How to Analyze an Industry

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The role played by a thorough analysis of an industry cannot be overemphasized. From the analysis of the industry is where the business strategies of a company are being formulated.

It can be seen then that analysis of the industry is a key factor for a business to thrive in the industry it belongs to. Read and learn more.

When one starts a business, and this means entering a certain industry, the role played by analysis of that industry is important. The reason for the importance of a business or industry analysis is this is what the entrepreneur will use to formulate business strategies that will give his own business an edge in the competition. Most businessmen who are not adept in the intricacies of a business venture most of times forget to give the analysis of the industry a chance to be used as a tool for his own business venture.

There are many ways to analyze an industry. There are methods or analysis designs such as Porter’s Five Forces, Boston Consulting Group Matrix, Quantitative Strategic Planning Matrix, Internal Factor Evaluation Matrix (IFE) and Internal-External (IE) Matrix to name a few. But for those who want to analyze the industry in a traditional and most common way, there is the use of SWOT Matrix. S stands for Strength, W stands for weaknesses, O stands for Opportunities and T for threats.

As a cursory understanding of how to analyze an industry, below presents some important information:

Pinpoint the Industry

This of course is a given statement. When you want to analyze an industry you should know what industry your business belongs to.


Before plunging for an in-depth analysis of an industry, the importance of research is indispensable. One must do the gathering and collecting of industry reports and information from the previous years, and one should have at least have an idea who are the top five players in the industry. Knowing the big five players in the industry will give the entrepreneur an idea of what are the internal and external trends in the industry.

Development of the Analysis: The External Industry Factors

When one has already gathered and collected data, and industry reports about the industry one is engaged in, one then has to screen the reports for opportunities and threats according to SWOT Matrix. Opportunities are known to be external industry factors, the same way with Threats.

Opportunities and Threats

One should list down all the Opportunities that are present in the industry. If one for example knows that there is chance to grow one’s operation in business worldwide because of China’s opening its market, then one can list it as: China expansion. Likewise, this can also be done with Threats.

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