Executive Summary and Introduction: (one page)
Research: This section includes two parts: the introduction and the executive summary. For the introduction, find the NAICS or SIC codes first, then determine generic descriptions of the industry and the general products that this industry produces.No additional research is required for the introduction.
Report: For the introduction part of this section, describe the purpose of the report and provide the definition of the industry and its main activities and products. The executive summary part will be written after you have completed your research. It should succinctly summarize what is in the report including your findings and conclusion.
1. Industry’s Dominant Economic Features (two pages)
Research: While you are getting familiar with this industry through your research, make note of information related to any dominant economic features such as market size; scope of rivalry; growth rate and what stage of the life cycle is the industry in; number of rivals and their relative size; prevalence of forward/backwards integration; channels of distribution; pace of process and product technology change; whether products are highly differentiated or very similar; to what extent are economies of scale in purchasing, distribution, advertising, are important; to what extent do learning curves exist; are high rates of capacity utilization important for profitability; what are the historical levels of profitability; are there segments within the industry, and if so, what are they, and how do their presence effect firms, strategies, competition, and levels of profitability within each segment?Make sure to identify where the industry lies using the SCP framework discussed in lecture.
According to the structure-conduct-performance (SCP) approach, an industry’s performance (or the success of an industry in producing benefits for the consumer) depends on the conduct of its firm. The conduct of the firm, in turn, is dependent on its structure (or factors that determine the competitiveness of the market).
The structure of the industry depends on basic conditions such as technology and demand for a product. This creates a linear relationship of sorts, where the structural inputs can impact the conduct and strategy of the firm, leading to better (or worse) performance.
Taken into account alongside the PESTEL framework, management should carefully consider and define the structure of a given industry. This structure will provide critical inputs for the broader industry, which in turn will impact the conduct of the organization through strategic integration. If this process is accomplished effectively—and management has integrated the external structure with the internal conduct strategically—higher performance can then be derived.
Report:Summarize what you have learned about the economic factors in the industry that have the most impact on it. In addition, if your industry is not a main industry, it might be a sub-industry within a main industry. For example, if you were studying steel production companies, the main industry is called metals and mining; within metals and mining there are two sub-industries dealing with steel, you would study steel production (also sometimes called steel manufacturing). Basically describe the purpose of your industry—what does it do, and what dominant economic features influence it the most. Choose carefully what information belongs in this section of your report, and what information should be included in one of the other five sections of the report. Make sure to identify where the industry lies using the SCP framework discussed in lecture.
2. Porter’s Five Forces (five pages for entire section)
See text and lecture notes for a discussion of Porter’s Five Forces.
Threat of Substitute Products (Include as a sub-heading)
Research: If you were studying steel production, you would look up information in your industry to see if there are many substitutes for steel and steel production. If so, discuss what these are and how they act as substitutes. If not, state that this is not an issue. For example, is plastic (a different industry) a good substitute for steel? Don’t forget to state the overall level of strength of this force for your industry as high, medium, or low.
Intensity of Competitive Rivalry in the Industry (Include as a sub-heading.)
Research: Look up information in your industry to see if there is a lot of rivalry between and among the companies currently in the industry and describe that here. Don’t forget to state the overall level of strength of this force for your industry as high, medium, or low. Be sure to discuss the relevant criteria for this force.
Threat of New Entrants (Include as a sub-heading)
Research: If you were studying steel production, you would look up information in your industry to see if there is a high likelihood for new firms to enter the steel production industry. Describe reasons why there are – or are not – barriers to entry into this industry (e.g., is there a high capital requirement to enter this industry, is it difficult to obtain the resources to produce steel, etc.). Don’t forget to state the overall level of strength of this force for your industry as high, medium, or low. Be sure to discuss the relevant criteria for this force.
The Power of Buyers (Include as a sub-heading)
Research: If you were studying steel production, you would look up information in your industry to see those people purchasing the steel that is produced have a high level of power over the steel producers such that they can control the prices and terms of contracts. Don’t forget to state the overall level of strength of this force for your industry as high, medium, or low. Be sure to discuss the relevant criteria for this force.
The Power of Suppliers (Include as a sub-heading)
Research: If you were studying steel production, you would look up information in your industry to see if those supplying the steel manufacturers have a high level of power over the steel producers such that there are no other suppliers, they can charge high prices, they can control the terms of contracts, etc. Don’t forget to state the overall level of strength of this force for your industry as high, medium, or low. Be sure to discuss the relevant criteria for this force.
Summary of Forces and Attractiveness (Include as a sub-heading)
After you have gone through all five forces, summarize the collective attractiveness of the industry.
Report: Determine whether or not each individual force affects the attractiveness of the industry. The best way to approach this section is to discuss how each of the forces impacts the attractiveness of the industry in just one or two sentences per force. Be sure to include a summary of your analysis of all of the key forces and what it means for the industry. Clearly state if your conclusion is that the industry is attractive, or not attractive. Base this on the goal of a new entrant, or an incumbent, to be able to achieve a position of competitive advantage. Note – if the industry is segmented, be sure to include a brief discussion of that fact and how the forces might differ across the different segments.
3. Drivers for Change in the Broad Environment (two pages)
Research: Search for information such as: political, economic, sociocultural, technological,environmental, legal, or other trends. The issues will vary by industry. Examples of issues that may be addressed in this section include long term growth rate; who buys the product and how they use it; significance of product innovation and technological change; marketing innovation; entry/exits of major firms; diffusion of technological know-how; extent of globalization; changes in costs and efficiencies; emerging buyer preferences (shift towards differentiation or commodity); regulatory influences; changes in societal concerns, attitudes, or lifestyles; reductions in uncertainty and risk in the industry over time.
Report: You do NOT need to discuss all factors in the general environment, only those relevant to the industry under study. Thus, be sure to discuss ONLY the most relevant factors for the boating industry. The most common general environmental factors include political, economic, socio-cultural, technological, legal, and environmental forces. And of course, these may span international boundaries. Simply discuss how the relevant trends in the general environment impact your industry. A nice way to approach this section is to include cited examples of firms within the industry that have had to adjust their business practices (or who have responded to the trend) as a consequence of the trend. Be sure to also discuss the implications of the trends for the industry. As such, you will not just state what the trend is, but you need to directly tie the trend to the implications that it will have (or is having) on the industry. The text and CEO meeting lecture notes will help with all of these.
4. Companies in the Strongest/Weakest Positions (one and half pages)
Research: Identify a minimum of three individual companies in the industry. Identify a leading company, a moderately successfully company, and a company that is struggling. Base your selection primarily on each company’s relative position based on their performance in the industry. Recall that each industry measures performance in a unique way.
Report: In addition to their position based on their performance, identify how each firm has positioned, or tried to position, themselves, in their industry. What strategies does each of these rivals pursue? Identify characteristics that differentiate the companies from each other based on quality/price, geographic coverage, vertical integration, product line breadth, distribution, or service.
Critical note: You are required to answer this question, using course concepts: “What strategy does each of these rivals pursue?” The criteria that you should use to determine the strategic positions of the firms are based on Porter’s generic strategies (e.g., low cost, differentiation, etc.). Specifically state which strategy the firms use. Do some generic strategies seem to work better in the industry than others? Are some firms more successful at executing the generic strategies then others? If so, why (how do you know)? Other criteria that you can use to determine the strategic positions of the firms include how the firms position their products on a number of criteria like quality and price. Do some firms have high quality and highly priced products/services while others have adequate quality and low priced products/services? Are some firms competing on a large geographic scale than others (e.g., compete in more geographic markets—internationally or in more domestic markets than others)? Do some firms offer a broader product/service selection than others? Do some firms benefit from first-mover advantages? Do some firms possess resources and capabilities that allow them to gain a competitive advantage?
5. Key Success Factors For Competitive Success (KSFs) (one and a half pages)
Research: This section probably does not require additional research. Instead you should reflect back on all that you have already learned about this industry. Before a team member starts writing this section, make sure the input of all other members from their research for their sections is taken into consideration. Analyze, synthesize, and evaluate what you have learned.
Report: Critical note: You are required to answer all of these questions.
• What are the 3-4 key industry issues/factors that have the strongest relationship with success and profitability?
• Do these KSFs vary by segment?
• How are these KSFs likely to vary over time?
6. Create an Industry Strategic Group Map (one page)
Maps are typically constructed in two dimensions, and in advanced analysis may be constructed in three dimensions. This guideline focuses on the two dimensional version. The horizontal axis is the X-axis, and the vertical axis the Y-axis. Separate measures for both axes are chosen. Ideally, the chosen measures for the axes should not be strongly correlated with each other. If one measure is strongly correlated with the other, then the map is essentially based on just one measure. If the two measures are weakly correlated or not correlated, then the map displays a firm’s position on two measures. The latter is a much more useful analysis tool. Firms are located on the map based on their performance along each axes. The location of the firms must be precise and objectively determined – this is not a qualitative or subjective process(Porter, EDC Director). The third variable (size of the bubble) reveals the key important metric that is used to measure competitive advantage in the chosen industry. Use SBU Manager Connell’s guidelines and the PowerPoints/whitepaper provided in Canvas.
Once the map has been created, insert the image in your report and clearly discuss why the variables were chosen and their significance to the players in the industry. What’s the “Aha” moment? What does this map reveal?
7. Analysis – Industry’s Prospects for Long-Term Profitability (one and a half pages)
Research: No additional research should be needed to complete this section. Write it last so that you can use the information from the previously-written sections. Thus, you should use all of your analyses to determine the prospects for long-term profitability. For example, you should identify the prospects for long-term profitability based on what you’ve already learned. You might even find some forecasts in your research that might help to support your assertions regarding the industry’s prospects.
Report: Critical note: You are required to discuss all of these issues:
• Future growth potential?
• Will competitive forces get stronger?
• Will driving forces increase/decrease profitability?
• Which company’s strategic position will improve/decline?
• How can firms insulate themselves from the unattractive forces in the industry?
• Is this an attractive industry in which to participate?
• Bibliography or Works Cited, listed alphabetically by author’s last name or source when author’s name is not available. Make sure in-text citation uses the same label, either author’s last name or source.
• Any other related documents, in the order in which they are mentioned in your report.
• The report must be double-spaced.
• Use 12-point Times New Roman font only.
• Provide 1-inch margins on all sides.
• Write in paragraphs using dialog. Avoid using bullets unless you include short lists of similar issues.
• It will take about 16 pages of text to do a thorough job on this analysis.
• You can provide appendices (charts, graphs, etc.), but these should not be considered part of the 16 page maximum of text. Make sure to include references in the body of your report to information provided in the appendices clarifying how it fits in your report. Put items in the Appendix in the same order they are discussed in the report. Citation requirements apply to information in the appendices as well.
• Use headings for each of the six main sections of the report, and number each page. Use sub-heading when appropriate, such as for Porter’s Five Forces.
• Do not include a table of contents.
• Reports must follow MLA citation guidelines (including in-text citations). The citation style should be consistent throughout the report.
• Include the attached / filled-in Industry Analysis grading rubric
• Failure to properly cite your sources will be assumed to be plagiarism and will result in a zero, or no pay, on the assignment.
• Writing skills count. Review the Business Writer’s Companion or the Cornerstone Writing Handbook to insure your writing skills meet requirements. Your writing skills must be precise and professional. Proof read your report (and ask another person to proof read your report) to insure there are no problems with your writing skills. You could lose three points for each error.
• Once the content of your report is assessed and graded, additional points will be deducted if you have failed to follow these instructions or if your writing skills are not exemplary.
• Your report will be graded from the perspective of an executive (your employer) reviewing a report. It must be professional in all respects.
• Compare your content and format with these instructions. You will lose points if you have not followed directions.