THE INDUSTRIAL ENVIRONMENT ANALYSIS

An industry analysis is a business function completed by business owners and other individuals to assess the current business environment. This analysis helps businesses understand various economic pieces of the marketplace and how these various pieces may be used to gain a competitive advantage. The remote environment consists of a set of forces that originate beyond a firm’s operating situation. These comprise political, economic, social, technological, and legal forces which create opportunities, threats, and constraints for the firm. The Five Forces model is a framework for industry analysis. The five forces that determine the competitive intensity and the attractiveness of a market are: the bargaining power of the buyers, the bargaining power of the suppliers, the threat of new entrants, the threat of substitute products, and the intensity of rivalry amongst existing firms.