Hi, and welcome everybody to another of the Management 175
Instructional videos. Today, we're going to be looking at an Introduction to Industry Analysis.
Industry analysis is a very important skill to develop as a management student.
You need to develop the ability to effectively and efficiently
look at
industries...look at markets...
...to break down the important factors that are influencing it. This can help you target new
potential
consumers. This is a way to compete with other
competitor companies.
So within this context of the industry analysis...
we're going to look at the facets of information that you'll find when you start to look at these industry overviews and market report overviews.
Now once you start to look at the industry overview, you look at specifically
the market SHARE and market SIZE...
...how the industry operates...
In restaurants, it's all about new menu items and table turnover you want people to come in eat...
...finish and then get out so you can refill that table. In the pharmaceutical industry, you can...
deal with 'Are you...
...creating new drugs by spending a lot more on research and development?'
Or, 'Are you buying new companies that are creating new drugs to add to your portfolio of medications?'
Because as soon as your drugs go
generic, you're not going to make any more money on those so you've got to figure out what the process is...
within an industry...and figure out how it operates so that you can compete better.
What's affecting growth? Is it primarily consumer-related? Is it supplier related? Is it economy-related?
Who those major players are and you can see that the...
components list that we looked at previously, match up with the information you'll get out of an overview.
So you'll see things like market share...market size...
How big is the market and who are the major competitors and players? This table here shows trends in airline brands.
You can see some have been doing much better than others over this five year span.
I can then look at the actual size of the market both in numbers and percent...as
well as in dollar value. So you'll see a lot of different numbers and tables like that.
Now the other important factor within an
industry overview are the trends--and this is just a sample taken from a market report...
about the key trends in...
lodging and gaming and...
what is sort of affecting one or affecting the other in a different way?
Shows that there are a variety of ways to grow...
...large scale employment of service-oriented workers...and how supply and demand are being influenced.
Now we'll highlight, just briefly, that there are
industry classification
systems. There is the North American Classification System (NAICS) and the Standard Industrial Classification
System (SIC). Right now we're still sort of stuck between these two the...
SIC System is older and is not being updated anymore the NAICS system is newer and has better
granularity so that I can look at in industry like hotels and see that there are a couple of different
classification numbers to cubbyhole types of companies. So I can use these numbers to search
databases and search for lists of companies so that I know they're doing exactly the same thing.
We can then take a look at a couple of other examples...
Restaurants and the different types of restaurants as well as look at what the actual definition of this.
So these classification systems exist. And, like I said, help you cubbyhole types of companies...
...help you make sure that you're looking at and you know that you're looking at exactly the same thing.
So, within the internal competitive landscape...
This is what is happening within an industry.
What are the your competitors doing? How are you going to respond to what they're doing?
What are those influences sort of affecting the industry? Does geography matter?
And what's technology doing?
We can look at some quick examples
You know in this case. This is Jetblue Airways, and they're offering Spa products on their red eye flights.
This might entice customers to fly Jetblue more often than other airlines on their red eye flights.
How will other companies respond to this?
I can then look at key trends about how transportation might be increasing...what's happening to rail...
...or, I can look at other key points say in the airline industry.
How it's growing?
How the recession is hurting it now...if they're bouncing back or not.
So within these industry overviews and these reports and surveys that you'll be expected to look at and find...
you want to watch for not only tables of numbers showing you trends,
but in addition to those trends, those tables and numbers, you want to see what the reports are actually talking about and...
the key elements that you can pull out to...
strengthen your own...
recommendation or solution to a problem.
We'll jump back into the external situation. And, notoriously the external situation is all about the consumer.
Now, the consumer could be another business. You know this is a very generic
idea of consumer. If there's a lot of business to business activity for any given company in an industry...
those potential customers are their consumers.
But where are they spending their money? What's influencing their behavior?
Do they have specific preferences or habits that are affecting them?
We can look at something like indoor waterpark trends, broken down by
education and age in this table, and
we can see, you know, the large number of people who have...
visited an indoor waterpark in the last 12 months.
And then some other elements that we'll go into in a more specific tutorial about this database.
But there's lots of consumer level data out there...
highlighting what they're doing, and what their habits are.
We can look at the impact of global terrorism, and this is just a header from one of these reports that we looked at.
We can [then] jump over to
trends like last minute travel of any age group versus the 18 to 34 year-olds, because that might be your target market and...
often when you're doing an industry analysis, you're trying to figure out:
How are you influencing that target market? What is your target market?
And how can you better tap into their preferences and desires?
So, to wrap this up...
Analyzing an industry gives you a deeper understanding of the industry...the smaller markets underneath it
Who the major players are...and those internal and external influences?
So using the
table the key components as you look at an industry will be important when you're trying to analyze that industry...when you're trying to...
prepare for a job interview...
Because you don't want to just walk in and
know what's on your resume you want to be able to talk to the company that you're sitting down with and actually...
have a conversation about: What's working? What's not working? And how you might fit into their strategy much better.
As always, if you've got any questions, either email us or talk to us in class. Thanks very much.