Industry Analysis

The information needed for an industry analysis include) industry characteristics and trends, such as sales, number of firms, and growth rate (2) operating practices of the firms in the industry, including product mix, provided, barriers to entry, and geographical scope.

First, we need to identify the companies that comprise the industry and de descriptive information on the industry and its members. It is useful to examine industry structure beyond domestic market boundaries, since international industry development may affect regional, national, and international markets. For example, the Free Trade Agreement between Canada and the United States created a wave of cross-border consolidations. The two countries before free-trade were the world's largest trading partners, conducting some $150 billion in trade each year with each other. Further changes in industry structure and composition will continue in the future. Total exports by the United States should reach $1 trillion in 1998, with over half of sales to Europe, Canada, and Japan. General Motors is the top U.S. exporter. The industry definition is based on the organization conducting the market analysis. Thus, an automobile producer should look at the industry comprised of automobile producers. The industry identification is based on product similarity, location at the same 'level in the channel of distribution (e.g., manufacturer, distributor, retailer) and geo­graphical scope. The industry analysis includes:

• Industry size, growth, and composition. .

• Typical' marketing practices.

• Industry changes that are anticipated.

Industry strengths and weaknesses

• Strategic alliances among competitors.