Industry Core Questions Flashcards
What are the core Market / Industry questions?
- Market size, growth rate, and trends
- Industry drivers
- Customer segmentations
- Industry changes
- Distribution channels
- Major players and market share
- Product differentiations
- Barriers
Industry:
Why is it important to ask about market size, growth rate, and trends? What should you ask for?
- How is the industry doing overall?
- How does the comapny compare to industry performance?
Note: Three years of data
Industry:
Why is it important to ask for industry drivers? What are the things that matter most?
Industry drivers are the characteristics of industry participants and/or the market that drive revenue and growth.
Some common industry drivers include:
- Brand
- Price
- Content
- Size
- Economics
- Technology
- Geopolitical events
- Bargaining power of buyers
- Bargaining power of suppliers
- Distribution channels
Industry:
Why is industry-level customer segmentation important? What do you look for?
Note: there are often a number of segments within an industry.
- Which is the company going after?
- How big are the different segments?
Industry:
Why is understanding distribution channels important? What do we care about?
- What are the major distribution channels within the industry (i.e., how do participants get their products to customers)?
- Compare to the distribution channels that the company is using.
Industry:
Who are the major players and what is their market share?
- Who are the competitors and how much market share do they have?
- Is the market fragmented, or is it dominated by one or two major players?
Industry:
Why is product differenation important? What do want to know about?
- How do competitors in the market differentiate themselves from one another?
Note: match this up to market share—what differentiators are capturing the bigges market share?
Industry:
Why is it important to understand industry changes?
Want to understand if there have been any major changes in the industry recently. Some impactful industry changes could include:
- New entrants
- Mergers
- New technology
- New or changing regulations
Industry:
Why is it important to understand industry barriers? What sort of barriers might exist?
Industry barriers help assess how difficult it is to compete in an industry. Two types of barriers:
- Barriers to entry
- Barriers to exit
Industry:
What are some barriers to entry?
Barriers to entry can include:
- access to capital
- access to distribution channels
- access to raw materials
- access to human talent
- government regulations
- customer loyalty
- high product switching costs (“sticky features”)
- domination by a small number of major players (high competitive concentration)
Industry:
What are some barriers to exit?
Barriers to exit include:
- Large capital investment in nontransferrable fixed assets
- Contractual obligations with suppliers / vendors
- Goverment requirements (e.g., tax breaks received by the company to employ people)
- Cost of leaving a market are higher than those of continuing to operate in it (over what timeline)?
Note: barriers to exit are part of the risk of entering a new market.
