Posted: December 23rd, 2015

Industrial Analysis – Toy Industry

The industry analysis project should start with the choice of an industry for the team. Then, you search the databases available on our library website for analyst report on the industry. If you can get Middle East specific data, you can choose to carry out the analysis for the Middle East. If not, use ‘global’ in your search terms to obtain report on global industry instead. Any time during the project, if you have a doubt, please feel free to contact me. I will either call you (if you gave me a phone number) or send my response by email.
Each team member should read a different analyst’s report so the team’s effort clearly reflects a synthesis of different perspective. If you just read one analyst’s perspective and summarized, you will not have the benefit of different sources and diverse view on the industry. I would expect clear allocation of responsibilities among team members. This should be in an email to me before the start of reading and understanding the industry analysis report. You need to keep the record of where the analyst’s report was published.
The following elements should be presented in your report: Industry structural characteristics:
The size of the industry in terms of revenue and volume (where possible) should be presented. For example, if you are looking petroleum refining industry, you should be able to obtain the size in revenue and million barrels of oil refined per day (since per year would be in trillions of drums per year!). Whereas, if you looked at cell phone (or mobile phone) manufacturing industry, you may just be able to obtain the size in revenue terms since it will be odd aggregating different types of phone though you may be able to find so many handsets to be sold per annum.
The growth rate of the industry should be presented next. If analysts do not have the same number since it is a prediction and not what happened in the past, you need to apply your idea of the industry (after discussing among the team) and present one figure and not all the figures. You should justify the growth rate you present.
The concentration ratio (preferably 4 firm) should be presented next. Again, there could be some disparity amongst analysts and you should resolve them.
The presence or absence of entry barrier should be discussed next. Again, not analysts may cover this but you need to understand the industry to make an informed judgment.
The presence or absence of exit barrier should be discussed next. Again, not analysts may cover this but you need to understand the industry to make an informed judgment.
Five forces a la Porter
Then, you should discuss in depth Porter’s five forces. I would prefer the following order: The intensity of rivalry first, the threat of new entry next, the threat of substitutes the third, the bargaining power of supplier next and the bargaining power of customers last. Again, if analysts’ interpretations differ, you need to resolve such discrepancies by discussing among yourselves and you need my input, please let me know through email.
The industry analysis report
The report should consist of four sections which contain as many as 12 paragraphs. The first paragraph is the introduction where clearly you introduce what you intend to do and what conclusion you would arrive at (e.g., carry out an industry analysis based on industry analysts’ reports and assess the competitive nature of the industry). You should also indicate how you will present the information – first through the sixth (as I have presented above).
The second section should be on the topics mentioned in your introduction. In one paragraph, you should discuss only one topic (idea). That’s why I have suggested that there would be twelve paragraphs though I have only six paragraphs above on what should be covered. I have covered five forces a la Porter in one paragraph whereas you will cover them in five paragraphs.
The last paragraph (which is the third section) should be on your conclusion based on the industry analysis carried out above on the nature of competitiveness and whether or not the industry your team studied is an attractive industry (i.e., highly profitable and worth exploring investing in this industry) or not.