Industry Classification
The first part of this section is defining the industry that your company fits into
and is an important macro identification. A valid test of the industry definition is
the answer to the question “with whom does your company compete?” Be careful
that the definition is not too narrow. For instance in the finance industry, Charles
Schwab is a discount broker and they obviously compete with other discount
brokers like Quick and Reilly and Fidelity. However, they also compete against full
service brokers and deep discounters.
There is also a risk of defining the industry too broadly. For instance, total retailing
in the U.S. is over $2 trillion a year. This includes everything sold to a consumer–
groceries, automobiles, fast food, clothing, etc. There are sub-sections to the retail
industry and these provide a better definition since they are consistent with the
criteria cited above regarding which companies compete against in the market.
Hence, it would be incorrect to identify your company as part of the hospitality
industry.
Explain the structure of the industry and identify the dominant companies. Who are
the current players, their products, their strengths and weaknesses? A chart (which
is located in the Appendix of your paper NOT within the body) showing the relative
size of dominant companies compared to your analysis company is often a good
idea.
Size and growth
Again, you are not looking at the hospitality but the subset of that industry to
which your company belongs.
Financial performance in this section deals with the industry and not your specific
analysis company. How has the industry done in recent years and what are the
projections for the future. The Value Line publication analysis is a good source for
this type of information as are trade publications that are devoted to the specific
industry. This is another opportunity to use a chart to show financial performance
of the industry over multiple years. Do not deal with quarters but focus on annual
performance.
Government regulations
Again, looking at the industry what are the important government regulations (if
any) that the industry is being forced to examine. Again, NOT the hospitality
industry.
3-3.5 pages
