5-1 Chapter Five Industry Analysis Dr. Bruce Barringer University of Central Florida
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-2 Introduction Industry A group of firms producing a similar product or service Industries vary by Size Growth-rate structure Financial characteristics Attractiveness
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-3 Target Market The limited portion of an industry that it goes after or tries to appeal to at a certain point in time
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-4 Industry
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-5 Industry Definition Define the firm’s industry
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-6 Industry Size, Growth Rate, and Sales Projections Display financial information in a multiyear format Display your information graphically Produce information on your industry on a regional or local basis Report both positive and negative information on your industry
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-7 Size Displayed in dollars over a 3- to 5- year period
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-8 Growth Should be reported on a percentage basis with an interpretation of what the numbers mean
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-9 Industry Sales Projections Report future sales projections for your industry Include concrete numbers of anticipated sales and growth rates
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-10 Industry Characteristics Industry structure Nature of the participants in an industry Key ratios Key success factors
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-11 Industry Structure Concentrated or fragmented Concentrated industries are dominated by a few large firms Fragmented industries include a large number of smaller companies General attractiveness A structurally attractive industry has high barriers to entry, no good substitutes for the product, limited power of supplier, and limited power of buyers
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-12 General Attractiveness
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-13 Ratio Report an industry’s key financial ratios and other ratios of interest
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-14 Key Success Factors Examples Brand name recognition Access to distribution channels Quality of products Ease of use Price Marketing support Quality of customer service
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-15 Industry Trends Environmental trends Business trends
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-16 Environmental Trends Economic trends Social trends Technological advances Political and regulatory change
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-17 Business Trends Profit margins Innovation Input costs
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-18 Long-term Prospects Include a brief statement of beliefs regarding long-term prospects for the industry
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