Industry Analysis Template

The Strategic Value of Industry Analysis

Industry analysis is the telescope through which businesses see their future. While financial statements show where you've been and operational metrics show where you are, industry analysis reveals where you're going—and whether you want to be there when you arrive.

The best industry analyses don't just describe markets; they decode them. They reveal the hidden forces shaping competition, the emerging trends creating opportunities, and the structural factors determining profitability. For investors, they're due diligence. For executives, they're strategy. For entrepreneurs, they're treasure maps.

Why Industry Analysis Drives Decisions

The Strategy Foundation: You can't develop strategy without understanding the battlefield.

The Investment Filter: VCs and PE firms won't invest without comprehensive market understanding.

The Risk Revealer: Industry analysis exposes threats before they become crises.

The Opportunity Identifier: Systematic analysis uncovers gaps competitors miss.

The Performance Predictor: Industry structure determines 30-50% of company profitability.

Industry Analysis Frameworks

Market Definition and Segmentation

Before analyzing, define the battlefield:

MARKET DEFINITION FRAMEWORK:

LEVEL 1: BROAD MARKET
"Software" - Too broad for analysis

LEVEL 2: MARKET CATEGORY
"Customer Relationship Management (CRM) Software"

LEVEL 3: SPECIFIC SEGMENT
"CRM for Small Business B2B SaaS"

LEVEL 4: NICHE FOCUS
"AI-Powered CRM for B2B SaaS Startups Under 50 Employees"

SEGMENTATION VARIABLES:

Geographic:
- Global vs Regional
- Developed vs Emerging
- Urban vs Rural

Demographic (B2C):
- Age cohorts
- Income levels
- Education/profession

Firmographic (B2B):
- Company size
- Industry vertical
- Technology adoption

Behavioral:
- Usage patterns
- Price sensitivity
- Channel preference
- Brand loyalty

Porter's Five Forces Analysis

The classic framework, properly applied:

## Porter's Five Forces Analysis

### 1. Threat of New Entrants: [High/Medium/Low]

**Barriers to Entry Assessment**:

Capital Requirements: [High/Medium/Low]

- Initial investment needed: $[Amount]
- Working capital requirements: $[Amount]
- Break-even timeline: [Months/Years]

Economies of Scale:

- Minimum efficient scale: [Units/Customers]
- Cost disadvantage at small scale: [Percentage]%
- Network effects present: [Yes/No]

Regulatory Barriers:

- Licenses required: [List]
- Compliance costs: $[Annual amount]
- Approval timeline: [Duration]

Brand/Switching Costs:

- Customer acquisition cost: $[Amount]
- Switching costs for customers: [High/Medium/Low]
- Brand loyalty importance: [Critical/Important/Minor]

**Assessment**: [Detailed analysis of why threat is high/medium/low]

**Strategic Implications**: [What this means for incumbents and new entrants]

---

### 2. Bargaining Power of Suppliers: [High/Medium/Low]

**Supplier Concentration**:

- Number of key suppliers: [Number]
- Top 3 supplier market share: [Percentage]%
- Switching costs: $[Amount]

**Differentiation of Inputs**:

- Commodity vs specialized: [Assessment]
- Alternative sources available: [Yes/No]
- Quality variation impact: [High/Medium/Low]

**Forward Integration Threat**:

- Supplier capability to enter market: [Assessment]
- Historical examples: [Cases]
- Likelihood: [Percentage]%

**Assessment**: [Analysis of supplier power dynamics]

**Mitigation Strategies**: [How to reduce supplier power]

---

### 3. Bargaining Power of Buyers: [High/Medium/Low]

**Buyer Concentration**:

- Customer concentration (Top 20%): [Percentage]% of revenue
- Largest customer share: [Percentage]%
- Customer acquisition cost: $[Amount]

**Price Sensitivity**:

- Product as % of buyer costs: [Percentage]%
- Differentiation level: [High/Medium/Low]
- Switching costs: [Assessment]

**Information Availability**:

- Price transparency: [High/Medium/Low]
- Comparison ease: [Easy/Moderate/Difficult]
- Review/rating importance: [Critical/Important/Minor]

**Assessment**: [Analysis of buyer power and implications]

**Customer Retention Strategies**: [How to reduce buyer power]

---

### 4. Threat of Substitutes: [High/Medium/Low]

**Direct Substitutes**:

- Primary alternatives: [List]
- Performance comparison: [Table]
- Price comparison: [Analysis]

**Indirect Substitutes**:

- Alternative solutions: [List]
- Job-to-be-done alternatives: [List]
- Non-consumption threat: [Assessment]

**Switching Analysis**:

- Switching costs: $[Amount]
- Switching difficulty: [High/Medium/Low]
- Switching triggers: [List]

**Assessment**: [Analysis of substitute threat level]

**Defense Strategies**: [How to combat substitutes]

---

### 5. Competitive Rivalry: [High/Medium/Low]

**Industry Structure**:

- Number of competitors: [Number]
- Market concentration (HHI): [Score]
- Market leader share: [Percentage]%

**Industry Growth**:

- Growth rate: [Percentage]% CAGR
- Life cycle stage: [Introduction/Growth/Maturity/Decline]
- Capacity utilization: [Percentage]%

**Differentiation**:

- Product differentiation: [High/Medium/Low]
- Service differentiation: [High/Medium/Low]
- Brand importance: [Critical/Important/Minor]

**Exit Barriers**:

- Asset specificity: [High/Medium/Low]
- Emotional barriers: [Assessment]
- Government/social restrictions: [List]

**Assessment**: [Analysis of competitive intensity]

**Competitive Strategies**: [Recommended approaches]

---

## Overall Industry Attractiveness: [Score/10]

**Summary**: [Synthesis of five forces into overall assessment]

**Key Success Factors**:

1. [Critical factor 1]
2. [Critical factor 2]
3. [Critical factor 3]

PESTLE Analysis Framework

Macro-environmental factors:

## PESTLE Analysis

### Political Factors

**Government Stability**: [Assessment]

- Policy continuity risk: [High/Medium/Low]
- Election impact potential: [Analysis]

**Regulation & Compliance**:

- Current regulatory burden: [Heavy/Moderate/Light]
- Pending legislation: [List with impact]
- Compliance costs: $[Amount] annually

**Trade Policies**:

- Tariff impact: [Analysis]
- Trade agreement changes: [List]
- Protectionism trends: [Assessment]

### Economic Factors

**Macroeconomic Indicators**:

- GDP growth correlation: [Strong/Moderate/Weak]
- Interest rate sensitivity: [High/Medium/Low]
- Currency fluctuation impact: [Assessment]

**Economic Cycles**:

- Recession resilience: [High/Medium/Low]
- Recovery positioning: [Analysis]
- Inflation impact: [Assessment]

### Social Factors

**Demographic Shifts**:

- Target demographic growth: [Percentage]% CAGR
- Generational preferences: [Analysis]
- Geographic distribution changes: [Trends]

**Cultural Trends**:

- Value shifts impacting demand: [List]
- Lifestyle changes: [Analysis]
- Social movement impacts: [Assessment]

### Technological Factors

**Digital Transformation**:

- Industry digitization rate: [Percentage]%
- AI/ML adoption: [Level and impact]
- Automation potential: [High/Medium/Low]

**Innovation Rate**:

- R&D spending (% of revenue): [Percentage]%
- Patent activity: [Trend analysis]
- Disruption risk: [High/Medium/Low]

### Legal Factors

**Regulatory Environment**:

- Regulatory complexity: [High/Medium/Low]
- Litigation risk: [Assessment]
- IP protection strength: [Strong/Moderate/Weak]

**Compliance Requirements**:

- Industry-specific regulations: [List]
- Data privacy impact: [Analysis]
- Labor law considerations: [Assessment]

### Environmental Factors

**Sustainability Requirements**:

- ESG importance: [Critical/Important/Minor]
- Carbon regulations: [Current and pending]
- Resource scarcity impact: [Analysis]

**Climate Impact**:

- Physical risk exposure: [High/Medium/Low]
- Transition risk: [Assessment]
- Opportunity creation: [Analysis]

Competitive Landscape Analysis

Market Structure Assessment

## Market Structure Analysis

### Market Concentration

**Herfindahl-Hirschman Index (HHI)**: [Score]

- <1,500: Competitive market
- 1,500-2,500: Moderately concentrated
- > 2,500: Highly concentrated

**Market Share Distribution**:

| Rank   | Company      | Market Share | Revenue | Growth Rate |
| ------ | ------------ | ------------ | ------- | ----------- |
| 1      | [Leader]     | 34%          | $2.1B   | +12%        |
| 2      | [Challenger] | 22%          | $1.4B   | +18%        |
| 3      | [Challenger] | 15%          | $950M   | +8%         |
| 4      | [Niche]      | 8%           | $500M   | +25%        |
| 5      | [Niche]      | 6%           | $380M   | +15%        |
| Others | Various      | 15%          | $950M   | +5%         |

### Competitive Positioning Map

[Visual 2x2 matrix with relevant axes like Price/Quality, Innovation/Efficiency]

### Competitive Strategies

**Market Leader Strategy**:

- Value Proposition: [Description]
- Key Capabilities: [List]
- Vulnerabilities: [Analysis]

**Challenger Strategies**:

- Differentiation approach: [Description]
- Market attack strategy: [Analysis]
- Resource advantages: [List]

**Niche Player Strategies**:

- Focus areas: [Segments/needs]
- Defensive moats: [List]
- Growth constraints: [Analysis]

Strategic Group Analysis

## Strategic Groups

### Group 1: Premium Full-Service

**Members**: [Company A, Company B]
**Characteristics**:

- Price point: Premium (20-30% above market)
- Service scope: Comprehensive
- Target market: Enterprise
- Key success factors: Brand, relationships, expertise

### Group 2: Digital Disruptors

**Members**: [Company C, Company D]
**Characteristics**:

- Price point: 40-60% below traditional
- Service delivery: Platform-based
- Target market: SMB, tech-savvy
- Key success factors: Technology, user experience, scale

### Group 3: Specialized Experts

**Members**: [Company E, Company F]
**Characteristics**:

- Price point: Premium for specialization
- Service scope: Narrow but deep
- Target market: Specific verticals
- Key success factors: Expertise, results, reputation

### Mobility Barriers

- Between Group 1→2: Technology investment, culture change
- Between Group 2→3: Expertise development, credibility
- Between Group 3→1: Scale, breadth of capabilities

Trend Analysis and Future Outlook

Trend Identification Framework

## Industry Trend Analysis

### Mega Trend 1: [Digital Transformation]

**Current State**:

- Adoption rate: [Percentage]% of industry
- Investment level: $[Amount] annually
- Leaders vs laggards gap: [X] years

**Growth Trajectory**:

- 2024: [Current state]
- 2025: [Projection]
- 2026: [Projection]
- 2030: [Long-term vision]

**Impact Assessment**:

- Revenue impact: +[Percentage]% for adopters
- Cost impact: -[Percentage]% operational costs
- Competitive impact: [Analysis]

**Opportunities Created**:

1. [New business model opportunity]
2. [Efficiency gain opportunity]
3. [Customer experience opportunity]

**Threats Posed**:

1. [Disruption threat]
2. [Skill gap threat]
3. [Investment requirement threat]

### Emerging Trend 2: [Sustainability Focus]

[Similar structure for additional trends]

### Weak Signals to Monitor

**Potential Disruptions**:

- [Technology on the horizon]
- [Business model innovation]
- [Regulatory change possibility]
- [Social shift indicator]

**Early Indicators**:

- [Metric to track]
- [Company to watch]
- [Region leading change]

Scenario Planning

## Future Scenarios

### Scenario A: Continued Evolution (60% probability)

**Assumptions**:

- Steady economic growth
- Gradual technology adoption
- Stable regulatory environment

**Industry in 2030**:

- Market size: $[Amount] (CAGR: [Percentage]%)
- Dominant players: Current leaders evolved
- Key changes: [List]

**Strategic Implications**:

- Focus on incremental innovation
- Invest in operational excellence
- Build on existing advantages

### Scenario B: Disruption Accelerates (30% probability)

**Assumptions**:

- Technology breakthrough
- New entrant with different model
- Customer behavior shift

**Industry in 2030**:

- Market size: $[Amount] (transformed)
- Dominant players: Mix of new and transformed
- Key changes: [Radical shifts]

**Strategic Implications**:

- Accelerate transformation
- Consider partnerships/acquisitions
- Rebuild business model

### Scenario C: Market Contraction (10% probability)

**Assumptions**:

- Economic recession
- Substitute technology emerges
- Regulatory crackdown

**Industry in 2030**:

- Market size: $[Amount] (contracted)
- Dominant players: Consolidated survivors
- Key changes: [List]

**Strategic Implications**:

- Focus on resilience
- Diversify revenue streams
- Prepare for consolidation

Strategic Recommendations

For Industry Incumbents

## Strategic Recommendations for Market Leaders

### Immediate Priorities (0-6 months)

1. **Digital Acceleration**

   - Action: Launch digital transformation initiative
   - Investment: $[Amount]
   - Expected ROI: [Percentage]% within 18 months
   - Risk of inaction: Loss of [Percentage]% market share

2. **Customer Retention**
   - Action: Implement loyalty program
   - Focus: Top 20% of customers
   - Target: Reduce churn by [Percentage]%
   - Success metric: NPS increase of [Points]

### Medium-term Initiatives (6-18 months)

1. **Capability Building**

   - Hire: [Specific roles/skills]
   - Develop: [Internal capabilities]
   - Partner: [External expertise]
   - Timeline: [Specific milestones]

2. **Market Expansion**
   - Target segment: [Description]
   - Entry strategy: [Approach]
   - Investment required: $[Amount]
   - Expected return: [Metrics]

### Long-term Positioning (18+ months)

1. **Platform Strategy**

   - Build: Ecosystem of partners
   - Create: Network effects
   - Goal: Increase switching costs
   - Metric: Platform participants

2. **Innovation Leadership**
   - R&D investment: [Percentage]% of revenue
   - Focus areas: [List]
   - Partnership targets: [Organizations]
   - IP strategy: [Approach]

For New Entrants

## Market Entry Strategy

### Entry Point Selection

**Underserved Segment**: [Description]

- Size: $[TAM]
- Growth: [Percentage]% annually
- Current solution gaps: [List]
- Entry barriers: [Low/Medium/High]

### Differentiation Strategy

**Value Proposition**: [Clear statement]

**Competitive Advantages**:

1. [Advantage 1]: How to build and defend
2. [Advantage 2]: How to build and defend
3. [Advantage 3]: How to build and defend

### Go-to-Market Approach

**Phase 1: Beachhead** (Month 0-6)

- Target: [Specific customer segment]
- Channel: [Distribution approach]
- Pricing: [Strategy]
- Success metric: [First customers]

**Phase 2: Expansion** (Month 6-18)

- Scale: [Growth targets]
- Product: [Enhancement plan]
- Team: [Hiring plan]
- Funding: [Capital requirements]

**Phase 3: Defend** (Month 18+)

- Moat: [Defensive strategies]
- Scale: [Efficiency targets]
- Exit: [Strategic options]

Industry Analysis Checklist

Research Phase:

• Define market boundaries
• Identify all players
• Gather financial data
• Interview industry experts
• Analyze customer needs

Framework Application:

• Complete Five Forces
• Conduct PESTLE analysis
• Map strategic groups
• Identify key trends
• Develop scenarios

Analysis Phase:

• Calculate market metrics
• Assess competitive dynamics
• Identify success factors
• Evaluate entry barriers
• Project future state

Synthesis Phase:

• Determine attractiveness
• Identify opportunities
• Assess threats
• Develop recommendations
• Create action plan

Documentation:

• Executive summary
• Detailed analysis
• Supporting data
• Visual frameworks
• Strategic roadmap

Validation:

• Expert review
• Data verification
• Logic testing
• Scenario stress-test
• Update schedule

Remember: Great industry analysis combines rigorous frameworks with practical insight. It's not about applying every model perfectly—it's about revealing the insights that drive better decisions. Focus on the factors that truly matter for success in your specific context, and always connect analysis to actionable strategy.