Analyse an industry

CONSULTING METHODOLOGIES

You will frequently need to research an industry. You will want to analyse the industry of your important customers so that you can serve them better. If you are considering entering a new business, you will want to understand how that industry operates. Following this methodology will ensure you cover all angles.

I Executive Summary

[Summarise the facts that are most relevant to the purpose of this analysis]

II What is the structure of this industry?

• What is the overall size and growth of this industry?
• What are the principle products/customer segments? [Tool: Product/Market matrix]
• What is the overall value chain? [Tool: Value chain map]
  • What is the concentration at each stage of the value chain? [Tool: Herfindahl index]
• Who are the major players in the industry?
  • Who are the customers?
    • What is the most useful needs-based segmentation?
    • What is the size, growth and profitability of each segment?
    • What does each segment want?
    • What are market shares by segment?
  • Who are the competitors? [See Analyse Competition for more ideas]
    • What has been the historic financial performance of competitors?
    • How does industry structure drive performance? [Tool: Structure/Conduct/Performance analysis]
    • What is competitors’ positioning? [Tool: competitive positioning map]
    • What are the market shares? [Tool: Market share map]
    • What are the different value propositions?
  • Who are the major suppliers? What is the ecosystem?
    • What are the major alliances/partnerships?
  • Who are the major distributors? What is the structure of route-to-market?
  • Who provides ancillary services?

III How do you make money in this industry?

• Is this a structurally attractive industry? [Tool: Porter’s 5 forces]
  • What are the Barriers to entry?
• Where is money being made in this industry? Why? [Tool: Profit Pool]
• What are the KPIs and profit drivers in this industry? [Tool: Profit Tree]
  • What are the cost drivers? What are the economies of scale? What type of scale matters?
• What is the right geographic scope – global, national or local markets?
• What are the historic Key Success Factors? [Tool: Key Success Factors]

IV How is this industry changing?

• What are the major events in the industry over the last 2 years?
  • What have been the major innovations?
• What are the major trends?
  • Customer trends?
    • Future segment growth rates?
    • How is the basis of competition changing?
    • How is communication with customers changing?
  • Competitive trends? Recent new entrants? M&A activity?
  • Technology progress? What are the key future milestones in product, process and marketing technology changes?
  • How are Channels changing?
  • What is the impact of future Regulation/Macro-economic context?
• What are the key future uncertainties in this industry? What are future industry scenarios?
• What are the implications of these changes for the industry?
  • What are the key common issues for industry players?