There are 21 questions provided regarding items to consider when conducting an industry analysis. Review the questions listed. Choose three that you think are the most important of all questions provided. Discuss why those three items are important when conducting an industry analysis.

   

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• How fast is the industry growing? Is it stagnant or declining? How many competitors are there? • Do firms compete mainly on price or differentiation? • Is there a history of cooperative pricing or is price competition more cut-throat ? • What are the key economic and regulatory issues faced by companies in this industry? ● • Who are the potential competitors and how might their entry affect competitive rivalry? • Are there strong barriers (such as patents, economies of scale, access to distribution channels, strong branding, legal constraints, or high capital needs) that limit the threat of new entrants? • Does government policy protect incumbents? • Are there first-mover advantages, such as an experience curve, that might put new entrants at a cost disadvantage and thus strongly favor existing businesses? ● Are close substitutes available? • What are the price/value characteristics of substitutes? • How sensitive are buyers to changing prices? • Are buyers able and willing to switch, and how costly is it to switch? The availability of close substitutes, combined with low switching costs, exerts downward pres- sure on industry profits. The bargaining power of buyers focuses on the ability of buyers to negotiate from a position of strength, thereby reducing industry profits. Questions to ask here include the following: • Are buyers highly concentrated or diffuse? • Do purchasers buy in large quantities? • Are substitute products available? • How costly is it for buyers to switch? • How much power do suppliers have to raise price? How many suppliers are there, and are there available substitutes? How costly is switching to new suppliers? ● ● • How fast is the industry growing? Is it stagnant or declining? How many competitors are there? • Do firms compete mainly on price or differentiation? • Is there a history of cooperative pricing or is price competition more cut-throat ? • What are the key economic and regulatory issues faced by companies in this industry? ● • Who are the potential competitors and how might their entry affect competitive rivalry? • Are there strong barriers (such as patents, economies of scale, access to distribution channels, strong branding, legal constraints, or high capital needs) that limit the threat of new entrants? • Does government policy protect incumbents? • Are there first-mover advantages, such as an experience curve, that might put new entrants at a cost disadvantage and thus strongly favor existing businesses? ● Are close substitutes available? • What are the price/value characteristics of substitutes? • How sensitive are buyers to changing prices? • Are buyers able and willing to switch, and how costly is it to switch? The availability of close substitutes, combined with low switching costs, exerts downward pres- sure on industry profits. The bargaining power of buyers focuses on the ability of buyers to negotiate from a position of strength, thereby reducing industry profits. Questions to ask here include the following: • Are buyers highly concentrated or diffuse? • Do purchasers buy in large quantities? • Are substitute products available? • How costly is it for buyers to switch? • How much power do suppliers have to raise price? How many suppliers are there, and are there available substitutes? How costly is switching to new suppliers? ● ●

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