introduction to management—ch05讲义教材.ppt

Industry Environment Chapter 5 industry characteristics Industry demand Definition As industry demand changes, so does the performance of firms in the industry. Low/high industry demand—poor/good performance of firms Industry demand can change and therefore is monitored closely by a firm’s managers. Apply new production plans Industry demand can be affected by changes in consumer income levels or preferences. Changes in industry demand affect the demand for a firm’s products and its revenue. industry characteristics Industry competition A firm’s performance can be affected by competition. Definition of market share Less competition – higher market share – higher revenue Revenue = Quantity * Price Changes in industry competition affect the demand for a firm’s products and its revenue. industry characteristics Labor environment The cost of labor is much higher in specific industries that require specialized skills. Industries that have labor unions may also experience labor strikes. Any changes in the labor typically affect a firm’s expense. industry characteristics Regulatory environment The federal government may enforce environmental rules or may prevent a firm from operating in particular locations or from engaging in particular types of business. Any changes in the Regulatory environment typically affect a firm’s expense. Industry Sources Value line The Value Line Investment Survey provides valuable information about numerous publicly traded companies. Standard and Poor’s The Standard and Poor’s Industry Outlook provides industry data and assessments for different industries. 2. Exposure to industry conditions Some firms are more exposed to industries conditions. Two key characteristics Market share Firms that have the most market share Firm’s focus on its main industry Firms that focus on their business in one industry Reducing exposure through diversification To diversify its business across several different industries A diversified combination of the in