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Industry
a set of players that sell more or less the same thing. TERM 2
Player
DEFINITION 2 could refer to an entire firm or to a division of a firm. Examples of entire firm: Coca - Cola Examples of divisions of the firm: Marathon a "player" in the petroleum industry as a division of USX (US Steele) TERM 3
Systems to classify firms into one or more
industries
DEFINITION 3 Standard Industrial Classification (SIC) North American Industrial Classification System (NAICS) TERM 4
Substitutability approach to identify industries
DEFINITION 4 The idea here is that firms in the same industry are likely to demonstrate demand-side substitutability or supply-side substitutability or both. TERM 5
Demand-side substitutability
DEFINITION 5 Refers to the possibility of customers switching between suppliers. Example: a buyer of a retail checking account could buy from PNC, or Citibank, or a large number of other banks.
Supply-side substitutability
Refers the similarity of technologies used by the producer. Example: Campbell's is a firm with lots of knowledge and experience turning tomatoes into prepared food. I don't think they make ketchup. Heinz does. Customers looking for ketchup won't find it by Campbell's. By the demand side definition Heinz is "in" the ketchup industry and Campbell's is not. Does Campbell's have the technology to make ketchup? If they did, then under supply- side definition, we would consider both firms in the same industry TERM 7
Rivals
DEFINITION 7 Are a special type of competitor, namely, those competitors that sell what you sell. Rivals may "look" different depending on how the industry is defined. Rivals could be entire firms or divisions of firms. TERM 8
Benefits of focus
DEFINITION 8 Doing one business exceedingly well. TERM 9
Diversified
DEFINITION 9 Firms that are in more than one business area. TERM 10
Focused
DEFINITION 10 Firms in one business.
Competition from new entrants
Competition from other players that could sell more or less similar products. Entry Barriers Economies of scale brand loyalty TERM 17
Competition from substitutes
DEFINITION 17 Competition from players that sell substitute products. Brand loyalty Switching costs TERM 18
Industry Profitability
DEFINITION 18 If industry profitability is high, that industry is a more attractive arena for all rivals, on average However, whether a particular firm in the industry is profitable or not is only partly dependent on industry attractiveness.
