Management Case Analysis

Industry Analysis Checklist

The purpose of this worksheet is to help you analyze the industry in which your project company operates. The worksheet begins by asking some background information to help identify the boundaries of the analysis. Spend time working on defining the boundaries because this can be challenging and, of course, drive the rest of the analysis. Following, the worksheet goes through each of the 6 forces of an industry before concluding with some general observations. Again, as a reminder, be sure to keep the analysis at the industry level and not a specific company level.

Group Project Company ___________________________

Step 1: Defining the Industry

1. In what industry or industry segment does the company compete?

[If you cannot define the industry or industry segment, then working through the following questions will help. If you can define the industry or industry segment, skip to question 2]

a. What products are substitutable? (Substitution on the supply side)

b. What manufacturers/service providers can easily switch to produce these products/services? (Substitution on the demand side)

c. What are the geographical boundaries to the industry? (i.e., where are there different prices for the same product)]

2. What companies compete in this industry?

3. What kind of companies are likely entrants into this industry? (e.g., From what existing industries might they come? Are there start-up companies that might enter?)

4. What types of companies comprise the suppliers (provide specific names)?

5. What types of companies comprise the buyers (provide specific names)? [If your project company sells directly to consumers, just note this]

6. What are potential substitutes? What are the advantages and disadvantages of each?

Step 2: Analyze the Industry

What are key trends occurring in the macro-environment that affect the industry?

(Be as specific as possible in providing numeric indication of key trends for each category)

a. National/International Economy

b. Technology

c. Political-Legal

d. Natural Environment

e. Demographic Structure

f. Social Culture

Industry Forces

All conditions are not equal, which conditions significantly affect the threat of new entrants?

Do you consider the threat of new entrants favorable or unfavorable? Why?

What are changes that may affect the threat of new entrants?

All conditions are not equal, which conditions significantly affect the bargaining power of suppliers?

From the perspective of the focal industry, do you consider the bargaining power of the suppliers a favorable or unfavorable condition of the environment? Why?

What are changes that may affect the bargaining power of the suppliers?

All conditions are not equal, which conditions significantly affect the bargaining power of the buyers?

From the perspective of the focal industry, do you consider the bargaining power of the buyers a favorable or unfavorable condition of the environment? Why?

What are changes that may affect the bargaining power of the buyers?

Which of these two conditions significantly affect the threat of a substitute?

From the perspective of the focal industry, is the threat of substitute products a favorable or unfavorable condition of the environment? Why?

What are changes that may affect the threat of substitute products?

All conditions are not equal, which of the conditions significantly affect the intensity of rivalry?

From the perspective of the focal industry, is the level of rivalry within the industry a favorable or unfavorable condition of the environment? Why?

What are changes that may affect the level of rivalry?

From the perspective of the focal industry, is the influence of complementary products a favorable or unfavorable condition of the environment? Why?

What are changes that may affect the power of complements?

Summary of Analysis

For each of forces in the following figure, circle whether the force has a high, medium or low impact on the industry.

Industry

Rivalry

Threat of Entry

Strength of

Buyers

Strength of

Suppliers

Threat of

Substitutes

Availability of

Complements

Industry Analysis

High

Medium

Low

High

Medium

Low

High

Medium

Low

High

Medium

Low

High

Medium

Low

High

Medium

Low

Step 3: Summarize the Expected Moves by Direct Competitors and Changes in the Industry

Based upon the above, you should have some indication of what significant moves your direct competitors may be considering as well as significant changes that may be occurring in the structure of the industry. What are the top 3-5 moves or changes you anticipate?

1.

2.

3.

4.

5.

Step 4: Clearly State the Key Success Factors

Based upon the above analysis, what are the 3-5 key success factors for companies in the industry?

1.

2.

3.

4.

5.

Step 5: Identify Strategies that Work in Similar Industries

What are similar industries – in terms of lifecycle (e.g., fragmented, emerging, mature, declining), concentration (e.g., competitive, oligopoly, monopoly), technology, product offering, etc. – to the structure of this industry?

What are strategies that appear to be effective in these industries?

Step 6: Develop a plan of action for your company to take

Based upon the above information, what are specific actions your company can take to shape or respond to industry conditions?

� If the buyers are consumers, some of the items may not apply. If an item does not apply, skip it.

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Industry

Rivalry

Threat of Entry

Strength of

Buyers

Strength of

Suppliers

Threat of

Substitutes

Availability of Complements

Industry Analysis

High

Medium

Low

High

Medium

Low

High

Medium

Low

High

Medium

Low

High

Medium

Low

High

Medium

Low