Industry analysis

An industry analysis is a comprehensive review of the structural underpinnings of an industry. This analysis is usually conducted as part of a competitive review of an industry, or as part of a decision to invest in an industry. Topics that may be included in an industry analysis are:

  • Sales and profitability levels
  • Performance and liquidity ratios
  • Barriers to entry
  • Regulatory trends
  • Cyclicality or seasonality trends
  • Total market size and individual shares of the market
  • The intensity of competition between market participants

An outcome of this analysis is a perception of the relative attractiveness of an industry; that is, can a business carve out a niche and hold it for an extended period of time, while generating reasonable profits?