Running Head: INDUSTRY ANALYSIS
Albert Einstein said that “the environment is everything that is not me” ("PEST and
SWOT Analysis for Business Industry & Competitive Analysis", 2018). Therefore, just it is
essential for us to be aware and watchful of our environment so should we be conversant with
our business’s environment. The trends, the market size, competitors and much more are some of
the factors that need to be analyzed in a business environment ("PEST and SWOT Analysis for
Business Industry & Competitive Analysis", 2018). In this paper, I shall explore the tools best fit
to make such an analysis and most precisely determine the competitive dynamics of the industry.
There are several business tools that are majorly used for this purpose. The SWOT
analyses, PEST analysis, and Competitive Forces Model are some of the widely used methods of
industry analysis today. Other techniques include organic ranking data, Google ads, keyword
research, back-links, content ideas, influencer and trending topics, email, social media, Alexa (an
Amazon) and many others ("13 Competitor Analysis Tools You Need to Stay Ahead [2018
Update]", 2018).
Now let us focus on the majorly used analytical tools, SWOT and PEST. SWOT is an
abbreviation of Strengths, Weaknesses, Opportunities, and Threats ("Industry Analysis - Top 3
Methods to Assess and Analyze an Industry", 2018). With that, you break the industry into the
four classes and compare it against the competitor. Strengths are the factors that give your
enterprise an advantage when compared to its competitors. Weaknesses are the factors in which
your company is disadvantaged relative to its competitors. Opportunities are the fundamentals
that found in the external environment of your business that increases the possibility of success
of your enterprise’s strategies thus growing benefits. Threats, on the other hand, are elements
INDUSTRY ANALYSIS
2
found that endanger the profitability and the integrity of the company and they are also found in
the external environment of the business. In this analysis, it should be known that external
factors are unexpected occurrences whose probability of happening has been projected as well as
the magnitude of their effect to the company ("Industry Analysis - Top 3 Methods to Assess and
Analyze an Industry", 2018).
Let’s now take a look at PEST which is also known as Broad Factors Analysis. The
abbreviation stands for Political, Economic, Social and Technological and it most suits in
external elements analysis ("Industry Analysis - Top 3 Methods to Assess and Analyze an
Industry", 2018). When analyzing Political factors, you consider regulations and policies related
to labor laws, taxes and tariffs, environmental regulations, trade policies and the country’s
political stability as a whole. Secondly, Economic factors are forces that affect businesses like
the growth rates of GDP, interest rates, exchange rates, inflation as well as the state of the capital
market. Social factors are now the effects of trends like demographics, behaviors like fashion and
health as well as the growth of the population. Technological results, on the other hand, are
developments and advancements that affect the operations of business and way of life ("Industry
Analysis - Top 3 Methods to Assess and Analyze an Industry", 2018).
SWOT analysis is best in analyzing the business since it gives us a better understanding
of the company by addressing its strengths and weaknesses (Frue, 2018). By knowing this, we
can capitalize on our opportunities and make use of our powers maximally to maximize
profitability. Another benefit of SWOT analysis is the knowledge of future opportunities and
threats (Frue, 2018). As a result, the business can formulate appropriate goals and the best
manner of reaching them. PEST analysis, on the other hand, is cost useful. The most significant
investment in this analysis is time since it requires research and an understanding of trends. This
INDUSTRY ANALYSIS
3
analysis also gives business owners a deeper understanding of the external indirect environment
like the law which is significantly impactful to the business undertakings ("Benefits and
limitations of SWOT analysis | Business Queensland", 2018). It also develops the alertness of the
business owners thus increasing the chances of opportunity exploitation ("Benefits and
limitations of SWOT analysis | Business Queensland", 2018). Business opportunities will always
be in the external environment, and since this analysis gives you a deeper understanding of this
environment, it is easy to spot these opportunities. With all this information, our business plan is
going to have a broader and more precise model.
INDUSTRY ANALYSIS
4
References
PEST and SWOT Analysis for Business Industry & Competitive Analysis. (2018). Retrieved
from https://www.shopify.com/guides/businessplan/the-industry
Industry Analysis - Top 3 Methods to Assess and Analyze an Industry. (2018). Retrieved from
https://corporatefinanceinstitute.com/resources/knowledge/strategy/industry-analysismethods/
13 Competitor Analysis Tools You Need to Stay Ahead [2018 Update]. (2018). Retrieved from
https://engeniusweb.com/articles/5-competitor-analysis-tools/
Frue, K. (2018). The Advantages of PESTLE Analysis. Retrieved from
http://pestleanalysis.com/advantages-of-pestle-analysis/
Benefits and limitations of SWOT analysis | Business Queensland. (2018). Retrieved from
https://www.business.qld.gov.au/starting-business/planning/market-customerresearch/swot-analysis/benefits-limitations
Company Biography
In January of 2002, John Ferrer and his wife Deborah started their own corporation, a large custom furniture
manufacturer located in Boston, MA. Their initial accounts were in the Northeastern region of the United States,
and they annually observed a constant profit increase. By March of 2006, they were able to grow the company
enough to go from five distribution and manufacturing plants to 10 to allow shipping to 48 states. Although they
have two retail stores, one located in Phoenix and one in Boston, their primary source of revenue is online catalog
sales. They have 10 manufacturing plants and distribution centers throughout the country.
John and Deborah’s corporation is known throughout the industry for its exceptional customer service and
superior quality. The contemporary designs lend themselves to a younger market, and the customer base is
predominantly upper-middle class because it is one of the highest priced furniture companies in the market. Part
of the appeal of John and Deborah’s brand is their consistent involvement with the local communities to create
green gardens. They have also been a major contributor to organizations that build houses for people in need.
One of their primary strengths is their vertical integration. They have a team of in-house designers saving the
company design costs and allowing the flexibility to rapidly change designs as the market changes. Their products
have been featured on several prominent home design and gardening shows and have been endorsed by several
well-known designers.
Because of the recent housing market sales decline (8% from 2005–2006), home renovations have slowed
significantly. This has impacted the amount of furniture and fixture sales and continues to impact revenue.
Furniture sales in the United States have decreased significantly, and John and Deborah have recently been
discussing the possibility of global expansion.
Another potential threat to their company is that many higher-end brands have been marketing aggressively and
creating lines for popular retail stores. These allow the lower-income consumers to have access to high-end brands
at a much lower price point. So far, these lines have been incredibly successful and have significantly increased
profits for competitors. Many of these competitors have also had great success in the global marketplace with
these lower cost replicas.
John and Deborah know that it is time to seriously consider expanding their business. They want to be able to
make it through the economic crisis and rely on other ways to increase sales and business. They are open to
looking into the global market, but they want to be sure that it is the right move for the business. They have
requested an advisory board meeting next month in which you will present the global marketing strategy. As the
market strategist, you will play a key role in helping the board decide if this is the right move for the company.
The Problem
You are sitting in Deborah Ferrer’s office. After the customary small talk, Deborah sits forward and states, “I am
very impressed with the work that you have done as the strategic marketing manager. Since John and I started this
company in Boston, we have seen continuous growth, but nothing like what we have seen since you started.
However, the housing market is really starting to impact our profits. This last quarter’s numbers were not looking
good.”
You reply, “The crisis has really hit us hard. We have some stiff competition, too, with the other brands creating
retail knock-offs.”
She counters, “We’ve had great success with your strategies in the domestic markets, but we do need to think of a
new approach and strategy. I have complete faith in your abilities to take this company exactly where it needs to
go. I must say that we are really counting on you, and I know that you will follow through.”
“I will make sure that we do well. Do you have any new projects for me?” you ask.
Deborah smiles and says, “You know me well. I do have a new project for you. I sent you an e-mail just before our
meeting. I’m curious if expanding in a global market would be a good move for our company. I would like you to
look into this for me.”
“Our team is definitely up for the challenge,” you say with enthusiasm.
Deborah shakes hands with you warmly, and you make your way out of the meeting. As you drive out of the
parking garage, you think about your success with the company. You cannot wait to get started.
Unit 2 Discussion Board
The tools to use in planning a global expansion are numerous. A few of them include Benchmarking, SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats), TOWS Matrix
(taking the next step using SWOT information), Porter's Five Forces, PEST (Political, Economic, Social and Technological), Game Theory, Competitor Analysis, Segmentation Analysis,
and Strategic Groups. (M.U.S.E., 2018).
Knowing that we have selected Canada and we are heading into some strong competition, we will be selecting Benchmarking and Porter's Five Forces to dig a little deeper. Benchmarking
permits a company to analyze competitors in a way that extracts useful information to draw comparisons against. (M.U.S.E, 2018). This is done by either establishing a direct channel
with a prominent competitor to have an information sharing meeting about processes, or by reviewing case studies or other pieces of open source information that may be available.
(M.U.S.E., 2018). The Porter's Five Forces model will permit us to analyze our situation from multiple perspectives, ensuring a thorough understanding is the outcome. (M.U.S.E.,
2018). With this model, one will analyze all competitive forces that the company will face, whether it be from suppliers, customers, other firms which are dis-similar but could offer
products to replace yours, potential new market entrants and rivalry between industry peers. (McGraw-Hill Create, 2018).
I believe benchmarking is a valuable tool to use because it permits one to harvest data about best practices employed by your competitors. It could be that a competitor has a competency
about a certain process that you are lacking, and through a benchmarking exercise, that discovery could be turned into improvements to be implemented at your company. By bringing
together a team of people from two different companies to engage in benchmarking discussions, there is no telling what may result. It is likely that each company walks away with
improvements that they would not have been able to make on their own. Benchmarking will also allow one to develop a list of metrics for ongoing monitoring. Let's say for example that
industry averages for changeover time measured in labor hours per output piece are set at a certain level. But through benchmarking with the industry leading company, you realize their
rate is 20% better than industry averages. Management will now be able to set internal goals that are not only realistic (because you know your competitor is doing those rates) but also
pushes your own company to do better than industry average. This process will certainly delve into the details on how they manage to achieve numbers that were previously thought to be
unobtainable.
The Porter's Five Forces model is valuable simply because of its comprehensive nature. Competition from five different sources are considered. Within each source of competition, a list
of factors is studied, which include (1) size and concentration, (2) growth characteristics, (3) switching costs, (4) product differentiation, (5) forward or backward integration, (6) exit
barriers, and (7) importance. (M.U.S.E., 2018). Having a model to follow that prompts one to think critically about a multitude of factors is one that will yield rich results.
We want to go into this process of global expansion with our eyes wide open and reduce the surprises that pop up that could cause potential harm. This is one of the primary benefits of
going through analysis exercises like this. Information yielded from these processes will aide in creation of our plan and permit us to create contingencies for anything we identify as a
potential threat. As Canada is the country we are seeking as an expansion target, it would also be useful to perform similar analysis on your second and third choices for expansion. This
permits leadership to confirm that they are making the right choice on setting their direction on Canada. Conversely, however, it could serve as an indicator that another directions would
better serve the company.
The next step in our strategic marketing plan is to determine what tools to utilize to conduct an analysis of the industry and competitors. This analysis will provide us with a starting point in
developing our strategic plan. The best tools that I have found is to conduct an Industry analysis and a PESTEL Analysis.
Industry analysis, also known as Porter's Five Forces Analysis, this framework is comprised of five competitive forces. The first competitive force is industry rivalry, this looks at competition and the
level of intensity that can lead to potentially reduced profit (Mars, 2014). The second competitive force is the threat of substitutes, this looks at the availability of substitute products which will limit
our ability to raise prices. The third competitive force is bargaining power of buyers, it looks at high level or powerful buyers that will have a extremely high impact on the prices of our product
(Mars, 2014). The fourth competitive force is the bargaining power of suppliers, this looks at how suppliers can affect prices and limit profit. The fifth and final competitive force is to look into
barriers to entering the market, these barriers can act as a deterrent against new competitors (Mars, 2014). All of these competitive forces have a significant and direct impact on our marketing
plan.
In the PESTEL Analysis is a tool that is used to monitor the marketing environmental factors that can have a direct effect on an organization. This analysis is used to identify threats and weaknesses
in the marketing plan. The PESTEL analysis looks at six factors that can affect marketing decisions; political, economic, social, technological, environmental and legal (Professional Academy, n.d.). All
of these factors are crucial in making a decision to move into the global arena.
These analysis tools are the best ways to analyze the market due to the comprehensive nature of the specific steps, each of these tools provide for each potential element in analyzing the potential
success of our strategic marketing plan to ensure a successful entry into the country's market (Professional Academy, n.d.). I plan to utilize these tools in the development of our strategic
marketing plan to determine the potential strengths and weaknesses of our location in regards to the product we are offering. These tools will allow to develop plans to remove potential barriers
during this expansion that could otherwise cause for failure. These tools will allow for a strategic plan in barrier removal and allow for our ultimate success and profit.
References
MaRS. (2014, January 6). Industry analysis and competition: Porter's five forces. Retrieved from MaRS: https://www.marsdd.com/mars-library/industry-analysis-and-competition-using-porters-five-
forces/
Professional Academy. (n.d.). MARKETING THEORIES - PESTEL ANALYSIS. Retrieved from Professional Academy: https://www.professionalacademy.com/blogs-and-advice/marketing-theories---
pestel-analysis
The best tools to use in this situation
To begin with you would need to have a sufficient reasoning idea before applying a global strategy for the organization. There's a lot of reasoning theories that are put into play to make sure that globalizing will be positive and adequate. There are
various tools that could be used for the company but the ones that would be useful would be SWOT and P.E.S.T. concepts.
Strength, Weakness, Opportunities and Threats Analysis
The Strength, Weakness, Opportunities and Threats Analysis, or SWOT, which assesses the business that is using it and the atmosphere that it is in at that moment that they are thinking about joining (Berry, 2018). The Internal Analysis will gather
information on the company like a self-assessment. It will determine what strengths and what weaknesses that the company has at the present time. It will also assess the external atmosphere that would label various elements as opportunities or as threats to the
business. The overall layout is overly simplified but is able to still show important information about the business or about the markets atmosphere that was formerly hid.
Strengths - A huge or observable advantage the business has had or will have preceding the variations for, in this situation of globalization.
Weaknesses
A main concern of the business
weakness, because this can be something that's now or later that can affect the globalization procedure.
Opportunities - Any interesting or beneficial advantages the company can gain by globalizing in the market.
Threats - The drawbacks of globalization in the market, which could be possibe or really like the competition or the exact status of the market.
Using PEST as an analysis
The PEST analysis stands for Political, Economic, Social and Technological, which are the places this analysis assesses. PEST comes in beneath market environment which is an external assessment scan. This environmental scan is more detailed in the
external assessment unlike other ideas, Like SWOT. It breaks down the basics that make up the market environment. For not so familiar or drastically different civilizations, economies or governments that PEST would surpass in helping a business to understand
the condition in the market they are thinking about.
Political - This characteristic mainly connects governmental regulations like tax plans, job acts environmental requirements, trade limits and also political establishment
Economic - Issues that have to so with the economy like economic expansion, interest amounts, exchange amounts and inflation amounts
Social - Developmental issues in the area such as health concerns, culture development amounts, age circulation, occupation approaches and attention on safety.
Technological - Factors coming from technology such as research and developmental actions, industrialization, technology motivations, speed of technological changes (Investopedia, 2018).
Tools Best for our Market Analysis
The SWOT and PEST analysis are good choices for the operation for the ideas of globalization. The business can get prepared by making sure that they use the SWOT analysis to monitor their chances if they were to begin enforcing right off. PEST can also be
used to be more thorough in multiple areas like the social
republic of Vietnam they don't pitch the exact conservational market that the organization might be familiar with back in the U.S. BY having the knowledge of the governmental, economical, Knowing the
political, economic, social and technical classes of a country such as Vietnam will raise the efficiency of the performance, and make actions there be a lot more able that going into this with no insight and trying to get a grasp in the markets. With SWOT the
business might only have a small amount of understanding of the complicated position that is happening in Vietnam.
Purchase answer to see full
attachment