Industry Parameters | Automobile Sector | IT Services | Steel Sector |
Demand: Why would there be a continued demand for the product / service |
|
|
|
Key supply drivers |
|
|
|
Degree / nature of change |
|
|
|
Predictability of business |
|
|
|
Cyclicality? |
|
|
|
Ability to increase price ahead of inflation (Pricing power) |
|
|
|
Some sort of monoploy or Oligopoly |
|
|
|
Does the company have a recurring revenue stream |
|
|
|
Does the business have franchise / brands or is it commodity |
|
|
|
Does the industry enjoy high growth rates ? For how long |
|
|
|
Porter’s 5 forces for industry attractiveness | Automobile Sector | IT Services | Steel Sector |
Industry attractiveness summary and reasons for low high returns |
|
|
|
ENTRY BARRIER – No. 1 Factor deciding industry profitability |
|
|
|
Asset specificity |
|
|
|
Economies of Scale |
|
|
|
Proprietary Product difference |
|
|
|
Brand Identity |
|
|
|
Switching cost |
|
|
|
Capital Requirement |
|
|
|
Distribution strength |
|
|
|
Cost Advantage |
|
|
|
Government Policy |
|
|
|
Expected Retaliation |
|
|
|
Production scale |
|
|
|
Anticipated payoff for new entrant |
|
|
|
Precommitment contracts |
|
|
|
Learning curve barriers |
|
|
|
Network effect advantages of incumbents |
|
|
|
No. of competitors – Monopoly / ologopoly or intense competition (concentration ratio ) |
|
|
|
RIVALRY DETERMINANT |
|
|
|
Industry growth |
|
|
|
Fixed cost / value added |
|
|
|
Intermittent overcapacity |
|
|
|
Product difference |
|
|
|
Informational complexity |
|
|
|
Exit Barrier |
|
|
|
Demand variability |
|
|
|
SUPPLIER POWER |
|
|
|
Differentiation of input |
|
|
|
Switching cost of supplier |
|
|
|
Presence of substitute |
|
|
|
Supplier Concentration |
|
|
|
Imp of volume to supplier |
|
|
|
Cost relative to total purchase |
|
|
|
Threat of forward v/s Backward integration |
|
|
|
BUYER POWER |
|
|
|
Buyer conc. v/s firm concentration |
|
|
|
Buyer volume |
|
|
|
Buyer switching cost |
|
|
|
Buyer information |
|
|
|
Ability to integrate backward |
|
|
|
Substitute product |
|
|
|
Price sensitivity |
|
| |
Price / Total Purchase |
|
| |
Product difference |
|
| |
Switching cost |
|
| |
Buyer propensity to Substitute |
|
| |
Intangible assets |
|
|
|