Moving to consumers, we would need to review the needs of individual consumers and whether larger companies can force AI firms to negotiate better services and prices for them. The field of AI has been attracting many new entrants, but there are significant barriers to entry, including high initial research and development costs. Lastly, the threat from the last force, the possibility of substitutes, depends on what a firm wants to do with its AI-based technology. The more complicated the tasks the AI is given, the more likely other goods and services can’t substitute for it. It can also expand the pool of potential substitutes and alter the power dynamics with suppliers and customers worldwide.

1. Factors like industry concentration, differentiation, switching costs, and substitution threat determine supplier power.
2. However, a few research firms provide SWOT analysis on an industry level.
3. The competitors’ section reveals a company’s strengths and how it can improve, based on competitors’ strengths and weaknesses.
4. It involves assessing the key features, attributes, or value propositions that differentiate the offering and resonate with target customers.
5. The analysis also evaluates size and growth trends, market share, profitability, and competitor strengths and weaknesses.
6. Attractive industries with strong upside are targeted for entry and expansion.

Internal

Despite this, any successful organisation has to look at the competition, and moreover, be aware how the nature of competition can guide its strategy. The Kenyan flower industry is facing increasingly stiff competition from Zimbabwe. For instance, if you’re entering the plant-based food industry, you might highlight how your product’s unique blend of ingredients offers superior taste and nutritional value compared to existing options. Once you’re done with collecting and analyzing your data, it’s time to pen it down as an industry analysis document. To tackle the challenges that come with building a successful strategy for organizational growth, it’s essential to start by knowing how to build a business growth strategy effectively. There’s quite a lot to be getting on with there, but conducting industry analysis is so crucial to making smart business decisions that it’s worth the time and effort.

1. A recent report from Gartner highlights that by 2025, 60% of CEOs are expected to implement prescriptive analytics to guide strategy, up from just 10% in 2021.
2. A rigorous industry analysis then informs strategic positioning, resource allocation, operational benchmarking and investment decisions.
3. It includes reviewing the market, political, and economic factors that have a direct impact on the development of an industry.
4. Product type competition has become intense also, for example, Pannar and Cargil seeds, so has brand competition, for example Israel’s CARMEL and South Africa’s OUTSPAN.
5. Parameters like geographic markets, product categories, and customer types help precisely delineate the industry boundaries.
6. You can use tools such as scenario planning or balanced scorecard to track your progress, performance, and feedback.
7. Analyzing industry suppliers reveals supplier power, which impacts profit margins.

After producing a recommendation, we iteratively repeat the entire process. Most strikingly, Porter’s model generalizes competition, implying a seemingly uniform industry structure for every market. The model assumes clear lines among sectors, which may not be tenable given the increasingly blurred lines in today’s business world, where companies are simultaneously in several sectors. Industries are no longer isolated silos; instead, they often intersect and interact, leading to a far more complex environment than the model suggests. Business strategists need to deal with sectors where information asymmetry, product differentiation, and significant entry and exit barriers are common. Firms do have some control over prices, contradicting classical assumptions.

Malaysia attempted to break into the cocoa industry, but did not achieve success because the cocoa was the wrong type and the product could not be absorbed into the world market. In the cut flower industry, it is the high value types which are giving the returns now – carnations, roses, orchids – rather than the low value ones. In marketing vegetables to the UK, any other route but through buying agents, until recently, was a recipe for disaster.

Perfect Competition markets have multiple buyers and sellers, similar products or services, and alternatives that are present for users. The final step is to determine your direction, which is the vision, mission, and objectives that you want to achieve in your industry. You can use frameworks such as SMART goals or OKRs to set specific, measurable, achievable, relevant, and time-bound targets.

Current business environment.

You can see the industry rivalry in the form of ad campaigns, price competition, launch and introduction of new products as well as the additional services offered. Customer loyalty more often also gives rise to competition in the industry. Industry analysis is conducted by the business entity or specifically an entrepreneur to identify the factors which are influencing the sector that they have already or thinking about investing in. Your competitive strategy defines how you will compete effectively in the target market. Once you have your data, it’s time to start interpreting and analyzing the data you’ve collected during your industry analysis. Are you ready to unlock the secrets of Industry Analysis, equipping yourself with the knowledge to navigate markets and make informed strategic decisions?

As with domestic marketing, global marketers have to decide how they are to compete in their chosen market. According to Porter, the principal sources of competitive advantage are lower costs of production and a differentiated product offering. Lesser developed countries usually have the former, but may have to work hard to obtain the latter. The Israeli citrus industry experienced all the problems envisaged by Porter In maintaining industry competitiveness.

#3. Broad Factors Analysis

In this analysis, the Malawian and Ugandan Birds Eye chili example is a good case. Uganda, devastated by the war, saw Malawi, (a new entrant) take over its position. Now Uganda is hitting back by resurrecting its shattered industry and strongly marketing its product to Malawi’s detriment. In the fertiliser industry for example, few companies dominate – including Norsk Hydro.

The fast food industry is Porter’s own example, which still remains the case. Suppliers are powerful when they are the only source of something important that a firm needs, can differentiate their product, or have strong brands. Porter’s first force is what we usually mean when discussing business competition. We think of Pepsi and Coca-Cola for soft drinks, Apple and Samsung for smartphones, Nike and Adidas for sneakers, and Ford and General Motors for autos. It also helps the company to hire people from the outside with the necessary skills if you do not have them on board.

It provides perspective into inherent industry profit potential shaped by competitive forces. High barriers to entry, lack of close substitute products, dispersed suppliers and buyers with low bargaining power, and minimal competitive rivalry implies higher profit potential. Intense rivalry, easy entry, potent substitutes, and concentrated suppliers/buyers suggest lower profitability. In this comprehensive guide, we have explored a variety of industry analysis templates that are essential for strategic business planning. From SWOT to Porter’s Five Forces, each template offers unique insights that help businesses understand their competitive landscape and make informed decisions. Start leveraging these powerful tools today to boost your strategic planning and gain a competitive edge in your industry.

Industry Analysis is the compass that helps businesses chart their course in the vast sea of markets. By understanding the industry’s dynamics, risks, and opportunities, you gain a strategic advantage that can steer your business towards success. From identifying competitors to mitigating risks and formulating competitive strategies, this guide has equipped you with the tools and knowledge industry analysis in strategic management needed to navigate the complexities of the business world. A SWOT analysis examines the internal strengths and weaknesses of firms in an industry along with external opportunities and threats.