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

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Presentation on theme: "5-1 Chapter Five Industry Analysis Dr. Bruce Barringer University of Central Florida."— Presentation transcript:

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

19 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright ©2009 Pearson Education, Inc. publishing as Prentice Hall


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