Introducing an Industry Analysis Forum

5 min readJan 11, 2022

Based on the Five Forces and PESTELE Frameworks, and the 2017 North American Industry Classification System (NAICS).

The Industry Analysis Forum

I have developed a forum for industry analysis, based on the Five Forces and PESTELE frameworks. The Industries used for the forum are categorized according to the 2017 North American Industry Classification System (NAICS).

The aim of this forum is to share news and information, host and foster discussions, debates, questions, and answers on the market forces and nonmarket issues experienced by industries. It is also hoped that it would become a source of information for researchers, students, and business professionals who are seeking answers to business problems.

Rationale

Organizations operate in environments that are characterized by complexity and uncertainty. The diverse issues that organizations in a particular industry face may be unique to that industry.

Managers use various frameworks to analyze their organization’s environment so as to understand it. These frameworks allow them to manage effectively by answering key management questions. They assist them in identifying threats and opportunities, understanding the rules of the game in their industry, developing scenarios, and understanding the structure of their market.

Two such frameworks are the Porter’s Five Forces and PESTELE frameworks. The Porter’s Five Forces framework analyzes the market issues faced by a firm in its competitive environment. The PESTELE framework analyzes the nonmarket issues faced by a firm.

The Five Forces Framework

The Five Forces framework was developed by Michael Porter of Harvard Business School. It identifies the following five competitive forces that affect all industries:

The Bargaining power of Suppliers

This examines the extent to which suppliers can influence prices in an industry. Suppliers tend to have greater bargaining power when they are few, there are no substitutes and the industry is not an important customer of the supplier group. They are also more powerful when their products are differentiated and there is a threat of forward integration.

The Bargaining Power of Customers

This examines the ability of customers to influence the price and quality of products and services in an industry. Customers tend to be powerful when they constitute a large portion of the seller’s sales or a high proportion of the customer’s costs or the supplier’s product is not important to the quality of the customer’s product. Additionally, undifferentiated products, low customer switching costs, and the threat of backward integration increase the customers’ bargaining power.

The threat of New Entrants

This examines the barriers to entry in an industry. Barriers to entry include economies of scale, product differentiation, high capital requirement, high switching costs, difficulty accessing distribution channels, government policies, entry-deterring prices, lack of experience, and costs disadvantages other than scale.

Threat of Substitutes

This examines the availability of substitute products or services in an industry. Factors that can influence the threat of substitution include the substitute product price-performance trade-off and the switching costs associated with changing from one supplier to the supplier of the substitute.

Competitive Rivalry

This examines the level of competition in an industry. Rivalry is intense if there are many similar-sized competitors, slow industry growth, high fixed costs, lack of differentiation, diverse nature of competitors, high strategic stakes, or high exit barriers.

The PESTELE Framework

PESTELE is used to analyze the non-market issues that affect an industry. It groups these issues into the following seven categories:

Political Factors

These are governmental influences affecting the economy and how an industry is operated. These include government stability, tax policies, foreign trade regulations, and social welfare policies.

Economic Factors

These are the determinants of the economy’s performance and their impact on an industry’s operational ability, profitability, and sustainability. It looks at factors such as business cycles, GNP trends, interest rates, money supply, inflation, unemployment, and disposable income.

Socio-Cultural Factors

These are the beliefs, attitudes, and trends in society that affects an industry. Examples of socio-cultural factors are population demographics, income distribution, social mobility, lifestyle changes, attitudes to work and leisure, consumerism and levels of education.

Technological Factors

This analyzes the impacts of technological innovation, increased reliance on technology, and the obsolescence of technology on an industry. Some examples of technological factors are the government’s spending on research, government and industry focus on technological innovation and use, new discoveries and developments, speed of technology transfer, and the rate of obsolescence.

Environmental Factors

These are the ecological and environmental issues that impact an industry. This looks at, for example, environmental laws, waste disposal, and energy consumption.

Legal Factors

This looks at the effect of governmental laws on the actions and policies of an industry. Examples of legal issues that may affect industries are monopoly legislation, employment laws, health and safety laws and regulations, and product safety laws and regulations.

Ethical Factors

This looks at moral or ethical issues that can arise in an industry. Examples of ethical issues that may arise are fair trade, slavery acts, child labor, treatment of employees, diversity discrimination, affirmative action, harassment, whistleblowing, marketing and information disclosure, financial statement accuracy, privacy, human rights, bribery, and sweatshops. Corporate social responsibility (CSR), where a business contributes to local or societal goals such as volunteering or taking part in philanthropic, activist, or charitable activities also falls under ethical issues.

In Closing

I invite you to check out the forum. I hope that you will become an active participant and that you will also benefit from it. I will also appreciate it if you recommend it to anyone that you think would benefit from it.

Thanks in advance.

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