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What Is Environmental Industry Analysis?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 05 September 2016
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Just like any other type of industry analysis, environmental industry analysis refers to a comprehensive assessment of the factors that affect the environmental industry. Part of the objectives of the assessment include the ease of establishing a business in the environmental industry, the level of competition within the environmental industry, and the relationship that business owners have with their suppliers. Other considerations include the type of relationship the customers have with the business as well as other threats that may affect the ability of the business to thrive.

An environmental industry analysis must necessarily begin with the definition of the environmental industry in order to gain a perspective into what the industry is all about. As can be surmised from the name, the environmental industry refers to those businesses that are derived from or connected to activities related to the improvement of the environment. The businesses in this industry include the operators of landfills, waste collectors and other related jobs. One of the first subjects under an environmental industry analysis is the ease with which a new company can penetrate the industry and thrive.

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This consideration must include a study of the type of market forces at work in the industry and a consideration of whether there are monopolistic tendencies in the industry. Such information is vital because it paints a clear picture of the level of difficulty that a prospective entrant will have to face in order to enter the industry. It also helps established industries conducting periodic assessments to find out the threat posed by new entrants into the industry. That is to say that the ease with which new businesses can enter an industry is directly proportional to the level of competition that is present in that industry. Where there are constant new entrants, there will be a lot of competition for the customers and for the resources available in that industry.

Another subject for an environmental industry analysis is the relationship the business has with the suppliers as well as the customers. The suppliers may include the companies providing the needed materials like incinerators and dump trucks as well as the employees who provide the necessary labor. In this case, the customers include the people and organizations that may contract the services of those in the environmental business to dispose of their garbage. This may also include those who engage the services of such people to conduct an analysis of their environment in order to detect and contain any toxic substances.

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Orcadeal
Post 3

Happy to elabroate, but don’t think of the five forces as a specific formula into which you plug data, get a result, and rake in the money.

1.) The threat of new entrants: The more businesses entering a segment of the economy — say airlines — the more competition, the more supply, the more the price goes down (though some argue that more competition drives up quality and efficiency).

2.) The threat of substitute products or services: This translates to alternatives for the consumer, and another force that can potentially drive price and profit down.

3.) The bargaining power of customers or buyers: Again, the more choices and leverage customers have, the more potential they have to drive price

down.

4.) The bargaining power of suppliers: The more suppliers can leverage price increases over a business, the more volatile profits become.

5.) The intensity of competitive rivalry: The intensity of rivalry is perhaps the most influential force on how a business, after analyzing the industry environment, will develop its own strategy.

Again, the five forces are a type of check list, a starting point from which a business will begin to craft a unique plan to find their specific niche in an industry.

FeistyFox2
Post 2

Can you elaborate Orcadeal? How do these forces work together to provide industry analysis?

Orcadeal
Post 1
A discussion of industry analysis should consider Professor Michael E. Porter’s “Five Forces,” which access the potential profitability of industries. Porter’s five forces should be considered far more substantive than the typical Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis.

The five forces that make industries more or less attractive (or profitable) are: The threat of new entrants, the threat of substitute products or services, the bargaining power of customers or buyers, the bargaining power of suppliers, and the intensity of competitive rivalry.

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