Dr Mohd Aslam Alig
Instrument that businesses and analysts use to understand the competitive dynamics and problems of the industry. It is a method that helps in understanding the position of your company relative to other players in the industry.
Comprehension of how companies and industries operate, concurrently with the critique of financial statements, furnishes a basis for forecasting a company’s performance based on relative parameters of the industry and permits analysts to specify the value of an investment in a company or its securities.
One of the crucial tasks of industry analysis is the continuous scanning of operations, anticipating problems, and identifying measures for potential productivity advancements. And as it is impossible to thrive when the whole industry is in a recession phase, it becomes very crucial to understand how to identify the problems of the industry you are working in.
Given below are a few analyses to identify problems in the industry:
- Weakness Analysis
A large number of questionnaires, audit procedures, checklists, and guidelines are used to identify potential problem areas.
In weakness analysis, explicit procedures such as product development, marketing, advertising, product pricing, and sales are colored for different sectors of the industry and individual firms. Along with that weakness analysis also concentrates on possible problem areas such as technology, training, working conditions, etc.
Steps included in weakness analysis are:
● Identify the area (industry, department, and service) you want to analyze weaknesses of
● Adjust existing approaches to your needs
● Inform and train collaborators in the use of weakness analysis
● Always ask questions to the right people, and finally
● Evaluate results
- SWOT Analysis
A SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis is a valuable means for brainstorming and strategic planning. An industrial architect should make use of this evaluation to fix detected weaknesses, construct existing strategies, discover new productivity opportunities, and foreknow threats to the industry by highly productive opponents.
SWOT analysis includes asking questions like
● Where do the productivity strengths of our industry lie
● Opportunities we have to improve the productivity of the industry
● Why is our industry not flourishing (our weaknesses)
● What kind of productivity threats do we face
- Portfolio Analysis
Just like SWOT analysis, portfolio analysis is also a tool of strategic management. Industrial sectors delivering income-elastic products can rise rapidly but are very much vulnerable to fluctuations in the world economy. Policymakers take into account this trade-off between outcome and employment growth over the longer term and volatility in the short and medium term.
Furthermore, industry portfolio analysis also helps in building an accountability framework that guarantees the right level of compliance in the industry, which ultimately results in problem identification in the industry. Thus, effective risk management is one of the consequential benefits companies fetch from industry portfolio analysis.
Portfolio analysis includes the analysis of
● Number of firms in the industry
● Percentage of market equity
● Dividend yield and
● Percentage of market leverage
- Force-field Analysis
FFA or Force-field Analysis is a tool to analyze a situation that demands change. It simplifies changes in an organization by minimizing disruption and effort. This analysis is used when there is some sort of confusion about which progress step should be taken next. Basically, it unlocks new options for action. This technique reduces the problem into an uncomplicated dimension and helps firms in the industry to work together.
Force-field analysis can be used by an individual, small, or large group.
This analysis includes the following steps:
● At the outset, determination of the current equilibrium condition. It includes the determination of the level of performance, improvements needed, and desired end result
● Identification of restraining and driving forces in the industry
● Analysis of the restraining forces that can be withdrawn and driving forces that can be strengthened
Technique
Application
Main Features
Weakness Analysis
For the identification of possible problem areas
Different questionnaires/ checklists, nominal grouping, and brainstorming exercises are available
SWOT Analysis
For the determination of strengths, weaknesses, opportunities, ad threats of the industry
SWOT factors are jointly brainstormed to weigh and determine alternative business strategies
Portfolio Analysis
To focus productivity improvements on most promising products or services
Group products as per their life horizon and performance to achieve a balanced product structure
Force-field Analysis
For the identification of impeding and impelling forces of the industry
Impeding and impelling forces are determined in a brainstorming exercise. The main focus is on the removal and strengthening of restraining and driving forces respectively
A distinctly specified list of issues is the most suitable basis for specifying potential solutions. You just need to make sure that the problems you have identified are the exact ones causing the trouble. Once you are done identifying the problem, next you must determine its root cause. A well-clarified problem has its solution hidden within it, but if you do not identify what the issues are, how can you solve them?
Final Takeaways
Defining problems is simple but it requires patience, critical thinking, and thorough analysis. To identify the problems you explore the current situation, identify its potential impacts, the results if it is left untreated, and how it actually originated.
Once you are done examining the situation, refine the problem to its most superficial form possible and ask why what you think is a problem? How is it hindering industry growth? And last but not least, until you find the answer to your question keep asking yourself why did that problem arise?
Between, misdiagnosis of a problem can be really troublesome. Not only will it result in substantially wasted time, energy, and efforts on something totally unconnected with the issue, but it also means that the real problem remains untreated. Therefore, work your way towards the analysis of weaknesses, portfolio analysis, SWOT analysis, and eventually force-field analysis.
Do not forget! Business is all about solving problems – at a profit.
