**Original Question “We need to put our Firmand Industry Growth in perspective”*The Correct Question - “…. And thanks to DataScience there is a Strategic Framework forthat… You have already seen the BusinessCapacity & Organic Business GrowthFramework which was Inward Facing… This isOutward Facing… You need to use Bothtogether to understand Growth. Allow me toexplain.”
And The Philosophy Behind The Answer*
**Assume two firms A and B growing by 10% and20% respectively*Assume Industry/Market Growth is 5% from1000 units to 1050 units*In One Year*How do we model this?*What conclusions can we make?
**Start with Firm & Industry Growth Projections*Scale The Projections down/up to ActualGrowth and calculate the Competitive Indexe.g. In Year 2 projected is 1150 while Actual is1050 hence CI = ~1.1*Do this every Quarter using Publically availableInformation and Financial and Research Reports
** This Chart Seems Uninterestingbecause its made using MockData. Real Charts using Industryand Firms Growth Projections andActual Growths are extremelyinsightful* The Industry/ Market GrowthCurve is Normally U shaped* Competitive Index of 1.0 impliesStatus Quo* Competitive Index Below 1.0implies Detrimental MonopolisticCompetition. Yay! Now we candetect this…* Firm Growth Follows/LagsIndustry/Market Projections-40.00%-20.00%0.00%20.00%40.00%60.00%80.00%100.00%120.00%140.00%1 2 3 4 5 6Industry/Market GrowthCompetitive IndexAB
** Rule: Your Survivability inyour Industry isProportional to (i) YourGrowth Rate, and then (ii)your Market Share* GE has always harpedabout the need for beingin the Top 3 in anyindustry. Now we can seewhy that’s true!* When your Firm (A)Growth Declines lowerthan Industry Growth It isTime for M&A…. See Year 2& 6. This is consistent withour Mental Understanding.-40.00%-20.00%0.00%20.00%40.00%60.00%80.00%100.00%120.00%140.00%1 2 3 4 5 6Industry/Market GrowthCompetitive IndexAB
**If you super impose multiple of such chartsfrom multiple industries, you can*Compare Cross-Industry Competitive Index’s*Industry Growth*Firm Growths*Economic Policy Impact*…
** You get a Composite Viewof Industry Growth (Y-Axis)vs Firm Growth (Area) vsCompetitive Index (X-Axis)* You can Spot Monopolies* You can Virtually Concludethat High Growth Firmscorrespond to High GrowthIndustries i.e. The FirmsInherit The Industry GrowthAdvantage-0.15-0.1-0.0500.050.10.150.22.214.171.1240 0.5 1 1.5The World Map1.051.021.10.870.961.21.4