Interpreting Industry Analyses

• Effective industry analyses are products of careful study and interpretation of data and information from multiple sources.
• A wealth of industry-specific data is available for firms to analyze for the purpose of better understanding an industry’s competitive realities.
• Because of globalization, international markets and rivalries must be included in the firm’s analyses.
• because of the development of global markets, a country’s borders no longer restrict industry structures
• entering international markets enhances the chances of success for new ventures as well as more established firms
• Analysis of the five forces within a given industry allows the firm to determine the industry’s attractiveness in terms of the potential to earn average or above - average returns.
• the stronger the competitive forces, the lower the potential for firms to generate profits by implementing their strategies
• An unattractive industry has low entry barriers, suppliers and buyers with strong bargaining positions, strong competitive threats from product substitutes, and intense rivalry among competitors.
• An attractive industry has high entry barriers, suppliers and buyers with little bargaining power, few competitive threats from product substitutes, and relatively moderate rivalry.