Industry Deep Dive Flashcards by Samantha Salis

What are some of the key risks that the auto industry faces? (3)

Foreign competition
Changing consumer tastes
Extensive competition impacts already low margins

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What are some important characteristics of the auto industry?

High barriers to entry: economies of scale, established customer brand preferences
Consolidated market
Mature market
Labor and capital intensive
Low margins due to high competition; difficult to pass on increase cost of raw materials to the customer

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What are some key revenue streams for the auto industry?

Warranties
Parts
Leasing
New car sales
Used car sales
Financing
Maintenance

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Key trends in the auto industry

Increasing importance of electronics and software
Vehicle to everything
Electrification
Automation

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Key revenue drivers for the restaurant industry (6)

Food and bev
Merchandise
Licensing
Franchising 
Catering 
Merchandise

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Key economic drivers for the restaurant industry

GDP
CCI (degree of optimism about the economy defined by spending)
Per Capita disposable income

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Key risks for restaurant industry (3)

Food borne illness
Liquor license
Wage and hour lawsuits

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New ideas for restaurant industry (2)

New fast casual restaurants taking market share from fine dining restaurants and QSR
Implementation of technology to increase profitability

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Risks/Challenges for Media/Entertainment Industry (4)

New content
Cord Cutting
Adapting to new technologies (ie: DVRs)
Consumer expectations (ie: customised experience on demand and multichannel)

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Key economic drivers for media/entertainment industry (3)

Royalties and monetization
Growth of streaming and mobile video
Piracy and copyright enforcement

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Key costs for media/entertainment (3)

Marketing
Labor
New tech

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Media/entertainment market characteristics

Highly competitive with a few major players owning most of the market

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Characteristics of the telecom industry

Capital intensive industry creates high barriers to entry; consolidated, mature market

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Telecom industry risks

Commoditised services

High exit barriers - high sunk cost

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Key costs for the telecom industry

Infrastructure
Wages
Frequency licenses
Marketing

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Telecom industry (technology) trends (3)

5G - Capex is increasing
AI
IoT

Telecom industry and COVID 19

The ongoing shift to remote work will drive demand for networking infrastructure and connectivity

Key revenue streams for the telecom industry

Data subscription
Text and image communication
Voice calls
Value added services

Key cost drivers for commercial banking

Wages (Salaries)
Marketing
Bad debt expense
Interest rates on deposits
Branch and compliance costs
Overhead costs: paper fee, error rate costs for manual processing

Characteristics/trends for commercial banking (including basic overview of how they make money)

Commercial banks make money by providing and earning interest from loans such as mortgages, auto loans, business loans, and personal loans. Customer deposits provide banks with the capital to make these loans.
Commercial banks offer consumers and small to mid-sized businesses with basic banking services including deposit accounts and loans.

Consolidated, mature industry with primary growth through acquisitions

Offshoring of various functions (ie: call centers) to reduce costs

Larger players’ services to beyond commercial banking into investment banking

Cross selling

Increase in mobiel banking

Commercial banking revenue streams

Interest rates
Service fees
These fees vary based on the products, ranging from account fees (monthly maintenance charges, minimum balance fees, overdraft fees, non-sufficient funds (NSF) charges), safe deposit box fees, and late fees.
Credit cards

Key customers commercial banking (4)

Individuals
High net worth individuals (priority segment)
Small medium businesses
Private companies looking to go public

COVID effects on utilities industry

Loss of demand from commercial and industrial sectors

Operational complexity: The dual objectives of keeping control rooms staffed and operational and crews out in the field completing critical projects – all while protecting the health and safety of their workforce – is unchartered territory for utilities.

Risks for utilities companies (3)

Clean energy threatens the future of traditional power generation methods
Seasonal demand leads to uncertain estimates
Energy efficient appliances decrease consumption

Costs for utilities companies

``` Purchased power accounts (nearly half of total cost) Infrastructure Wages Marketing Maintenance contracts ```

Utilities Industry Characteristics

High investment costs Government incentives for sustainable initiatives Bundles with renewable energy Regulated by PUC Price sensitive consumers - trend toward cheapest options, pricier competitors get priced out of the market

Airline industry Characteristics

Consolidated industry High fixed cost High barriers to entry: very high start up costs, availability of gate space, airport leasing agreements Legacy carriers compete with low cost carriers. New entrants more common in the low cost model

Airline industry costs

``` Fuel Labor Marketing Terminal fees (paid monthly) Insurance/legal fees ```

Airline industry key revenue drivers

``` Ticket sales Baggages and onboard services charges Credit cards Value added services (food and beverages, Wifi) Cargo transportation ```

Airline industry customer segments (and price sensitivity info - if relevant)

Leisure (price sensitive) Business (important due to margins and services purchased) Freight/cargo transportation

Airline industry risks (3)

Changes in fuel prices Macroeconomic conditions influencing the amount of leisure travelers Very competitive market with many foreign airlines partly government subsidized

Oil industry: Upstream vs downstream vs midstream

Upstream - companies involved in the exploration of oil and gas Capital intensive Technology intensive High risk Instead, they hire contract drilling companies to drill wells for them and the contract drilling companies generally charge for their services based on the amount of time they work for an E&P company. Midstream - move extracted raw materials to refineries Risks: high regulation Key costs: shipping, trucking, pipelines, and storing of the raw Downstream - refineries

Retail industry: key cost factors

``` Cost of Goods Sold (74% of costs) Transportation Wages Rent and utilities Marketing ```

Retail industry: Revenue

``` Product sales (brick & mortar, online) Slotting fee Advertising Affiliate marketing Cross-selling additional products and services Loyalty and rewards programs ```

Retail industry: Risks (4)

Changes in disposable income Demand and supply issues Overstock Easy entry invites competition

Retail industry: COVID

Income disparities will drive continuing business toward off-brand and discount retailers, and online shopping will continue to accelerate. Demands for convenience drive contactless transactions Growth of e-commerce

Retail industry trends (4)

D2C Private label brands Digital marketing Omnichannel purchasing

Key economic drivers for the retail industry (5)

``` Consumer Confidence index Per capita disposable income International Export/Import Gross Domestic product/inflation Commodity prices (e.g. gold price for jewelry) ```