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Industrial Economics - Essay Example
Industry analysis is a means that smooth the progress of a company's perception of its place comparative to other companies that create analogous and equivalent products or services. Considering the forces at work in on the whole industry is a vital module of effectual and successful strategic planning…
Kenneth J. Cook wrote, "Many small business owners and executives consider themselves at worst victims, and at best observers of what goes on in their industry. They sometimes fail to perceive that understanding your industry directly impacts your ability to succeed. Understanding your industry and anticipating its future trends and directions gives you the knowledge you need to react and control your portion of that industry. However, your analysis of this is significant only in a relative sense. Since both you and your competitors are in the same industry, the key is in finding the differing abilities between you and the competition in dealing with the industry forces that impact you. If you can identify abilities you have that are superior to competitors, you can use that ability to establish a competitive advantage." (Cook, 1995)
An industry analysis consists of three most key fundamentals: the causal forces at work in the industry; the on the whole magnetism of the industry; and the critical factors that establish a company's success within the industry. In 1980, Michael E. Porter developed a leading model for analyzing the arrangement of industries.
A complete industry analysis necessitates a business owner to make an objective examination of the underlying forces, attractiveness, and success factors that establish the composition of the industry. ...