Evaluating Company’s External

Environment
Salim Solaiman
Founder , Coach & Mentor : Liberate Learning & Consulting
Adjunct Faculty Sum 23, BRAC U

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 Looking Outside the Organization : Industry
Analysis
Definition of Industry
• An industry is the group of all firms those
are offering products/ services those are
close substitutes of each other
Definition of Industry Analysis
• This is business research that focuses on
the potential of industry
• It is a study of a specific industry to
understand the future outlook based on
past trend & its demand & supply
mechanics

Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
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 Elements of Industry Analysis
• Industry definition , size , trend
• Stage of life cycle of the industry
• Entry barriers of the industry
• Business models in place & the trends of the
same
• Companies in the market , their differentiations
• Customers, value propositions & trends of
same
• Five forces & trends
• Value chains & trends
• And any other analysis or research that mat
help you understand the A to Z of industry

Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
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 Methods of Industry Analysis
• Conduct background detailed research on
your industry & competitors to understand
your market (both primary & secondary
research)
• Collect data that helps to get answers
you are looking for
• Analyze data & try to get insights. Don’t
be happy with just visible facts
• Write your analysis in way a that explains
how it may impact your company
• Evaluate your own business through
those lenses

Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
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 5 Stages of Industry Life Cycle
1. Embryonic
2. Growth
3. Shakeout
4. Mature
5. Decline

https://www.iedunote.com/industry-life-cycle

Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
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Embryonic Stage of Industry
• Firms are in the introduction stage, busy
creating awareness about their product/service
and educating the customers.
• Competition in the industry is none or very low,
innovation is at maximum, and investment in
distribution channels and marketing is very
high.
• If a firm can develop proper distribution
channels, increase consumer awareness, and
provide a better quality product or service, then
the rest of the competition will see sales
numbers grow.
In short
• innovation is the highest,
• high focus on distribution channels,
• large investment in marketing to establish
consumer awareness.

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Growth Stage of Industry
• Strong firm’s growth rate of sales and market
share accelerates. A standard for the product is
imposed or agreed upon by the government and
other standard-setting agencies.
• The innovation process is looking for ways to
improve the existing product by creating a better
manufacturing process, delivery method, and
more.
• Firms try to optimize their marketing, distribution
channel, and product to maximize the market
share and reduce competition.
In short
• sales rate increases for strong firms,
• market share grows,
• industry standards are set,
• innovation is for making existing products better.

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 Shakeout Stage of Industry
• During the shakeout stage of the cycle, the percentage
growth rate of industry declines. Firms face competition for
market share from other firms.
• Firms that are weak in their innovation, marketing, customer
support, product quality, and after-sales support; start to lose
market share and eventually are forced out of the industry.
• Strong firms start to gain more market share.
• Fierce battle based on price wars starts; capacity within the
industry grows, but the demand does not keep pace.
• Unviable organizations lose out in this phase. Merger ,
acquisition happens
In short
• Strong firms win weak phases out,
• Competition increases and companies use marketing and
pricing techniques to grow among the competition.

Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
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 Mature Stage of Industry
• Market reached the maximum size where industry
growth is likely zero or negative.
• Companies that are strong in policy and sales
numbers survive and totally dominate the
marketplace. The market situation basically
becomes an oligopoly where only a few large firms
exist.
• Sales numbers are due to replacement, repeat
purchases, there is no other alternative, or people
looking to buy older generation products to save a
few bucks.
In short
• Consumer awareness is maximum,
• The firm enjoys an oligopoly market,
• Alternatives of the product are little or no,
• Industry growth is flat.
Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
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 Decline Stage of Industry
• At this stage, the sales number drops to
very low. This drop-in sale could be
because of the internal and external
environments; such as;
• A new alternative product has immersed,
• Rules and regulations changes,
• Issues with the supply of raw materials,
• Increased level of competition from other
firms and more.
• In the decline stage; a firm has four
strategic options; Exit, Harvest, Maintain,
and Consolidate.

Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
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Entry Barriers of An Industry

https://www.investopedia.com/terms/b/barrierstoentry.asp
https://fourweekmba.com/barriers-to-entry/

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 Types of Entry Barriers

https://www.driveyoursuccess.com/2012/08/market-entry-barriers-six-areas-that- https://www.wallstreetmojo.com/barriers-to-entry/
can-sink-a-new-business-venture.html

Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
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 Advantages & Disadvantages of Entry
Barrier
Advantages Disadvantages
• Barriers to entry prevent new entrants from entering the
market, producing cheap and inferior products. • High entry costs discourage
• They protect the existing market players from
safeguarding their profits and revenue generation. new entrants to the market,
• Barriers to entry help current players concentrate on
research and development rather than fighting
thereby daunting the
competition with the new players.
• The government lays down regulations for players in a
innovations.
• Monopoly prevails when new
few industries like transport to reduce traffic, pollution,
etc., telecom industries to reduce
heavy infrastructure usage, land, etc.
• They aid the existence of a monopoly and let the entrants are discouraged,
existing players enjoy market power and market share.
• It gives the players a competitive edge.
leading to dominance over
• It is also advantageous to consumers because they can
receive high-quality products at lower prices due to the
the consumers.
competition.

Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
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 5 Key Success Factors Those are
common to almost all Industry
1. Strategic Focus
2. People
3. Operations
4. Marketing
5. Finance

https://ca.indeed.com/career-advice/career-development/key-success-
factors-examples

Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
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 Points to be Covered in Industry Analysis
Industry Analysis Should Include
I. Economic features of the industry like market
size, number of customers and sellers,
technology, nature of standardization of product,
market growth potential, prospect of making
profit etc.
II. Strength of competition and competitive
pressures.
III. Major driving forces in the industry that cause
pressures for change.
IV. Financial and competitive positions of the
competitors in the marketplace.
V. Strategies undertaken by the competitors.
VI. Industry’s key success factors such as design in
garments industry.
VII. Attractiveness of the industry in terms of growth
prospect, degree of uncertainty in the future.

Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
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 Benefit of Industry Analysis
1. Identifying and selecting the company’s arena by defining
its industry and served markets.
2. Identifying business opportunities and uncovering niche
markets.
3. Providing a benchmark for evaluating the company
relative to the competitors and, based on it, developing
skills and capabilities necessary for success.
4. Shortening the company’s response time to competitors’
moves.
5. Restricting or preempting competitors’ moves.
6. Encouraging organizational development through
frequent interactions among the executives during the
analysis.
7. Helping the company to gain a competitive advantage
through identifying any area where the company holds a
significant advantage over its rivals.
8. Enhancing organizational learning by exposing managers
to the ideas and actions of competitors
9. Enables to get invaluable insights those are important to
develop strategy

Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
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 Competitors Analysis : Porter’s 5 Forces
Crucial In Shakeout Phase Onwards

https://www.business-to-you.com/porters-five-forces/
Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
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 Competitive Analysis Template
Using Scale 1(Worst) to 10 (Best)

https://www.bdc.ca/en/articles-tools/marketing-sales-export/marketing/how-evaluate-competition

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Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
 PESTLE The Key Tool To Scan Macro
Environment

https://www.wallstreetmojo.com/macro-environment/ https://www.oxfordlearninglab.com/p/pestle-macro-environmental-
analysis

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Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
 SWOT A Great Tool That Can Be Used Time &
Again From Different Perspective

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Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU
 Key Questions Need To Have Answers From
Industry & Competitive Analysis
1. In which stage of life cycle the industry is ?
2. What are the driving forces of industry & what impact they will have on
competitive intensity & profitability ?
3. How strong are the industry competitive forces?
4. Does the industry outlook conducive for good profitability ?
5. What are the key success factors of the industry ?
6. What market positions do industry players occupy & who are strongly
positioned , who are not ?
7. What strategic moves industry rivals likely to make next ?

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Salim Solaiman/Founder, Coach & Mentor : Liberate Learning & Consulting / Adjunct Faculty Sum 23, BRACU