The industry analysis is a vital component in feasibility studies and business plans which reflects the current and expected conditions of the industry and the various components of that industry. The analysis is done to research the attractiveness of an industry; the various advantages and disadvantages in an industry and the level of threats in a specific industry. An industry analysis is usually carried out using Porter’s five forces model and enables a company to analyze various factors affecting a company.
The five forces model was developed and introduced by Michael Porter in the Harvard Business Review (Porter, 1979). This model involves five factors including the entry of competitors in the market, threat from substitute products or services, bargaining power of consumers and buyers, bargaining power of suppliers and rivalry among the existing competitors. The industry analysis focuses on the components, participants and current conditions of an industry. The entry of competitors will explain the level of difficulty faced by new entrants in the field of Light Emitting Diodes and the barriers these entrants face with respect to current conditions of the industry. The threat of substitutes will discuss the threat of any substitutes of Light Emitting Diodes in current or future years. The bargaining power of buyers will explain the position and strength of buyers and consumers of Light Emitting Diodes which can affect a Light Emitting Diode manufactures decisions with respect to prices and quality. The bargaining power of suppliers will focus on the level of power suppliers may have to affect the procurement of raw materials required for Light Emitting Diodes. Rivalry among existing competitors will explain the level of competition and aggressiveness of the competitors in manufacturing and selling Light Emitting Diodes.
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