Environmental and industry analysis pdf
File Name: environmental and industry analysis .zip
- What is Environmental Analysis?
- Why Is Industry Analysis Important?
- Definition of Industry Analysis
- THE INDUSTRIAL ENVIRONMENT ANALYSIS
The environmental analysis is carried out to determine various environmental factors and their potential impact on a company. On the basis of a corresponding environmental analysis, companies are better able to assess their future market opportunities and risks. Overall, an environmental analysis may also serve to assess market attractiveness. The creation of an environmental analysis is generally carried out considering several areas of the environment - for example, it is first possible to differentiate between influencing factors to be analyzed, which emanate from the global environment and those that bring about the competitive environment of a company. A common method for the investigation of influencing factors in the field of the global environment is the so-called PESC analysis — the letters P, E, S and T stand for the terms 'political', 'economic', 'socio-cultural' and 'cultural'.
What is Environmental Analysis?
Industry analysis is a tool that many businesses use to assess the market. It is used by market analysts, as well as by business owners, to figure out how the industry dynamics work for the specific industry studied. Industry analysis helps the analyst develop strong sense of what is going on in the industry.
When it comes to business, industry analysis involves such things as assessing the competition in the industry; the interplay of supply and demand in the industry; how the industry holds up against other industries that are emerging and providing competitions; the likely future of the industry, especially in light of technological developments; how credit works in the industry; and the exact extent of the impact that external factors have on the industry.
The importance of industry analysis is manifold. As an entrepreneur trying to find your way in the industry of your choice, you can use industry analysis to understand what your position is, relative to the position that other players in the industry have. You can use industry analysis to your advantage to identify opportunities and threats within your environment, as well as to plan for the future of your business, in the context of the future of your industry.
The only way you can survive in any competitive industry is that you will need to understand how you measure up against your competitors, and then use that information to your fullest advantage.
The importance of industry analysis for marketing capability cannot be overemphasized. This importance has various facets to it, however, and they can each be discussed in some detail. One of the greatest indicators of how well your business will perform in an industry is the performance of the industry as a whole. If the industry is doing well, then your business is likely to do well within that industry, provided you run it well enough.
By being able to foresee the changes that are likely to take place in the industry, this will help you see which changes that industry is likely to go through. For example, if there is a significant drop in the price of fuel, then manufacturers of products that require fuel to produce will enjoy better profit margins. Being able to predict such changes will give your business the opportunity to react in a strategic manner when doing industry-related projects. During the planning phase of your business, you will be better able to position yourself in the market if you understand how the market works.
For example, if you understand the kind of products being sold in the market, as well as how saturated the market is, you will be better able to figure out how you can differentiate yourself from the competition. Throughout the process of industry analysis, you will be able to identify many different threats and opportunities.
Threats are any phenomena that would impede the growth of your business, while opportunities are phenomena that would catalyze the growth of your business.
This is one of the most famous models of industry analysis that we have today. The book lays out the theory that there are five forces, the analysis of which will give a business a proper impression of what is going on within the industry.
The five forces are as laid out below:. The intensity of rivalry in the industry: The two factors you can use to gauge how competitive the industry is overall are the number of participants that take part in the industry and the market share that each industry player commands. A variety of factors determine this. The same applies if there are such factors as labor unions, restrictions by the government, and high exit costs, due to the nature of fixed assets.
All of these things will contribute to the intensity with which competitors will go at each other. The threat of new entrants to the industry: How easy is it for a new firm to enter the industry? Can a new player just walk in and set up shop without too many things working against that player? If it is very easy for a new business to enter the market and set up shop, then the players already in the market are constantly facing the threat of new competition, in addition to the competition they already face from existing players.
If entry costs are especially high and it is extremely difficult for new players to enter the market, then whichever company currently enjoys a competitive advantage gets to enjoy that competitive advantage for a little while longer. Also, as long as entry is difficult, then the company players will face the same competitors throughout, which makes it much easier for them to adjust.
If it does, then those suppliers will have a lot of bargaining power, since they enjoy a kind of oligopoly. If there are a lot of suppliers then the bargaining power will be shifted to the business instead. This can be crucial for a small business because dealing with difficult suppliers can have a direct influence on the price of a product, as well as its final quality.
If the buyer enjoys most of the power in the market, then that buyer can demand lower prices on products, as well as better quality products and discounts, or after-sales services on those products. Typically, this is what happens in industries where there are a few buyers but a lot of businesses offering the same product.
The few buyers will have the bargaining power in that industry. The threat of substitute goods and services: Typically, industries do not experience competition solely within themselves; they also compete with each other. An industry will be in direct competition with another industry that offers substitute goods or services for that industry. By extension, all of the companies within an industry will be in competition with other companies in a competing industry.
Their profitability will be affected by this, because there is a glass ceiling on the prices they can charge for their products and services. There are generally two kinds of substitutes: the first are products that have the same quality or function as the product in question, but are products are offered at a lower price, while the second are products that are offered at the same price as the product in question but are of a higher quality or greater utility.
It is a highly useful framework with which we can gain an understanding of the environment within which we operate. In order to perform the complete PEST analysis, each of the four factors that make it up must be analyzed in detail:.
Political factors: These are the factors that affect an industry, which are determined by the authorities.
They include regulations and policies that affect the industry either directly or indirectly, such as trade policies, tariffs, environmental regulation, taxes, the ease of doing business, labor laws, and the political stability of the country or region within which the business and industry operate.
Economic factors: These are the economic forces that govern the industry and the country within which the business operates. They include such factors as the ability to access capital, the GDP growth rate, the interest rates, the exchange rates, and so on. Social factors: These are prevalent trends in the society within which the business and industry operate. They include such aspects of society as social movements, fashion, health, demographics and population. Technological factors: This includes all factors that have to deal with any developments or advancements in technology that could change the mode of operation of the industry or business, or even disrupt the industry entirely.
It is a framework that pretty much supersedes others already mentioned, in the sense that it can be used to evaluate those others. With SWOT analysis, you can figure out what your strengths are, according to your PEST analysis, what your weaknesses are, what opportunities your environment presents, and what threats you have to deal with. Strengths are the characteristics your business has that give it some kind of advantage over competitors.
Weaknesses are the characteristics your business has that give it some kind of disadvantage, relative to its competitors.
Whenever you conduct any kind of analysis on the industry, you will come across two types of factors: internal and external.
These factors may or may not cease to exist in the near future. External factors are those that exist outside of the control of the business; these are considered contingencies. They are assessed on the probability of their occurrence and on the kind of impact they would have on the business, if they happened.
You should also consider whether or not the leadership of the business has the ability, as well as the intention of taking advantage of the opportunity, - or of avoiding the threat. Conducting industry analysis will take time and energy. This kind of analysis is not only time consuming, but is also quite complicated. If you miss any of the important stuff, then you have a faulty analysis in your hands. There are, however, some steps you can take to make it more effective and more likely to be accurate:.
There will likely already be plenty of industry reports that are relevant to your analysis. Take your time to read all of them.
See if digging deeper into these reports makes more sense. Remember that any industry is constantly changing, and that some industries can be volatile. Do your best to select the most current report that will provide the most up-to-date view of things. Every industry has different sub-industries. Chemicals will be divided into organics, pesticides, and so on.
When you select an industry, select the industry that is most relevant to you, and focus on that. The interplay of supply and demand are the main factors that control a market. You should look into the scenario for these factors for a given product, doing trend analysis based on past trends and using the results of that analysis to forecast the future. You need to look at your competitors and what to expect from them.
The best model to use here is the 5 Forces Model by Porter. Look at factors influencing the industry on a macro level. These factors include new innovations, comparisons with similar industries across the globe, and so on. Nicky is a business writer with nearly two decades of hands-on and publishing experience.
Women on Writing. She also studied business in college. Why Is Industry Analysis Important? There are three main ways in which you can perform industry analysis. These are:. SWOT Analysis.
Inc: Industry Analysis. Related Articles.
Why Is Industry Analysis Important?
Industry analysis is a tool that many businesses use to assess the market. It is used by market analysts, as well as by business owners, to figure out how the industry dynamics work for the specific industry studied. Industry analysis helps the analyst develop strong sense of what is going on in the industry. When it comes to business, industry analysis involves such things as assessing the competition in the industry; the interplay of supply and demand in the industry; how the industry holds up against other industries that are emerging and providing competitions; the likely future of the industry, especially in light of technological developments; how credit works in the industry; and the exact extent of the impact that external factors have on the industry. The importance of industry analysis is manifold. As an entrepreneur trying to find your way in the industry of your choice, you can use industry analysis to understand what your position is, relative to the position that other players in the industry have. You can use industry analysis to your advantage to identify opportunities and threats within your environment, as well as to plan for the future of your business, in the context of the future of your industry.
Strategic Planning: External Environmental Scanning. Strategic Planning: External Environmental Scanning pdf. Any planning activity involves thinking about the future. However, the focus of strategic planning is not on predicting the future, but instead on making better decisions here and now in order to reach a desired future. Because the future cannot be known with certainty, farm business managers must make certain assumptions about what the future will hold. An important part of the strategic planning process is to recognize and explicitly state any key assumptions about what the future may hold. To be successful, the farm business manager must find a fit between what the business environment wants and what the farm provides, as well as between what the farm needs and the environment can provide.
PDF | Scenario analysis is a means of evaluating potential implications for Higher Education strategic managers and evaluating the possible options. | Find.
Definition of Industry Analysis
Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by disabling your ad blocker. Environmental analysis is a strategic tool.
An industry analysis looks at how your company compares to others that are in the same niche. According to Inc. When you conduct an industry analysis, you can better plan effective strategies for your business.
THE INDUSTRIAL ENVIRONMENT ANALYSIS
In business, being good is not good enough unless it comes from your customers and is supported by sales and market growth sustainability. Factors in the macro environment and the competitive nature of business, means that your business and market position can easily be affected should you not predict the trends and movements within the economy, global community and your own industry and market segment. It is impossible for an organisation to develop strong competitive positioning strategies without a good understanding of the environment and its competitors and their strengths and weaknesses. This topic will look at: Industry Analysis Competitive Analysis Competitor Analysis Industry Analysis In analysing the industry and market sector, we are interested in answering two questions: What are the major trends affecting the growth of the industry in the future? In summary, will this industry grow faster or slower than average?
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Abstract. The study aimed to measure the impact of Environmental analysis on the Threats: The banking sector witnessed rapid changes and multiple and Lastrada, M. The'orique (). philsandlin.orgpdf.