Section 2. Industry Analysis (For Parts A-C: no more than 10 full content pages, excluding? graphs/tables; For Part

Section 2. Industry Analysis (For Parts A-C: no more than 10 full content pages, excluding 

graphs/tables; For Parts D-E: no more than 6 full content pages, excluding graphs/tables)

Remember, this is an industry analysis not a company analysis. Therefore, limit 

the amount of specific company (organizational) information.

A. Basis description of the industry. Will include, as a minimum:

1. The nature of the product or service

2. Information about customers and channels of distribution

3. Size of the industry (sales)

4. Geographic location of the industry

5. Profit trends

6. Competitive nature of the industry

B. Factors that influence demand. These factors may cause demand to increase 

or decrease. For each factor that you discuss, indicate whether it will cause 

demand to increase or decrease. You should demonstrate an understanding of 

why customers buy the product or service (e.g., customer service, quality, cost 

to name only a few). Also include:

1. The functions served by the product/Why customers buy the products or services

2. Stage of the product life cycle

3. Economic trends

4. Demographic trends

5. Social/cultural trends

6. Political trends

7. Technological trends

8. Programs developed by companies in the industry (new marketing 

programs, new distribution channels, etc.)

9. Pricing actions/trends (how do competitors us price as a competitive weapon, etc.)

C. Factors that influence cost structures and profitability

1. Stage of the product life cycle. (Stage of the product life cycle affects pattern 

of investment, cash flows, and profitability.)

2. Competitive environment. Thoroughly analyze and discuss Porter’s Five 

Forces of Industry Competition. Explain effects on costs and 

profitability.

3. Cost drivers. Describe the major cost drivers or identify what contributes to the 

price a company must charge for its product or service (e.g., labor, material,

manufacturing). Give percentages or other data if available. Also, discuss the 

value chain as it relates to cost.

D. Opportunities in the industry. Using your analysis of the industry, prepare a 

thorough list of opportunities in the industry. For example, weak competitive 

rivalry would be an opportunity in the industry. Be sure to explain why each is 

an opportunity for the industry. Examples may include:

1. Serving additional customer groups/expanding into new markets

2. Expanding the product line

3. Integrating forward or backward

4. Complacency among rival firms

5. Strong increase in market demand

6. Favorable demographic, social, cultural, technological trends

E. Threats in the industry. Using the industry analysis completed to this point, 

prepare a thorough list of threats in the industry. For example, a strong competitive 

rivalry would be a threat in the industry. Be sure to explain why each is a treat to 

the industry. May include:

1. Entry of lower-cost foreign competitors

2. Rising sales of substitute products

3. Slower market growth

4. Adverse shifts in foreign exchange rates or trade policies

5. Adoption of new governmental regulations affecting the industry

6. Strong bargaining power of customers or suppliers

7. Changing buyer needs or tastes

8. Adverse demographic, social, cultural, technological trends