Answer to Question #186747 in Management for Prabhdeep Singh

Question

Subject : Project Planning and control

What factors may a company consider when measuring industry attractiveness and business strengths? (Please give at least 8-9 factors )

Should these factors vary from One business to another in a company?

Answer 1

Project Planning and Control

In order to measure industry attractiveness and business strengths, it is important to analyze a number of factors. These include:

1. Demand - this is the number of consumers who are willing and able to purchase products at various prices in a given period of time. The demand of a commodity implies that consumers have the desire to acquire the goods and are able to pay for it.
2. Segmentation – this refers to the process of dividing a large unit of business into various smaller units which have similar characteristics. The establishment of a complete market with smaller subsets results in consumers who bear similar taste, interest and preference.
3. Value chain – this is a strategy used to identify activities that are more valuable to the company. Taking action on these activities shows the business progress and the ones that can be improved to increase competitive advantage.
4. Company profitability – the profits which equal the business’s revenue minus expenses allows a company to earn profit which is important in determining the strength of the business. As a business cannot continue operations without turning profits, profitability shows how it is growing and attracting investors.
5. Product differentiation – this involves distinguishing products or services from others to determine its attractiveness to a particular target market.
6. Supply – supplier power impacts industry profitability because the more powerful the supply the higher the demand for goods and services within the industry.
7. Competition level – industries which have intense rivalry can often have higher profitability as it shows there is growth within the business, switching buyer costs and competitor concentration.
8. New entrants – the entry of new investors into an industry can imply business profitability because the emergence of new companies shows an increased market share.

The factors discussed above should not vary from one business to another in a company because they illustrate a general overview of the industry. When these factors are strong, it means that the industry can return higher profits from investments and when they are benign it shows that the industry is hostile thus can potentially lead to low profitability.