Industry analysis of computer sector Submitted to Mrs. Indrish KAUR Submitted by Priyanka Manchanda FMS/MBA/152ing Introduction to Industry Each business operates under a group of firms that produce competing products or services known as an “industry”. An industry is thus a group of firms producing similar products or services. By similar products we mean products that consumer perceive to be substitutes for one another. Eg.
Firms that produce PC’s such as apple, HP, IBM, Wipro, HCL, Although there are usually some differences among the competitors, each industry has its own set of “rules of combat” governing such issues as product quality, pricing and distribution. This is especially true in industries that contain a large number of firms offering standardized products or services. As such, it is important for strategic managers to understand the structure of the industry in which their firms operate before deciding how to compete successfully.
Industry analysis is therefore a critical step in the strategic analysis of firm. In a perfect world, each firm would operate in one clearly defined industry. However, many firms compete in multiple industries, and strategic managers in similar firms often differ in their conceptualization of the industry environment. The concept of primary and secondary industries may be useful in defining an industry.
A primary industry may be considered as a group of close competitors, whereas a secondary industry includes less direct competitors. The basic purpose of industry analysis is to assess the strengths and weaknesses of a firm relative to its competitors in the industry. It tries to highlight the structural realities of particular extent of competition within that industry. Through industry analysis an organization can find whether the chosen field is attractive or not and assess its own position within the industry. Computer industry is a collective term used to describe the whole range of businesses involved in developing computer software, designing computer hardware and computer networking infrastructures, the manufacture of computer components and the provision of information technology services. ” INTRODUCTION TO HP a Hewlett Packard External Environment Analysis In today’s constantly evolving business world, it is essential for organizations to fully master and incorporate strategic management theory into decision making processes.
As the world’s largest technology company, HP brings together a portfolio that spans printing, personal computing, software, services, and IT infrastructure to solve customer problems (Hewlett Packard, 2010). “HP is well positioned to outperform the market. The strength of HP’s portfolio is leaner cost structure and accelerating market momentum that gives the confidence to raise the full year outlook (Hurd, 2010)”. One of the most important aspects of Hewlett Packard’s strategy building is an analysis of the
GET BETTER GRADES external business environment that they operate in. As pointed out in the text Strategic Management. Concepts and Cases Competitiveness and Globalization, “The firm’s understanding of the external environment is matched with knowledge about its internal environment to form its vision, to develop its mission, and to identify and implement actions that result in strategic competitiveness and above-average returns. (Hitt, Ireland, and Hoskisson, 2009) In this paper, there will be an analysis of Hewlett Packard’s external business environment and its impact on the firm’s strategic business continuity plan, including examination of the three components of the external environment, the general environment, the industry environment, and the competitor environment. External Environmental Analysis Before analyzing Hewlett Packard’s external influences, it is important to highlight the specific processes in an external environmental analysis. This analysis is performed so that firms can correctly identify potential pportunities and… Importance of industry analysis Framework for industry analysis Industry analysis covers two important components: 1. Industry environment 2. Competitive environment The following are the aspects to be covered in the above analysis: Industry analysis 1. Industry features 2. Industry boundaries 3. Industry environment 4. Industry structure 5. Industry performance 6. Industry practices 7. Industry attractiveness 8. Industry prospects for future Competitive analysis Competitive analysis basically address two questions: 1. Which firms are our competitors? 2.
Which factors shape competitors in industry Industry analysis: Industry features: Industries differ significantly. So, analyzing a company’s industry begins with identifying the industry’s dominant economic features and forming a picture of the industry landscape. Dominant economic features are 1. Overall size: overall size of the industry is large. As there are many players in the market. And there is yet potential and opportunity in the market to be grabbed. The industry is facing a global competition 2. Market growth rate: computers industry is a growing and grooming industry.
As more and more people are becoming familiar with computers. And it is penetrating to the remote areas. And has already become an essential part of our lives. Today, all the information is stored into the computers. Consumers all over the world are using this machine for their work and entertainment purpose. Internet is an inseparable part of our lives. Consequentially demand for computers is hiking. Thus the industry is enjoying its growth phase. 3. Geographic boundaries of the market: there is an international competition in market. On the grounds of technologies, services, pricing, brand image etc. . Number and sizes of competitors: there are a large number of competitors, and all of them are bullish players. Eg. There are Apple, H. C. L. , Zenith computers, Wipro, Dell, etc. 5. Product innovation: it is highly innovative industry. Every day there is seen a set of innovations, and renovations. Products are continuously developed. And become obsolete in very short span of time. Because the customer is very proactive and moves towards the new and better versions which are highly hyped. Competitors need to put up new add ons every time in order to have a competitive edge over other players.
Now by knowing these features about the industry, it would be easier for a manager to understand the strategic moves that managers should employ. Industry boundaries 1. Breadth of market: The Breadth of Market Indicators The Breadth of Market Indicators theory is a technical analysis theory that predicts the strength of the stock market according to the number of issues that advance or decline in a particular trading day. Investors have been searching for ways to describe “the market” for decades. In the stock market analysts are using the “top down” approach where they ook at the market, then the industry group and, finally, the individual stock. In contrast, the phrase “it’s not a stock market but a market of stocks” takes a “bottom up” approach based on the notion that the market is really the sum of the actions of all groups and stocks. To reconcile these two methods, we need tools to generalize the behavior of all stocks and they all fall into the category of market breadth indicators. One of the more commonly used is called the advance-decline line. During bull markets, it is rather rare, if not impossible, for all stocks to be rising.
Speculators may have pushed up some issues to overbought conditions early and they are caught in short-term corrections. Some industries, and their stocks, flourish during one part of the business cycle while others languish. What the market needs in order to be classified as “healthy” are the basic technical underpinnings of rising trends, rising volume and rising participation from the masses. For the stock market, this means both widespread interest from investors and traders and broad interest in the majority of issues available. Some measures of market breadth involve the volume of rising stocks compared to the volume of falling stocks.