3-1
Industry Analysis
Chapter 03
McGraw-Hill/Irwin
Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Category Attractiveness Summary
3-3
Aggregate Category Factors






Category size
Category growth
Stage in product life cycle
Sales cyclicity
Seasonality
Profits
3-4
Attractiveness of Market Variables
3-5
Category Attractiveness over the
Product Life Cycle
3-6
Category Factors






Threat of new entrants
Bargaining power of buyers
Bargaining power of suppliers
Current category rivalry
Pressure from substitutes
Category capacity
3-7
Factors in Assessing the Structure
of Industries
 Threat of new entrants




Bargaining power of buyers
Bargaining power of suppliers
Amount of intracategory rivalry
Threat of substitute products or
services
3-8
Threat of new entrants





Economies of Scale
Product Differentiation
Capital Requirements
Switching Costs
Distribution
3-9
Buyer Bargaining Power is High
When:
 Product bought is a large
percentage of the buyer’s cost.
 Product bought is undifferentiated.
 Buyers earn low profits.
 Buyer threatens to backward
integrate.
 Buyer has full information.
 Substitutes exist for the seller’s
product or service.
3-10
Supplier Bargaining Power is High
When:
 Suppliers are highly concentrated,
that is, dominated by a few firms.
 There is no substitute for the
product supplied.
 Supplier has differentiated its
product or built in switching costs.
 Supply is limited.
3-11
Major Characteristics of Categories
Exhibiting Intensive Rivalries





Many or balanced competitors
Slow growth
High fixed costs
Lack of product differentiation
Personal rivalries
3-12
Impact of Category Factors on
Attractiveness
3-13
Environmental Factors





Technological
Political
Economic
Regulatory
Social
3-14
Typology of Technical Developments
3-15
Conceptualizing Political Risks
3-16
Projected Population Change in the
U.S.: 2000–2010
3-17
The 10 Themes of N-Gen Culture
3-18
Evidence of Inequality, as Cited by
Federal Reserve Chairman Ben
Bernanke
3-19
Share of Food Purchases
3-20
Category Attractiveness: Retail Coffee
3-21
Category Attractiveness: MP3 Phones
3-22