INDUSTRY ANALYSIS

TYPES OF ENVIRONMENT Macro environment (General Environment) Industry Environment Competitive Environment Internal Environment

Environment of a Firm General Environment Industry Environment Competitive Environment FIRM Internal Environment

Industry Analysis: Defining an Industry A group of firms producing products that are close substitutes of each other and compete for the same buyers

Industry Analysis: Defining an Industry Sector A group of closely related industries Industry A group of companies offering products or services that are close substitutes for each other and that satisfy the same basic customer needs Industry boundaries may change as customer needs evolve and technology changes Market Segments Distinct groups of customers within an industry Can be differentiated from each other with distinct attributes and specific demands

The Computer Sector: Industries and Market Segments

DOMINANT ECONOMIC TRAITS Market size Scope of competitive rivals (local, national, international ) Market growth rate and place of industry in the growth cycle Number of rivals and their sizes Number of buyers and their relative sizes Prevalence of backward and forward integration

DOMINANT ECONOMIC TRAITS Ease of entry and exit Technological changes in production process and new product introductions Extent of product differentiation among rivals Capacity utilization and low-cost efficiency Degree of learning and experience curve Capital requirements Level of industry profitability