A study of the structure of your targeted industry can reveal how attractive the industry is. You will need to take the following into account:
a) Competition among existing market players. Information of this aspect should be the number of market players in this industry, their comparative size, product lines, strategies, costs, and commitment to the industry.
b) Threat of competition from potential entrants.
c) Threat of competition from substitute products and technology. These are products or services that are not directly competing with your products or services, but they have implications on the growth of your industry.
d) The buying power of customers. Determine the buying power of customers by looking at the number of competition and by charting prices. If too many businesses are cutting prices due to customer pressure and do not make a sufficient profit, investment in such an industry may be unwise.
e) The bargaining power of suppliers. To determine supplier power within the industry, you need to find out who the major suppliers are and the condition of their product lines. You can do this by reading trade periodicals and contacting trade associations.
