Glossary: M06 — Industry and Competitive Analysis
| Term | Definition |
|---|---|
| Barrier to Entry | Obstacles that make it difficult for new firms to enter an industry (capital, regulation, brand) |
| Bargaining Power of Buyers | The ability of customers to pressure companies to lower prices or improve quality |
| Bargaining Power of Suppliers | The ability of suppliers to raise input prices or reduce quality |
| Bottom-Up Analysis | Starting analysis from individual companies and aggregating to the industry level |
| Buyer Concentration | The degree to which a few large buyers account for a significant share of purchases |
| Competitive Advantage | A condition that allows a company to produce goods or services more effectively than rivals |
| Cyclical Industry | An industry whose revenues and earnings are highly sensitive to the business cycle |
| Decline Stage | The final industry life cycle stage characterized by shrinking demand and falling revenue |
| Defensive (Non-Cyclical) Industry | An industry relatively unaffected by business cycle fluctuations |
| Economies of Scale | Cost advantages gained by increased production volume, spreading fixed costs |
| Embryonic Stage | The earliest industry life cycle stage with slow growth, few participants, and high uncertainty |
| GICS | Global Industry Classification Standard; a widely used classification system by MSCI and S&P |
| Growth Stage | The industry life cycle stage with rapid revenue growth and increasing competition |
| ICB | Industry Classification Benchmark; a classification system by FTSE Russell |
| Industry Concentration | The degree to which a small number of firms dominate an industry’s total output |
| Industry Life Cycle | The stages an industry passes through: embryonic, growth, shakeout, mature, decline |
| Mature Stage | The industry life cycle stage with slow, stable growth and high barriers to entry |
| Oligopoly | A market structure dominated by a few large firms with significant pricing power |
| Porter’s Five Forces | A framework analyzing five competitive forces that shape industry profitability |
| Rivalry Among Existing Competitors | The intensity of competition among firms currently in the industry |
| Shakeout Stage | The industry life cycle stage where growth slows, competition intensifies, and weaker firms exit |
| Substitute Product | A product from another industry that can serve the same function for consumers |
| Switching Cost | The cost a customer incurs to change from one product or supplier to another |
| Threat of New Entrants | The risk that new competitors will enter the industry and erode profitability |
| Threat of Substitutes | The risk that alternative products will reduce demand for the industry’s products |
| Top-Down Analysis | Starting analysis from the macro economy, narrowing to industry, then company |
Related: M06 Module Page | Equity Formulas