Competitive industry analysis

Industry differ in many respects such as industry type, industry culture as well as geographic location. It may be necessary to get an awareness of industry trends in order to achieve a greater development. After understanding the industry trends, competitive industry analysis is an another thing you should give primary consideration. Do you know what is competitive industry analysis? Which elements constitute this analysis? Actually, competitive industry analysis is a kind of strategy for a company, which can offer an impetus to company’s all-rounded development. Besides, it can also help a company determine their investment plan whether entering that market is right or not. This analysis consists of four elements, ranging from threats to entry, bargain power of buyers and suppliers to availability of substitute goods. It is rarely an easy task for a company to enter hypercompetitive industry. Management team will conduct this analysis to see if they can find a niche in the market. now we can talk about the four elements of competitive industry analysis in details. We can take steel pipe supplier as an example, that is steel pipe industry.

In a competitive industry analysis, what are threats to entry? It includes start-up costs, government guidelines, distribution outlets and the potential power of contemporary counterparts. This step should be given the primary consideration, because each of these factors is fatal to the overall plan even kills the idea of entering a new market. in some cases, government regulation is much more important than distribution channels. When it comes to bargaining power of buyers, it calls to mind the potential purchase power about the market. when a few dominant buyers exist, this phenomenon occurs. An example of this is found in the steel pipe industry where representative products such as welded steel pipe are fairly standard. In a competitive industry analysis, this can lead to a downturn in market share of all steel pipe companies. In responding to this case, many suppliers may set up their own retail channels to resist this power.

Like buyers, suppliers also have bargaining power to some extent. As you know, products provided in the market have specific differentiations as opposed to each other. For example, round steel pipe differ in shape compared with square steel pipe. This can become a natural barrier for suppliers who want to entry a market where their products are favorable. Last but not least, substitute goods make it difficult for a company to sell cost-consuming products. Because consumers are not confined to a limited products inventory. They have access to sufficient products. So it a challenge as well as a chance for the development of a company. All in all, making a competitive industry analysis better your prospects. Ant other questions about this analysis?