An industry analysis template is a tool used by the business owners to understand the different economic pieces. They use these pieces to gain a competitive edge. They also use this document to evaluate the current status of the business environment.
Table of Contents
- Methods for creating industry analysis:
- Broad Factors Analysis or PEST Analysis
- SWOT Analysis
- How to perform an industry analysis?
Methods for creating industry analysis:
There are three main methods to use while creating industry analysis report;
Competitive Forces Model or Porter’s 5 Forces
In 1980, Michael Porter back was first introduced this method in his book entitled “Competitive Strategy: Techniques for Analyzing Industries and Competitors.” He says in his book that analyzing five factors gives you with an accurate impression of your industry. These five factors are as follow;
- The Intensity of the Industry Rivalry: this factor indicates the number of participants that are in the industry and the respective market shares that they own directly display that industry’s competitiveness.
- The Threat of Potential Entrants: this factor shows that how easy new firms can get into the market of a specific industry. If you find it easy to get into an industry then you may face the risk of new competitors entering the industry too.
- The Bargaining Power of the Suppliers: for the business, the business owners usually build relationships with different suppliers. They hold a substantial amount of bargaining power in case the particular industry depends on very few suppliers.
- The Bargaining Power of the Buyers: this would happen when the customers are the ones who hold substantial bargaining power.
- The Threat of Alternative Goods or Services: in industries, all businesses are in constant competition with each other. All of the firms should have potential competitors from different industries. You may also like Price Comparison Templates.
Broad Factors Analysis or PEST Analysis
This method is very useful for making an industry analysis sample. This method comes with a framework for the analysis of an external environment. You would have to analyze the following model’s individual components in order to use this method for your industry analysis template;
Political: these factors include the specific regulations and policies related to;
- labor laws,
- environmental regulation,
- the ease of doing business,
- trade policies,
- political stability
Economics: These factors indicate to the economic forces that have a direct impact such as;
- exchange rates,
- the capital market conditions,
- GDP growth rates,
- interest rates and so on
Social: they are the ones that make a social impact on industries such as demographics, population growth, etc. They also indicate how the different trends behave such as in the case of social, health, and fashion movements.
Technological: they may concern with developments and advancements that may modify the way your business operates.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It is an effective way to make a summary for your industry research reports of different methods of industry analysis. For this method, consider the following factors;
- Internal: this factor is already in existences. They have contributed to your business’ current position.
- External: this may happen as contingent events. By examining the likelihood of their occurrence and how they would affect your business, assess the importance of these factors.
How to perform an industry analysis?
Let us discuss step-by-step on how to perform an industry analysis;
Review the available reports
At first, go through the previous industry analysis samples if you have. This provides you a better understanding of what you must do. Some reports also have relevant information that you don’t have to repeat in your new analysis. Moreover, you should never rely on these previous reports due to;
- when you consider how volatile the market is
- What are some factors that may constantly change in an industry?
Approach the appropriate industry
Bear in mind that some industries have sub-parts. So, you have to pay attention on the most relevant one. It would be quite impossible for you to make an accurate industry analysis example in case you don’t approach the right industry. Select your industry. Then, find out if it has sub-parts. If so, select the purpose of your company the most. You also have to identify the varying market segments in your industry.
For demand and supply, come up with a scenario
Demand and supply are the main factors that govern markets and all economists know that. For this, for your industry or product, you have to come up with a demand and supply scenario. You can do this by analyzing the past trends as well as the forecasting outlook for the future. In the same way, you can also do a comparative analysis with the other competing companies. This will provide you a better idea of your company’s economic health.
Come up with the competitive scenario
This is the most essential step in the process. Here, you have to come up with and evaluate the competitive scenario. For this step, analysts typically use Porters 5 Forces Model. This model acts as your framework for your industry analysis. This model works with different kinds of industries and this is its great thing.
Learn about recent developments
Just by analyzing the industry on a micro-level, you can complete your industry research reports. Instead of this, you should incorporate the influencing factors at a macro-level. This indicates that you also learn about the following;
- recent developments in the industry
- innovations in the industry analysis report
- both global and sector comparative evaluations
Focus on the dynamics of the industry
You should ensure that your industry analysis example pays attention on a specific industry. You have to pay attention to the dynamics of that industry to do this. In addition, the analysis should be to-the-point and in-depth.
In conclusion, an industry analysis template is a tool used in market assessment. Analysts and businesses use it to understand their industry’s competitive advantage. This also assists them in getting a sense of what’s happening in their industry.These five factors are as follows