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Industry and sector analysis - Industry dynamics - Industry structure dynamics

Q: Explain the industry life-cycle concept and the key points of interest in each stage.

It proposes that industries go through different stages: Development : innovation Rapid growth : growth ability Shake out ( peak ): managerial and financial strength Maturity : market share and cost Decline : cost and commitment

Q: Explain the comparative industry structure analysis

It is a radar plot that summarizes the power of each of the five forces on five axes . Power lowers as the axes go outward . With low forces , the area between the axes is large . With high forces , the area between the axes is small . Thus, the larger the enclosed area , the greater the profit potential .

3 important questions on Industry and sector analysis - Industry dynamics - Industry structure dynamics

What 2 additional approaches can be used to understanding change in industry structure?

The industry life-cycle
Comparative Five Forces analysis

Explain the industry life-cycle concept and the key points of interest in each stage.

It proposes that industries go through different stages:

Development: innovation
Rapid growth: growth ability
Shake out (peak): managerial and financial strength
Maturity: market share and cost
Decline: cost and commitment

Explain the comparative industry structure analysis

It is a radar plot that summarizes the power of each of the five forces on five axes. Power lowers as the axes go outward.
With low forces, the area between the axes is large.
With high forces, the area between the axes is small.
Thus, the larger the enclosed area, the greater the profit potential.