Industry Analysis Assignment Example | Topics and Well Written Essays - 500 words

Industry Analysis - Assignment Example n as Porter’s Five Forces Analysis, pertains to a framework for the analysis of the industry and the development of the business strategy given in 1979 by Michael E. Porter (Porter, 2008). It comprises of the five forces which elaborate upon the competitive intensity and thus, determine the attractiveness of a market. The five elements of the industry analysis are explained below: The entry of the new firms into market can be blocked in many ways. For instance, low-cost manufacturing or technological advancements can be few of the many barriers for the businesses. Besides this, there are political barriers which block the entry of businesses into the international markets (Marvin, 1987). For example, the bagel industry in US experienced the flood of new companies entering the industry in 1996, which caused a sharp decline in the profit aspect of the industry. This diminished the attractiveness of the industry. One of the other features of the industry analysis includes the barriers to exit. It comprises of the legal obstacles, or the strategic significance which stops the business from leaving a market at the proper time. An example can be the case of European oil industry. The exit barriers in the industry have been the outcome of environmental cleanup, high costs of dismantles refineries, and employee layoffs. Due to these factors, a very low level of profits exists which is the result of a persistent projection of extra capacity. In an industry, the businesses operate in two types of markets: the market for outputs and the market for inputs. The transactions in both markets take place which are a source of value-creation for both suppliers and buyers. There are large customer groups which are equipped with the power to negotiate on better terms of trade and bargain on price. Moreover, they can switch the suppliers thus, increasing the market competitiveness. For example, in a pharmaceutical industry, the buying power is low. Due to the patent protection,