1.04 Analyze marketing information to

make informed marketing decisions.

Identify industry/economic trends that will impact business activities

The world is changing rapidly around us. We

are no longer a small town business world with one man shops. Successful competition means constant growth. The money your business will make and where it will head, in terms of growth, is determined by the trends within the global economy. Take heed of these trends as you plan your future success.

Introduction

GNP is Rising: The Gross National Product (GNP) of the United States, Western Europe, Eastern Europe and Asia are growing. There is minimal growth in places like the Middle East, Africa and the Caucus region. Those nations that experience the highest growth

are likely to also bring in the most wealth. High growth in places like China can actually change world dynamics.

Lesson: There is lots of money to be made in an expanding economy

Major Economic Global Trends

Service Sector is Big Business: Around 2001

developed countries had 72% of their new growth in the service industry while developing countries had 52% growth in the service industry (Shackman, 2005). Hotels, restaurants, software,

telecommunications, food service, outsourcing, etc. will take a larger percentage of the economy over time.

Lesson: Businesses in the service industry will experience the most growth.

Major Economic Global Trends

Industry is on the Decline: Contrary to popular

believe Industry like manufacturing has been in serious decline in developed countries and slightly declining in developing countries. Due to high labor costs and unions in developed

countries the labor market is uncompetitive. It is cheaper for companies to move overseas and develop similar operations.

Lesson: If you base your business on industry try and find something new or improve your services.

Major Economic Global Trends

Telecommunications and Internet are on

the Rise: Countries are screaming for more technology and communications. Throughout the world much of the commerce and economic activity among developed nations is through these electronic forms. Huge projects are being conducted in Iraq, Africa and

Eastern Europe to get everyone on a cell phone. Lesson: If you have a business you are eventually

going to have to get hooked into the global electronic grid (i.e. internet, web pages, ecommerce, etc.)

Major Economic Global Trends

Industry trends are examined to make

predictions. The study includes trends related to

consumer behavior, employment, technological advancements, new product development, competition, government norms and other factors that impact the industry.

Business/Industry Trends

inform and guide strategic planning reduce risks seek opportunities anticipate business cycle changes improve inventory management improve supply chain management enhance management forecasts improve financial management enhance marketing management

Reasons Why Businesses Identify Industry/Economic

Trends

Industry organized economic activity connected with the production,

manufacture, or construction of a particular product or range of products Geographic area

A specific area Product

something that is made or created by a person, machine, or natural process, especially something that is offered for sale

Targeted customers the intended group for which something is performed or marketed

Regulatory environment the laws, rules, and regulations put into place by federal, state, or other

government entities and civilian organizations to control the behavior and actions of business activities.

Competitors a company in the same industry or a similar industry which offers a

similar product or service

Identify factors to consider when determining industry trends

Standard & Poor's Industry Surveys: These cover over 50 industries including biotechnology and

telecommunications. The study comprises of fundamental analysis examining the prospects of each industry, with a comparative analysis of company data. Information on major trends, key players and financials is accompanied by an update on the recent developments in the industry and a forecast on the impact of government legislations on the industry.

Business & Company Resource Center: This source, provided by the Gale Group, is helpful in identifying

industry trends through an analysis of company profiles. Information on a company’s products, share prices and consumer marketing is provided.

Faulkner's Advisory for IT Studies: This collection of reports covers technological aspects, such as IT

infrastructure, data networking and enterprise systems. Also, FAITS links to business news sources such as The New York Times and Nando Net.

Major Sources of Information for Identifying

Industry Trends:

political and social population and demographics resources and environment science and technology work and workplace

Forces that drive trends

industry profiles trade/professional associations census data industry surveys online databases business directories company websites government agencies

Securities and Exchange Commission)

General resources that are useful in identifying industry

trends

a useful tool for spotting industry trends. identifies five factors that act together to

determine the nature of competition within an industry.  These are the: Threat of new entrants to a market Bargaining power of suppliers Bargaining power of customers (“buyers”) Threat of substitute products Degree of competitive rivalry

Porter’s five forces model in industry analysis.

Greater market share and a higher ability to influence the selling price

indicate the trend of consolidation. Profits rise and costs decline.

The expansion of the areas of operation, product line, customer base and technical capabilities encourages companies to consolidate.

An example of this trend in the electronics industry is that of the acquisition of Compaq by Hewlett Packard.

From banking to software, and from automotive to telecom, almost every industry has undergone consolidation in recent times.

The measurement of industry trends can be done by studying the profile of an industry.

By locating a pattern of movement of certain companies within an industry, trends can be measured.

This research can also include a study of statistical data on business and financial ratios.

Porter’s Five Forces Model in Industry Analysis

An industry trend analysis is a qualitative and

quantitative report on a specific sector of economic activity defined by national or international industry classification systems. Industry is any activity in which raw materials are

processed into finished goods. There are various methods used to collect, quantify

and interpret economic activity in an industry trend analysis. Generally, the analysis selects an industry

according to its North American Industrial Classification System (NAICS) code.

How to identify industry trends that will impact business activities.

Some industry trend analysis reports compare

the performance of a particular business to that industry’s performance as a whole. Others are conducted to gain a better

understanding of market dynamics and performance within the industry sector.

Analyzing industry trends helps business leaders, economists, and policy makers understand the structure of an industry. Vulnerabilities and opportunities that may exist within an industry can be revealed through the analysis.

How to identify industry trends that will

impact business activities.

Which data is collected in an industry trend analysis

depends upon the purpose for the analysis. Economists look at industrial trends in order to provide

feedback to government officials or industry leaders. Political systems are closely intertwined with economic

systems, as a nation's productivity is essential for supporting a population with essential and luxury goods.

The government might use the data collected to give incentives to one industry rather than another.

Business leaders conduct an industry trend analysis to measure their companies' ability to remain competitive.

How to identify industry trends that will

impact business activities.

The NAICS is used in an industry trend analysis to compare one

industry to another, or to group industries within the scope of a broader analysis. Economic activity generated by the sale of finished goods is also included in an NAICS category.

This system replaced the Standard Industrial Classification System (SIC) used in the U.S. in 1997. This change was made to modernize the system to include categorization by how production occurs, not just what is produced. The change also allowed industrial activity in Mexico, Canada, and the U.S. to be considered as a whole.

(NAICS) North American Industrial Classification Code

NAICS organizes industry categories using numerical codes.

Classification codes mark the boundaries of where one industrial sector ends and another begins. The strict delineation is helpful when comparing one industry trend analysis to another industrial category's trend analysis. An example of how NAICS codes operate may be understood by looking at

the seafood industry. The industry sector of Seafood Product Preparation and Packaging has a numerical code of 3117. Seafood canning, an activity that falls under the larger category of seafood production in general, has been assigned the code 311711, while fresh and frozen seafood processing has the code 311712.

Coding industrial sectors helps set specific boundaries for each industry's activities. These codes are structured so that one part of an industrial sector's activity can be broken out as a separate economic statistic for trend analysis purposes. Such statistics are crucial in conducting the quantitative part of an industry trend analysis.

(NAICS) North American Industrial Classification Code