Based on all five forces, what is your overall assessment of this industry? Just how attractive or unattractive is it?
Macro-level Industry assessment:
- Industry Domain/Macro Level: Industry Attractiveness
It’s now time to look at how attractive your industry is on a macro level.
Mullins suggests using Porter’s Five Forces to assess which factors affect the profitability of your industry.
To do this, first define the industry that you will be competing in, and then ask yourself how easy it is to enter this industry. If it’s easy to get into, you can quickly be flooded with competitors if you are seen to make a success of your business.
Next, look at your competition. Is rivalry in this market fierce or civilized? Are organizations stealing ideas from others in the industry? Take time to gather intelligence about your potential competitors to see what they’re up to.
Last, look at buyers and suppliers. How much power do they have? Are they setting their own terms and conditions because of this power? If so, how will this affect your offering?
- a) Five macro-level questions to assess your industry:
Michael Porter’s five forces Questions to ask
Threat of Entry
Is it difficult for companies to enter this industry?
Supplier power
Do suppliers to this industry have the power to set terms and conditions?
Buyer power
Do buyers have the power to set terms and conditions?
Threat to substitutes
Is it easy or difficult for substitute products to steal the market?
Competitive Rivalry
Is competitive rivalry intense or genteel?
- b) The Macro Industry test:
- What industry will you compete in? Define it carefully.
- Based on all five forces, what is your overall assessment of this industry? Just how attractive or unattractive is it?
- If your industry is a poor performer overall, are there persuasive reasons why you will fare differently?
