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An industry is a group of firms producing a similar product or service. Industry analysis is business research that focuses on the potential of an industry. Once it is determined that a new venture is feasible in regard to the industry and market in which it will compete, a more indepth analysis is needed to earn the insandouts of the industry the firm plans to enter. This analysis helps a firm determine if the markets it identified during feasibility analysis are accessible and which ones represent the best point of entry for a new firm.

 Industry

and competitive analysis attempts to provide a framework for identify the key industry characteristics, the nature and degree of competition, the drivers of industry change, strengths and weaknesses of competitors, competitive strategies of rivals, key success factors in competition, and revealing profitability of industry. Such a framework enables us to analyze any industrys attractiveness or the lack of for investment.

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1. Identify the Competition To analyze the competitive landscape, it is necessary to make a list of those competitors that compete directly or indirectly with the firms product or service by providing the same product or service to the customer. Step 2. Identify the Competitors Strategies Analyzing the competitors strategies provides the firm an indication of current trends in the marketplace. This helps the firm determine how to approach the customer.

Step 3. Determine the Competitors Objectives and Goals The key to properly assessing the competitor is to know where its value system lies. Because each competitor is different, it will place various levels of importance on technology, quality, cost, market share, and mission. Understanding the competitions objectives can help the firm identify those things that may differentiate it from the rest of the pack. Step 4. Identify Competitors SWOT In this step, it is not only important to assess the competitors strengths and weaknesses, just as the firm performed on itself, but it is also valuable to recognize those opportunities and threats that may be present for the competition

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5. Estimate Competitors Reaction Patterns

Some competitors react quickly to events in the marketplace, whereas other competitors take a different approach and react only to selective events in the marketplace. Others are laid-back and react slowly, while still others dont show a pattern of reaction at all. Looking at these behaviours provides the firm a better understanding of what may occur in an industry if the firm takes certain actions or implements certain initiatives.

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6. Select the Competitors to Attack and Avoid

Some competitors are such large financial powerhouses that it may not be financially feasible to attack. Some merely put up the front or the image that they cannot be attacked. It is in this step that it is valuable to the firm to know the competitors for which an attack strategy would be profitable and those for which avoidance would be the best policy. Identifying the weak versus the strong competitors will allow the firm to make efficient decisions.

Yellow Pages Promotional brochures Promotional advertisements Competitors customers Competitors vendors Trade associations Competitors web sites Competitors employees News stories about competitors Shop the competition

 Direct

competition refers to businesses that derive the majority of their profits from the sale of products or services that are the same as or similar to those sold by another business. Indirect competition is competition from businesses that derive only a small percentage of their profits from the sale of products or services that are the same as or similar to those sold by another business.

 Intensity

of rivalry among existing competitors Threat of entry by new competitors Pressure from substitute products Bargaining power of suppliers Bargaining power of buyers

1. Rivalry intensifies as the number of competitors increases and as competitors become more equal in size and capability. 2. Rivalry is usually stronger when demand for the product is growing slowly. 3. Rivalry is more intense when industry conditions tempt competitors to use price cuts or other competitive weapons to boost unit volume.

4. Rivalry is stronger when the cost to customers of switching brands is low. 5. Rivalry is stronger when one or more competitors is dissatisfied with its market position and launches moves to bolster its standing at the expense of rivals. 6. Rivalry increases in proportion to the size of the payoff from a successful strategic move.

7. Rivalry tends to be more vigorous when it costs more to get out of a business than to stay in and compete. 8. Rivalry becomes more volatile and unpredictable when competitors are more diverse in terms of their strategies, personalities, corporate priorities, resources, and countries of origin.

9. Rivalry increases when strong companies outside the industry acquire weak firms in the industry and launch aggressive, well-funded moves to transform their newly acquired businesses into major market contenders.

 What

are the barriers to entering the new market? What will be the reaction to your new company by businesses already actively operating there?

 Size
Special

technologies Training Patents Experience Brand loyalty Start-up expenses associated with buildings, equipment, and supplies Access to product and/or equipment vendors

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will firms already doing business in the industry react to a new start-up? Will they ignore the new entrant as an insignificant competitor, or will they wage all-out war? Will the competitors put pressure on their vendors not to sell to the new business? Will they create promotional campaigns aimed at solidifying brand loyalty? Will they send secret shoppers into the new business?

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substitute products readily available in a sufficient quantity and at a price that might cause your potential customers to switch? How do you plan to deal with substitute products? What about the danger from substitute distribution channels?

 Not

only should all the identified direct and indirect competitors be analyzed, so should any that have recently gone out of business. It is important to include them in your analysis so that you can benefit from their mistakes.

To conclude we can say that: An Industry competitive analysis is the identification and examination of the characteristics of a specific competing firm. A business-specific competitive analysis provides you with the information you need to pinpoint strengths and weaknesses, both yours and the competitions.