IBISWorld provides company reports. To learn more of what's included, check out the US Company Benchmarking Report List. An industry is a group of enterprises primarily engaged in the same kind of economic activity regardless of their types of ownership.
So, companies and enterprises roll up into industries and industries roll up into sectors, which are larger parts of the economy.
Let’s look at an example for a breakdown in the United States Manufacturing sector.
Note: Individual companies are classified into an industry based on their largest source of revenue. For example, while a brewery might operate a small restaurant that contributes a small percentage to their overall revenues, the company would be classified in the brewery industry by most classification systems.
We’ll get into more detail about industry classification systems a little further down.
When someone is seeking industry research, they are likely looking for information about a particular industry (or set of industries) in order to:
Industry research is designed to help businesses develop strategies, and is a crucial part of effective strategic planning. It’s often helpful to use a common framework (like, PESTLE, SWOT and Porter’s Five Forces) to gauge competition and highlight opportunities and threats that may influence profitability within an industry. While you may already know your company’s strengths and weaknesses, putting it all down on paper can keep you from overlooking key factors.
Here are 3 of the most common frameworks:
PESTLE analysis accounts for the political, economic, social, technological, legal, and environmental factors that affect a business.
The PESTLE framework offers the most support during the idea phase. In business planning, product development, product launches and new market entry, PESTLE analysis helps businesses grasp the external environment and strengthen their strategies by finding areas of opportunity. While researching each of the six topics can seem daunting at first, industry research reports often do the legwork for you. The data and analysis laid out in these comprehensive reports often fit neatly into the PESTLE template.
SWOT analysis covers the strengths, weaknesses, opportunities and threats within an industry.
The SWOT framework is an integral part of business planning. This model is especially useful when planning strategies or considering investment opportunities, product development and outsourcing. SWOT helps businesses take stock of their resources and determine what can be leveraged to gain a foothold in the market. Through SWOT, businesses also grasp the underlying threats that may harm their growth potential and cut into profitability.
But where do businesses find this information? Industry research reports go hand in hand with SWOT analysis, making it easy to fill in the gaps. When done right, SWOT analysis can help a business achieve its fullest potential while enhancing its market competitiveness.
Learn more about the SWOT formula and questions you can ask to gain better insights into strengths, weaknesses, opportunities, and threats.
The Five Forces model includes the:
Businesses strategies are often driven by the Five Forces model. To help companies flesh out this template, good industry reports will highlight key data points that fall squarely into the five categories.
Ultimately, the framework aims to determine the competitive intensity and attractiveness of an industry in terms of its profitability.
Taking stock of the forces at play can help shape a company’s approach to serving customers and aid strategic planning. With the Five Forces model, businesses can assess various opportunities and threats to better understand their competitive advantage, mitigate risks and reduce costs.
Threat of New Entrants
Some industries are easier to enter than others. When industries are easier to break into, operators are at risk of being edged out by new competition.
Buying Power of Customers
Buying power, also called bargaining power, refers to the customer’s ability to negotiate for higher quality, better customer service or lower prices. Companies that sell to diverse downstream buying markets and have a large customer base are often less influenced by individual buyers. On the other hand, companies that operate at the mercy of buyers have little pricing power.
Supplier Power
An upstream supplier’s power is strongest when the supplier is considered a frontrunner in a highly concentrated industry. When suppliers are dominant, they give customers little choice but to accept the prices offered. This situation can complicate a company’s upstream supply chain.
Threat of Substitutes
Substitutes can act as replacements for a company’s product or services, making them a threat to revenue generation and – in extreme cases – business continuity.
When companies enter into industries with numerous substitute products or services, they run the risk of becoming obsolete. This is especially true when the substitute products present several benefits that the company’s offering lacks.
Industry Competitors
A company’s success ultimately depends on its position in the market, which largely hinges on the level of competition. Competition is driven upward when there are large, established companies dominating an industry. Before breaking into an industry, newer, less established companies should consider whether they’ll be able to steal the limelight from existing competition. If their product or service is not distinguished enough to divert business away from competitors, their chances of thriving are low.
Going hand-in-hand with PESTLE, SWOT and Porter’s Five Forces is competitive analysis.