Strategic analysis of industry

Sectoral analysis investigates competitive environment and evaluate attractiveness of the sector where the company operates or in which it prepares to enter.

The scope of sectoral analysis

Sectoral analysis has to answer the following questions:

• What is the attractiveness of the sector for a company or a potential investor, what are the opportunities and threats for business development in a particular sector,
• which sectors produce better or worse growth opportunities, what sectors allows for a synergistic effect, how to shape the future portfolio of operations to reduce the risk and increase the effects of strategy,
• what new attractive sectors might in the future provide the enterprise with new fields of operations and what is the cost of entry to these sectors.

Others specify scope of sectoral analysis in broader terms. Sectoral analysis synthesizes the most important components of the environment, and above all, market, competitive, legal, economic, and social and political issues. Also included in the sectoral analysis is evaluation of enterprise resources that belong to a given sector.

Sectoral analysis methods

The main methods used in this area are:

• strategic gap analysis
• Porter analysis of five forces
• weighted scoring method in the assessment of attractiveness of the sector,
• map of strategic groups,
• the experience curve.

See also:

• Strategic portfolio analysis

Strategic analysis of industry — recommended articles

ASTRA analysis — Company situation analysis — Strategic analysis — Experience curve — Near environment — Business portfolio analysis — McKinsey matrix — External analysis — Threat of new entrants

References

• Fleisher, C. S., & Bensoussan, B. E. (2003). Strategic and competitive analysis: methods and techniques for analyzing business competition (p. 457). Upper Saddle River, NJ: Prentice Hall.