How to Conduct Industry Analysis for MBA Assignments: Research Techniques and Data Sources

Businesses and analysts use industry analysis as a technique for market evaluation to comprehend the competitive dynamics of a certain industry. It aids in their understanding of the state of an industry, including statistics on supply and demand, the level of industry competition, the industry’s competitiveness with other emerging industries, the industry’s future prospects in light of technological advancements, the industry’s credit system, and the impact of external factors. 

An entrepreneur or corporation can use industry analysis as a tool to better understand their position in relation to other industry players. It provides them with a clear understanding of the current and potential state of the sector, enabling them to recognize both possibilities and risks. Understanding and taking full advantage of the distinctions between you and your industry rivals is essential to survival in this dynamic business climate. 

However, if any student is having hard time managing their academic projects, they can simply hire assignment help for MBA students.

Types of industry analysis

There are three commonly used and important methods of performing industry analysis. The three methods are:

• Competitive Forces Model (Porter’s 5 Forces)
• Broad Factors Analysis (PEST Analysis)
• SWOT Analysis

#1 Competitive Forces Model (Porter’s 5 Forces)

Michael Porter proposed one of the most well-known models for industry analysis, known as Porter’s 5 Forces, in his 1980 book “Competitive Strategy: Techniques for Analysing Industries and Competitors.”

Porter claims that a five forces analysis simplifies study and provides a true picture of the sector. In our Corporate & Business Strategy course, we cover these five forces and an additional force — power of complementary good/service providers.

1. Intensity of industry rivalry

The number of players in the market and their relative market shares give an accurate picture of how competitive the market is. All of the above listed elements have a direct impact on these. Lack of differentiation in products tends to add to the intensity of competition. High exit costs such as high fixed assets, government restrictions, labor unions, etc. also make the competitors fight the battle a little harder. You can even let online assignment help handle this task for you while you relax.

2. Threat of potential entrants

This indicates the ease with which new firms can enter the market of a particular industry. If it is easy to enter an industry, companies face the constant risk of new competitors. If the entry is difficult, whichever company enjoys little competitive advantage reaps the benefits for a longer period. Also, under difficult entry circumstances, companies face a constant set of competitors.

3. Bargaining power of suppliers

This is a reference to suppliers’ bargaining strength. The industry has significant bargaining leverage if it depends on a small number of suppliers. This can particularly affect small businesses because it directly influences the quality and the price of the final product.

4. Bargaining power of buyers

The complete opposite happens when the bargaining power lies with the customers. If consumers/buyers enjoy market power, they are in a position to negotiate lower prices, better quality, or additional services and discounts. This is the case in an industry with more competitors but with a single buyer constituting a large share of the industry’s sales.

5. Threat of substitute goods/services

The industry is always competing with another industry producing a similar substitute product (BAW, 2022). Hence, all firms in an industry have potential competitors from other industries. This takes a toll on their profitability because they are unable to charge exorbitant prices. Substitutes can take two forms – products with the same function/quality but lesser price, or products of the same price but of better quality or providing more utility.

#2 Broad Factors Analysis (PEST Analysis)

PEST, or Political, Economic, Social, and Technological analysis, is another name for the broad factors analysis. An effective framework for examining the external environment is PEST analysis.

Each of the four model components will be examined by an analyst in order to apply PEST as a method of industry analysis. These components include:

1. Political

Political factors that impact an industry include specific policies and regulations related to things like taxes, environmental regulation, tariffs, trade policies, labor laws, ease of doing business, and overall political stability.

2. Economic

The economic forces that have an impact include inflation, exchange rates (FX), interest rates, GDP growth rates, conditions in the capital markets (ability to access capital), etc.

3. Social

The social impact on an industry refers to trends among people and includes things such as population growth, demographics (age, gender, etc.), and trends in behavior such as health, fashion, and social movements.

4. Technological

The technological aspect of PEST analysis incorporates factors such as advancements and developments that change the way a business operates and the ways in which people live their lives (e.g., the advent of the internet).

#3 SWOT Analysis

Strengths, Weaknesses, Opportunities, and Threats make up a SWOT analysis. It may be an excellent method for condensing different industry factors and figuring out how they will affect the particular company.

Check it out to learn more about performing SWOT analysis.

1. Internal

Internal factors that already exist and have contributed to the current position and may continue to exist.

2. External

External factors are usually contingent events. Assess their importance based on the likelihood of them happening and their potential impact on the company. Also, consider whether management has the intention and ability to take advantage of the opportunity/avoid the threat.

Importance of Industry Analysis

Industry analysis, as a form of market assessment, is crucial because it helps a business understand market conditions. It helps them forecast demand and supply and, consequently, financial returns from the business. It indicates the competitiveness of the industry and costs associated with entering and exiting the industry. It is very important when planning a small business. Analysis helps to identify which stage an industry is currently in; whether it is still growing and there is scope to reap benefits or has reached its saturation point.

With a very detailed study of the industry, entrepreneurs can get a stronghold on the operations of the industry and may discover untapped opportunities. It is also important to understand that industry analysis is somewhat subjective and does not always guarantee success. It may happen that incorrect interpretation of data leads entrepreneurs to a wrong path or into making wrong decisions. Hence, it becomes important to collect data carefully.