DOMINANT ECONOMIC FEATURES OF THE INDUSTRY

 Dominant Economic Features of the Industry
Industries differ significantly in their basic character and structure. Industry and competitive analysis begins with an overview of the industry’s dominant economic features. Industry is “a group of firms whose products have same and similar attributes such that they compete for the same buyers.” The factors to be considered in profiling an industry’s economic features are fairly standard and are given as follows:

•  Size and nature of market. 
•  Scope of competitive rivalry (local, regional, national, international, or global). 
•  Market growth rate and position in the business life (early development, rapid growth and takeoff, early maturity, saturation and stagnation, decline). 
• Number of rivals and their relative market share. 
•  The number of buyers and their relative sizes. Whether and to what extent industry rivals have integrated backward and/or forward. 
•  The types of distribution channels used to access consumers. 
•  The pace of technological change in both production process innovation and new product introductions. 
•  Whether the products and services of rival firms are highly differentiated, weakly differentiated, or essentially identical? 
•  Whether organisation can realize economies of scale in purchasing, manufacturing, transportation, marketing, or advertising?
•  Whether key industry participants are clustered in a particular location, for example, lock industry in Aligarh. Saris and diamonds in Surat, information technology in Bangalore. Similarly, there is also concentration of business in different countries on account of geographical and other reasons? 
• Whether certain industry activities are characterized by strong learning and experience effects (“learning by doing”) such that unit costs decline as cumulative output grows? 
•  Whether high rates of capacity utilization are crucial to achieving low-cost production efficiency? 
•  Capital requirements and the ease of entry and exit. 
•  Whether industry profitability is above/below par?

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