Introduction to Industry and Company Analysis
Requirement:
1. Provide an overview/introduction to the industry and companies you have selected.
2. Provide a list of information sources (please be specific).
1. Framework, concepts and theories to be considered:
Products and/or Services Supplied (principal business activity and other business activities)
Business-Cycle Sensitivities
Industry Classification (Classifying Companies into Industries)
Constructing a Peer Group
· Examine commercial classification systems
· Review the subject company’s annual report for a discussion of the competitive environment
· Review competitors’ annual reports to identify other potential comparable companies
“Porter’s five forces” analysis (threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, intensity of rivalry among existing competitors).
Price competition (Barriers to entry, Industry concentration, Industry capacity, Market share stability).
Competitive strategies (Low-cost strategy and Product/service differentiation strategy).
Using the life-cycle model (embryonic; growth; shakeout; mature; and decline).
External influences on industry growth, profitability, and risk (
· Macroeconomic influences include the level of production, interest rates, availability of credit, and inflation
· Technological influences include new products that change how companies do business
· Demographic influences include the distribution of consumers by age and gender
· Governmental influences include tax rates and regulations
· Social influences include how people work and spend.
A checklist for company analysis (please see Exhibit 8 for details):
· corporate profile;
· industry characteristics;
· demand for products/services;
· supply of products/services; pricing; and
· financial ratios.
2. Information sources include:
· economic publications
· business publications
· industry and trade associations
· company disclosures, and
· The companies’ competitors, suppliers, and customers
