Studying the market trends and the competition level is important for businesses because it helps them to lay out their future strategies. Therefore, they use various tools and methods to achieve their goals. Industry analysis is the same process. Today, we’ll discuss industry analysis, its types, examples, and guide.
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Industry analysis is a market evaluation tool that businesses and companies use to comprehend and analyze the degree of competition in a certain industry. It helps you to understand the market position of the industry. Like the external factors impacting the industry, credit system, technological changes and how shaping the future, other competitive developing industries, competition level within the industry, and statistics of supply and demand.
Industry analysis helps an entrepreneur or a startup company to comprehend the position of a business relevant to the other competitive businesses in the industry. Most importantly, it helps you to recognize the upcoming threats and opportunities and how you can handle them with your strong points. The only way to survive in today’s business environment is to distinguish yourself from the competitors within the industry.
Businesses and companies use three main tools and methods to perform industry analysis, and they’re as follows;
Michael Porter introduced this model in the 1980s and it goes by the name of Porter’s 5 Forces. It analyzes the five forces impacting the industry. They are as follows;
SWOT analysis comprises strengths, weaknesses, opportunities, and threats, and its analysis studies the impact on the business. It further consists of two parts;
PESTLE analysis comprises six macro-environmental factors like political, economical, social, technological, legal, and environmental factors.
Industry analysis allows you to have an insight into the competitive business environment. The weaknesses of your competitors would be your strong suits. You can integrate such information to make the marketing plan to grow your business.
The result of industry analysis provides you an insight into the future growth of your business. If the report tells you upcoming threats, then you can take preventive measures to avoid them.
The analysis confirms and ensures the credibility of your business, and it would help you attract investors. It means that you’re familiar with competitors and knows what your customers want.
You should take some time to find and study already published reports relevant to your industry. You would probably find a well-detailed report, and studying it would answer your questions. It doesn’t mean that you should completely rely on such published reports.
Therefore, you should choose the most report of your industry. It’s because trends and statistics change over time. If you rely on the old report, it won’t give you conclusive results.
You must select the most relevant industry for your business. It’s because every industry has got many sub-categories. For instance, a chemical industry would have sub-categories of pesticides, organic, inorganic, and so on.
Supply and demand play a significant role in controlling the market. You should study the past trends and product and product scenarios, and the findings would help you to predict the future.
You should consider studying your competitors and their expectations and plans from the market. Porter’s 5 forces model would help you in this regard.
Most importantly, you should study the macro-environmental factors that could impact your industry. Like the technological development, the latest tech trends, and technology innovation would impact many businesses worldwide.
The industry analysis should focus on the particular industry in question and understand the various dynamics of the industry. It should be direct, to the point, and in-depth. For instance, if your focus industry is aluminum, then you should be aware of the per capita consumption within the industry along with production and total consumption.
If you want to study the industry analysis of other businesses relevant to the industry as an example, it’s because it helps business owners to understand the position of their business. It answers them that how they can get a competitive edge over competitors.