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Industry Analysis
 

Industry Analysis

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Industry analysis is a part of fundamental analysis

Industry analysis is a part of fundamental analysis

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    Industry Analysis Industry Analysis Presentation Transcript

    • INDUSTRY ANALYSIS
      • Narender Bansal
      • MBA 3 rd Semester
      • Maharaja Agrasen Institute of Technology
      • Delhi-110086
    • Industry Analysis
      • After economic analysis, we ask the question “which industries will benefit most from the upcoming economic environment?”
      • This will lead to several industries, and our analysis will lead us to choose the one that we find to be best positioned.
    • What is an Industry?
    • INDUSTRY GROUPS
      • AGRICULTURE
      • STEEL
      • HEALTH CARE
      • RETAIL
      • AUTOMOBILES
      • PHARMACEUTICAL
      • FINANCIAL SERVICES
      • HOTEL & TOURISM
      • IT
      • TELECOM
      • UTILITIES
      • PAPER & PRINTING
      • BANKING
      • FMCG
      • INFRASTRUCTURE
      • TEXTILE
      • OIL AND GAS EXPLORATION
    • SIC Code
      • ECONOMIC SECTOR
        • Manufacturing
        • Distribution
        • Services
      • PRODUCT AND SERVICES
        • List of what is offered by the industry
      • GEOGRAPHIC SCOPE
        • Local ,Regional, National, International
    • Computer industry
      • Different Market Segments
        • Personal Computer
        • Micro Computer
        • Mini Computer
        • Mainframe Computer
    • Furniture industry Home Furniture Office Furniture Wooden Hosehold Metal Household
    • Industry Analysis tries to find out following answer
      • Difference between return for alternate industries
      • Future performance of currently performing companyin one period
      • Consistent performance over time
      • Risk difference between different industries
      • Risk variability over period of time
    • ECONOMY AND INDUSTRIAL SECTORS The economic performance of a country,to a large extent,determine Favourable and unfavourablable climate for its industrial participation
    • Reasons of industrial analysis
      • Provide an awareness of market performance
      • Identify investment opportunities
      • Important part of company’s business plan
        • Financial institutions
    • Data Requirement
      • Product Line
      • Complementry Product
      • Product Growth
      • Product Pattern (Seasonal,Cyclical)
      • Econimies of Scales
      • Suppliers
      • Labour Market
      • Buyer and their Behaviour
      • Substitute Product
      • Prices
      • Marketing and Selling
      • Cost Structure
      • Logistic
      • Department of Economic Analysis , Business Publication
    • Industrial Life Cycle It is Rise and Fall in Customer Interest
    • Industrial Life Cycle
      • Rise and Fall of Customer Interest
      • Depend on extent of technology and innovation
      • Each phase passes from four stages
        • Introduction Stage
        • Growth Stage
        • Maturity Stage
        • Stability/Decline Stage
    •  
    • Feature of Industrial Life Cycle
      • Marketing
      • Manufacturing
      • Competion
      • Risk
      • Margin
      • Strategy
      High Advertising Skimming Pricing Under Capacity High Production Cost Low High High but low profit Increase Market Share High Advertising Under Capacity Shift to High Production Many Competitor Groth Vs Risk High and High Profit High Prices Change Quality &Price Image Market Segmentation Services Optimum Capacity Price Competition Low Low due to price war Marketing Effectiveness Low Advertising Overcapacity, Mass Production Exit,Fewer Very High Risk Low Profit Cost Control Introduction Growth Maturity Decline
    • TOOLS FOR INDUSTRY ANALYSIS
      • Qualitative
      • Cross sectional industry performance
      • Industry performnce overtime
      • Difference in industry risk
      • SWOT analysis
      • Competition over industry life cycle
      • Quantitative
      • Analysing employment data
      • Analysis of emolument data
      • Input output analysis
      • Earning data analysis
    • Cross sectional industry performance
      • Aimed at finding out variability in Rate of return among various industries in given time period
      • compare performance
      • in term of
        • Sale
        • profit
        • market capitalisation
        • dividend
    • Example
      • Stock market growth=10%
      • Industrial growth rates
      • = 5% to 8%
      • Stock market growth=50%
      • Industrial growth rates
      • = 80% to - 20%
    • Industry performance over time
      • To identify stage of product life cycle
      • Time duration 3 to 5 year
      • Difficult to forecast future performance due to
      • compositional change
      • in industry
      • technological change
      • innovation
    • Differences in industry risk
      • Besides focussing on return also consider risk
      • Specifically investigate two question
        • Does risk differ across industries in given time period
        • Are industry risk stable over time
      • Measured in term of variability in return/productive value
      • Risk pattern also depend on economic situation
    •  
    • SWOT ANALYSIS
      • Strenth & weakness
      • Assess strenth and weakness
      • Internal capability of industry
      • Competitive advantage or defensive against weakness
      • Opportunity & threat
      • Evaluate opportunity and threat
      • Environmental trend
      • External situation
        • Competitive forces
        • Technology
        • Government regulation
    • SWOT analysis
      • STRENTH
      • Capicity
      • Competitive advantage
      • Good custermor service
      • High quality product
      • Customer loyality
      • Financial resources
      • WEAKNESS
      • Limitation default defect
      • Competitor has exploitable advantage
      • Example:
        • Small scale industry hs poor financial resources
        • Industry that cater domestic market, would have weakness of catering to global market
    • SWOT analysis
      • Opportunity
      • Favourable condition in environment
      • May be trend or need
      • Growing market of industry product
      • Shrinking competition
      • Identification of new market
      • Threat
      • Unfavourable situation
      • May be barrior or constraint
      • Slowing domestic economy
      • Competition
      • New entrant
      • New technology
    • SWOT analysis Threat Opprtunity Strenth Weakness Internal environment External environment Confront Avoid Exploit Search
    • Analysing Employment data
      • Life cycle can be predicted by Product life cycle
      • Help in identify key industries
      • Identify growth and decline
      • Evaluate importance of industry to economy
      • DetermineCompetitiveness among industries
    • Data Requrement
      • Industry wise total employment in current as well earlier years
      • Industry wise total emolument data in current as well earlier years
      Employes: Who receive wge and hold clerical superwisery post Duration of analysis Short : Changing environment Long : Predictive purpose Base year
      • Employment share of sub industry
      • = Employment in sub industry *100
      • Total employment in industry
      • Employment in wools=2000
      • Total in textile =11500
      • % Share =2000/11500*100 ie 17.39%
      • Change in employment
      • Current yr no. Of employes _1 *100
      • Base yr no. Of employes
      • Current employes:1500
      • Base yr employes:1200
      • % change : [(1500/1200)-1]*100 ie 25 %
      • Location quotient:
      • Measure concentration of industry’s concentratio in an area relative to rest of nation
      • Industry location quotient
      • Industry share of regional employment
      • Industry share of national employment
      • or
      • Industry’s regional employment
      • Total national employment
      • Industry national employment
      • Total national employment
      • % change in location quotient
      • [ (Current yer LQ/Base yr LQ)1 ] *100
      • LQ = location quotient
    • Employment shift analysis Current yr total national employment - 1 Base yr total national employment Base yr total national employment National avarage growth rate Industry avarage growth rate Regional industry base year employment * national avg growth rate
    • Emolument Data
      • Sum of wages and salaries,employer’s contribution to provident fund
      • And other fund and workmen and staff welfare expenses
      • Emolument per employ=
      • Industry regional emolument
      • Industry regional emolument
      • Change in emolument per employe by industry
      • Current yr emolument per employe
      • Base yr emolument per employe -1 * 100
    • Input output analysis
      • Total input
        • Include value of fuel,material consumed,expenditure,repair costtaxes,,postage,banking charges
      • Total output
        • value of product
        • byproduct
    •