Industry Analysis In Business Plan

Industry Analysis In Business Plan-65
During the planning phase of your business, you will be better able to position yourself in the market if you understand how the market works.For example, if you understand the kind of products being sold in the market, as well as how saturated the market is, you will be better able to figure out how you can differentiate yourself from the competition.

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The few buyers will have the bargaining power in that industry.

The threat of substitute goods and services: Typically, industries do not experience competition solely within themselves; they also compete with each other.

The importance of industry analysis for marketing capability cannot be overemphasized.

Industry analysis and the associated skills used to carry out industry analysis are absolutely critical for your business, as they will help you gain an intimate understanding of the environment within which you’re operating.

This can be crucial for a small business because dealing with difficult suppliers can have a direct influence on the price of a product, as well as its final quality.

The bargaining power enjoyed by buyers: It’s a little different when we consider the kind of bargaining power that buyers have.If it is very easy for a new business to enter the market and set up shop, then the players already in the market are constantly facing the threat of new competition, in addition to the competition they already face from existing players.If entry costs are especially high and it is extremely difficult for new players to enter the market, then whichever company currently enjoys a competitive advantage gets to enjoy that competitive advantage for a little while longer.Their profitability will be affected by this, because there is a glass ceiling on the prices they can charge for their products and services.There are generally two kinds of substitutes: the first are products that have the same quality or function as the product in question, but are products are offered at a lower price, while the second are products that are offered at the same price as the product in question but are of a higher quality or greater utility.This importance has various facets to it, however, and they can each be discussed in some detail.One of the greatest indicators of how well your business will perform in an industry is the performance of the industry as a whole.The same applies if there are such factors as labor unions, restrictions by the government, and high exit costs, due to the nature of fixed assets.All of these things will contribute to the intensity with which competitors will go at each other.There are three main ways in which you can perform industry analysis. The book lays out the theory that there are five forces, the analysis of which will give a business a proper impression of what is going on within the industry.The five forces are as laid out below: The intensity of rivalry in the industry: The two factors you can use to gauge how competitive the industry is overall are the number of participants that take part in the industry and the market share that each industry player commands. If there isn’t much differentiation in the products sold in the industry, then typically, there will be very stiff competition.


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