1. 5-1 Chapter Five Industry Analysis Dr. Bruce Barringer University of Central Florida

2. 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

3. 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

4. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-4 Industry

5. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-5 Industry Definition Define the firm’s industry

6. 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

7. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-7 Size  Displayed in dollars over a 3- to 5- year period

8. 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

9. 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

10. 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

11. 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

12. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-12 General Attractiveness

13. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-13 Ratio  Report an industry’s key financial ratios and other ratios of interest

14. 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

15. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-15 Industry Trends Environmental trends Business trends

16. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-16 Environmental Trends  Economic trends Social trends  Technological advances Political and regulatory change

17. Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall5-17 Business Trends Profit margins Innovation Input costs

18. 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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