- Identify an industry you would like to learn more about. Ideally, you should be able to gather sufficient information on this industry to thoroughly analyze the impact of the general environment on industry profitability. Although information is available for a wide variety of industries, this exercise will be easier if you choose an industry that has been written about consistently in the business press. In order to manage the volume of data required for a thorough analysis, your instructor might want you to focus solely on the home country of the largest firms in the industry (unless most firms earn a majority of their profits from abroad).
- Use data from a variety of sources, including those listed in the appendix, in your analysis.
- Try to identify the major effects of each of the eight factors (complementary products; technological change; general economic conditions; demographic forces; ecological/natural environment forces; global forces; political, legal, and regulatory forces; and social/cultural forces) on industry profitability.
- Identify and predict any short-term to medium-term changes in any of the eight factors that might alter average profitability in the industry. Address how those changes will affect industry profitability in the future.
- As part of the analysis, consider how the general environmental factors may affect each of the five industry forces (rivalry, buyer power, supplier power, threat of new entrants, and threat of substitutes).
Here is a link to a some very helpful materials you might use in guiding your work:
https://ocw.mit.edu/courses/sloan-school-of-management/15-902-strategic-management-i-fall-2006/lecture-notes/strmgtfr.pdf (Links to an external site.)