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ch03 - Industry Analysis The Fundamentals OUTLINE The...

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Industry Analysis: The Fundamentals The objectives of industry analysis From environmental analysis to industry analysis Porter’s Five Forces Framework Applying industry analysis Industry & market boundaries Identifying Key Success Factors OUTLINE
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The Objectives of Industry Analysis To understand how industry structure drives competition, which determines the level of industry profitability. To assess industry attractiveness To use evidence on changes in industry structure to forecast future profitability To formulate strategies to change industry structure to improve industry profitability To identify Key Success Factors
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THE INDUSTRY ENVIRONMENT Suppliers Competitors Customers Social structure The national/ The national/ international international economy economy Technology Technology Government Government & Politics & Politics The natural The natural environment environment Demographic Demographic structure structure Social structure From Environmental Analysis to Industry Analysis The Industry Environment lies at the core of the Macro Environment. The Macro Environment impacts the firm through its effect on the Industry Environment.
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Profitability of US Industries (selected industries only) Household & Personal Products 22.7 Gas & Electric Utilities 10.4 Pharmaceuticals 22.3 Food and Drug Stores 10.0 Tobacco 21.6 Motor Vehicles & Parts 9.8 Food Consumer Products 19.6 Hotels, Casinos, Resorts 9.7 Securities 18.9 Railroads 9.0 Diversified financials 18.3 Insurance: Life and Health 8.6 Beverages 18.8 Packaging & Containers 8.6 Mining & crude oil 17.8 Insurance: Property & Casualty 8.3 Petroleum Refining 17.3 Building Materials, Glass 8.3 Medical Products & Equipment 17.2 Metals 8.0 Commercial Banks 15.5 Food Production 7.2 Scientific & Photographic Equipt. 15.0 Forest and Paper Products 6.6 Apparel 14.4 Semiconductors & Computer Software 13.9 Electronic Components 5.9 Publishing, Printing 13.5 Telecommunications 4.6 Health Care 13.1 Communications Equipment 1.2 Electronics, Electrical Equipment 13.0 Entertainment 0.2 Specialty Retailers 13.0 Airlines (22.0) Computers, Office Equipment 11.7 Median return on equity (%), 1999-2005
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18.4 15.2 15 14.7 12.8 11.9 11.3 11 10.3 10.3 9.9 9.9 9.6 9.5 9 9 8.4 7.7 6.9 6.5 6.2 0 5 10 15 20 Pharmaceuticals Household and personal products Computer software and services Media Commercial services Semiconductors Healthcare equipmernt and services Food, beverages, tobacco Hotels, restaurants, leisure Technology hardware and equipment
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