# Industry Analysis Frameworks ## Overview This guide provides comprehensive frameworks for analyzing industries, markets, and competitive landscapes. These frameworks provide structured approaches to business intelligence and strategic decision-making. ## Core Analysis Frameworks ### SWOT Analysis **Purpose:** Assess internal strengths and weaknesses alongside external opportunities and threats **Structure:** ``` Positive Factors Negative Factors Internal | Strengths | Weaknesses | External | Opportunities | Threats | ``` **Implementation Guidelines:** **Strengths (Internal, Positive):** - What advantages does the company have? - What unique resources or capabilities exist? - What do competitors see as strengths? - What factors drive sales and growth? **Weaknesses (Internal, Negative):** - What could be improved? - What should be avoided? - What factors cause losses or problems? - What resources are lacking? **Opportunities (External, Positive):** - What market trends could be exploited? - What technological changes create advantages? - What regulatory changes benefit the business? - What market gaps exist? **Threats (External, Negative):** - What obstacles does the business face? - What are competitors doing that impacts the business? - What technological changes threaten the business? - What negative market trends exist? **TOWS Matrix Integration:** - **SO Strategies:** How to use strengths to capitalize on opportunities - **WO Strategies:** How to address weaknesses to pursue opportunities - **ST Strategies:** How to use strengths to avoid threats - **WT Strategies:** How to minimize weaknesses and avoid threats ### Porter's Five Forces **Purpose:** Analyze competitive forces and industry attractiveness **The Five Forces:** 1. **Threat of New Entrants** - Barriers to entry (economies of scale, capital requirements) - Brand loyalty and customer switching costs - Access to distribution channels - Government regulations and policies - Expected retaliation from existing players 2. **Bargaining Power of Buyers** - Number and concentration of buyers - Buyer volume and purchase frequency - Price sensitivity and product differentiation - Availability of substitute products - Cost of switching between suppliers 3. **Bargaining Power of Suppliers** - Number and concentration of suppliers - Unique inputs and differentiation - Switching costs for buyers - Forward integration threat - Labor union power and availability 4. **Threat of Substitute Products** - Availability of alternative solutions - Relative price and performance of substitutes - Buyer willingness to switch - Perceived level of product differentiation - Technological developments 5. **Rivalry Among Existing Competitors** - Number and size of competitors - Industry growth rate - Fixed costs and exit barriers - Product differentiation - Brand loyalty and customer switching costs **Analysis Questions:** - How intense is the competition in this industry? - What are the key barriers to entry? - How much power do customers and suppliers have? - What substitute products threaten the industry? - What factors determine profitability in this industry? ### PESTLE Analysis **Purpose:** Analyze macro-environmental factors affecting business **Political Factors:** - Government stability and political climate - Tax policies and trade regulations - Labor laws and employment legislation - Environmental regulations and policies - Trade restrictions and tariffs - Government incentives and subsidies **Economic Factors:** - Economic growth and GDP trends - Interest rates and inflation - Exchange rates and currency stability - Consumer spending patterns - Unemployment rates - Business confidence indices **Social Factors:** - Demographic trends and population changes - Cultural attitudes and lifestyle changes - Education levels and social mobility - Consumer preferences and buying habits - Health consciousness and wellness trends - Social media influence and communication patterns **Technological Factors:** - Research and development activity - Automation and innovation levels - Technological infrastructure - Rate of technological change - Impact on cost structures - New product development capabilities **Legal Factors:** - Consumer protection laws - Employment and labor laws - Health and safety regulations - Industry-specific regulations - Intellectual property laws - Data protection and privacy laws **Environmental Factors:** - Climate change and weather patterns - Environmental regulations and policies - Sustainability expectations - Resource availability and costs - Waste disposal and pollution concerns - Renewable energy adoption ### BCG Matrix **Purpose:** Analyze product portfolio and resource allocation **Four Quadrants:** 1. **Stars (High Growth, High Market Share)** - Market leaders in growing industries - Require significant investment - Potential for future cash generation - Strategy: Invest and maintain market position 2. **Cash Cows (Low Growth, High Market Share)** - Market leaders in mature industries - Generate more cash than required - Foundation of the business - Strategy: Maintain and harvest cash 3. **Question Marks (High Growth, Low Market Share)** - Potential in growing markets - Require significant investment - Uncertain future performance - Strategy: Invest heavily or divest 4. **Dogs (Low Growth, Low Market Share)** - Low market share in mature markets - Generate low or negative cash flow - Limited growth potential - Strategy: Harvest, divest, or liquidate ## Specialized Analysis Frameworks ### Value Chain Analysis **Purpose:** Identify value-creating activities and competitive advantages **Primary Activities:** 1. **Inbound Logistics** - Receiving, storing, and distributing inputs - Material handling, inventory control, transportation - Supplier relationships and scheduling 2. **Operations** - Transforming inputs into final products - Manufacturing, packaging, testing, equipment - Process efficiency and quality control 3. **Outbound Logistics** - Collecting, storing, and distributing products - Order processing, scheduling, delivery - Distribution channels and customer service 4. **Marketing and Sales** - Persuading customers to purchase products - Advertising, promotion, pricing, channel selection - Sales force management and customer relationships 5. **Service** - Enhancing and maintaining product value - Installation, repair, training, customer support - Spare parts availability and complaint handling **Support Activities:** 1. **Procurement** - Sourcing raw materials and supplies - Supplier relationships and negotiation - Quality control and cost management 2. **Technology Development** - Research and development activities - Process automation and improvement - Product design and innovation 3. **Human Resource Management** - Employee recruitment, training, and development - Compensation and performance management - Organizational culture and relationships 4. **Firm Infrastructure** - General management, planning, finance - Legal, accounting, and quality management - Organizational structure and systems ### Blue Ocean Strategy **Purpose:** Create uncontested market space and make competition irrelevant **Key Concepts:** **Value Innovation:** - Simultaneous pursuit of differentiation and low cost - Creating and capturing new demand - Breaking the value-cost trade-off - Aligning the whole system of activities **Four Actions Framework:** 1. **Eliminate** - Factors that industry takes for granted but should be eliminated - Reduce complexity and cost structure - Focus on value-creating activities 2. **Reduce** - Factors that should be reduced well below industry standard - Identify over-served customers - Eliminate waste and inefficiency 3. **Raise** - Factors that should be raised well above industry standard - Address customer pain points - Create new value propositions 4. **Create** - Factors that industry has never offered - Discover new sources of value - Reconstruct market boundaries **Strategy Canvas:** - Visual representation of current strategic landscape - Plot competitor factors and value curves - Identify opportunities for differentiation - Communicate strategic shift internally ### McKinsey 7S Framework **Purpose:** Analyze organizational effectiveness and alignment **Hard Elements:** 1. **Strategy** - Plans for allocation of resources - Competitive positioning and market approach - Response to external changes - Sustainable competitive advantages 2. **Structure** - Organizational chart and reporting lines - Division of labor and specialization - Coordination mechanisms and control systems - Decision-making authority and responsibility 3. **Systems** - Formal and informal procedures - Performance measurement and evaluation - Information systems and communication flows - Operational processes and workflows **Soft Elements:** 4. **Shared Values** - Core values and organizational culture - Mission and vision statements - Superordinate goals and beliefs - Organizational identity and purpose 5. **Skills** - Dominant attributes and capabilities - Core competencies and distinctive abilities - Organizational strengths and weaknesses - Human capital and talent management 6. **Style** - Leadership approach and management style - Employee attitudes and behaviors - Organizational climate and atmosphere - Communication patterns and norms 7. **Staff** - Employee demographics and characteristics - Training and development programs - Performance and reward systems - Socialization and team integration ## Market-Specific Frameworks ### Technology Adoption Lifecycle **Purpose:** Understand market adoption patterns for new technologies **Adoption Categories:** 1. **Innovators (2.5%)** - Technology enthusiasts and visionaries - Risk-takers and early adopters - Focus on new capabilities and features - Willing to tolerate bugs and limitations 2. **Early Adopters (13.5%)** - Opinion leaders and trendsetters - Recognize potential for competitive advantage - Willing to invest in new solutions - Provide valuable feedback and insights 3. **Early Majority (34%)** - Pragmatists and practical thinkers - Focus on proven solutions and ROI - Require reference cases and testimonials - Critical for mainstream adoption 4. **Late Majority (34%)** - Conservatives and skeptics - Focus on risk reduction and reliability - Require established standards and support - Price-sensitive and risk-averse 5. **Laggards (16%)** - Traditionalists and resistors to change - Focus on familiar and proven solutions - Require significant pressure to change - May never adopt new technologies **Chasm Theory:** - Critical gap between early adopters and early majority - Different buying criteria and decision processes - Need for whole product solution and market development - Strategic importance of crossing the chasm ### Customer Lifetime Value (CLV) Framework **Purpose:** Analyze customer profitability and relationship value **CLV Calculation:** ``` CLV = (Average Purchase Value × Purchase Frequency × Customer Lifetime) - Customer Acquisition Cost ``` **Key Components:** 1. **Customer Acquisition** - Marketing and sales expenses - Lead generation and conversion costs - Onboarding and setup costs - Channel and partnership expenses 2. **Customer Retention** - Revenue per customer per period - Purchase frequency and average order value - Customer retention and churn rates - Cross-selling and up-selling opportunities 3. **Customer Lifetime** - Average customer relationship duration - Retention rates by customer segment - Lifetime value trends and patterns - Factors affecting customer longevity **Strategic Applications:** - Customer segmentation and targeting - Resource allocation and investment decisions - Pricing and value proposition optimization - Customer experience improvement initiatives ### Jobs-to-be-Done (JTBD) Framework **Purpose:** Understand customer needs and motivations for product usage **Core Concepts:** **Job Statement:** "When [situation], I want to [motivation], so I can [expected outcome]." **Job Dimensions:** 1. **Functional Jobs** - Practical tasks and problems to solve - Measurement criteria and success metrics - Functional requirements and constraints - Alternative solutions and trade-offs 2. **Emotional Jobs** - Feelings and perceptions to manage - Social identity and status considerations - Personal values and beliefs - Emotional responses and reactions 3. **Social Jobs** - How others perceive the customer - Social status and group belonging - Influence and impact on others - Social norms and expectations **Job Mapping:** - Define the job and desired outcomes - Identify constraints and obstacles - Map the job process and steps - Discover improvement opportunities ## Implementation Guidelines ### Framework Selection Criteria **Research Objectives:** - What specific questions need to be answered? - What level of analysis is required? - What resources and time are available? - Who is the target audience? **Industry Characteristics:** - Industry structure and dynamics - Competitive intensity and market maturity - Regulatory environment and constraints - Technological complexity and change rate **Data Availability:** - Accessibility of relevant information - Quality and reliability of data sources - Time sensitivity of information - Analytical capabilities and tools ### Combining Frameworks **Complementary Analysis:** - Use multiple frameworks for comprehensive understanding - Cross-validate insights across different approaches - Identify patterns and consistencies - Address different aspects of business analysis **Integration Strategies:** - Start with broad frameworks (PESTLE, Porter's Five Forces) - Apply specific frameworks based on research questions - Use specialized frameworks for detailed analysis - Synthesize findings into actionable insights **Best Practices:** - Document assumptions and limitations - Use consistent terminology and definitions - Validate findings with additional sources - Update analysis regularly for changing conditions This comprehensive set of frameworks provides structured approaches to analyzing industries, markets, and competitive landscapes, enabling thorough and actionable business intelligence research.