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Industry Analysis

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Market Size - Market size refers to the total number of firms operating in the industry. It is also important to know whether the industry is growing, static or declining. It depends upon the position of industry in the business life cycle i.e early development, rapid growth, early maturity, maturity, stagnation and decline.
Number of rivals in the industry - Organizations should also know whether the industry contains too many small rivals or is it dominated by a few large firms. Similarly they should also know about the various developments in the industry such as mergers and acquisitions etc.
Scope of Competitive rivalry – this is an important factor for the organisations to know about the level of competition. Industry members must know about the nature of future competition. Eg. If a company realises that its future success depends upon diversification, product development and market expansion, then it must start planning from the very first day.
Customer Needs and Requirements - Firms must take into account the needs of the customers as well as middlemen. Organisations should do market research in order to know the major shifts in buyer needs and requirements. They should also know the various factors affecting consumer behaviour.
Degree of Product Differentiation - Product differentiation is another important factor for analyzing the overall industry situation. If the products of an industry are not differentiated then it will increase competition among the members of industry. In such cases prices of the products will be low and the new entrants will find it difficult to compete with the existing firms.
Product innovation can be used as a measure to know the dominant industry features. If the industry is characterized by rapid product innovation and short product life cycle then the research and

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