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An Industry Analysis is an analysis of the conditions in an industry at a particular time, including the behavior of and relations between competitors, suppliers, and customers. Understanding the different factors at work — political, economic, environmental — within a given industry is an important component of effective strategic planning for any company. Start by defining what type of industry you are in, and then determine what sector of the industry you will occupy. Once this is established, you can research which factors have a potential impact on your business, as well as the major organizations in the industry.
What’s in It?
The Industry Analysis should cover several different topics about the industry including:
Industry size and growth trends
Major organizations in the industry
Important factors that affect the behavior of the industry
The industry size section should include revenue figures, the number of companies, and the number of employees in the industry. The major organizations section should specify who your potential competitors are, as well as your suppliers, distributors, and trade organizations. Make sure to include specifics on each organization such as who owns the company, a brief description of the company, who their target market is, when they were established, their contact information, and their most recent annual revenue. Factors currently affecting the industry may include government regulations, environmental factors, as well as economic and market conditions. Thoroughly researching these factors is necessary as any of which can affect your chances of starting a successful business in the industry.
Why’s it Important?
The Industry Analysis will help business owners understand the big picture of their environment and identify the various threats and opportunities facing their business, ultimately helping them identify ways to create competitive advantages. Knowing what political, economic, and market factors affect your industry will better prepare you for market entry by understanding the major forces that affect how you do business.
Identify and contact trade organizations to find most of this information.
Build these relationships and bookmark great resources. As your business grows you will need to keep up with changes in the industry.