industry analysis research paper

How to Conduct an Industry Analysis? Steps, Template, Examples

Appinio Research · 16.11.2023 · 39min read

Are you ready to unlock the secrets of Industry Analysis, equipping yourself with the knowledge to navigate markets and make informed strategic decisions? Dive into this guide, where we unravel the significance, objectives, and methods of Industry Analysis.

Whether you're an entrepreneur seeking growth opportunities or a seasoned executive navigating industry shifts, this guide will be your compass in understanding the ever-evolving business terrain.

What is Industry Analysis?

Industry analysis is the process of examining and evaluating the dynamics, trends, and competitive forces within a specific industry or market sector. It involves a comprehensive assessment of the factors that impact the performance and prospects of businesses operating within that industry. Industry analysis serves as a vital tool for businesses and decision-makers to gain a deep understanding of the environment in which they operate.

Key components of industry analysis include:

• Market Size and Growth: Determining the overall size of the market, including factors such as revenue, sales volume, and customer base. Analyzing historical and projected growth rates provides insights into market trends and opportunities.
• Competitive Landscape: Identifying and analyzing competitors within the industry. This includes assessing their market share , strengths, weaknesses, and strategies. Understanding the competitive landscape helps businesses position themselves effectively.
• Customer Behavior and Preferences: Examining consumer behavior , preferences, and purchasing patterns within the industry. This information aids in tailoring products or services to meet customer needs.
• Regulatory and Legal Environment: Assessing the impact of government regulations, policies, and legal requirements on industry operations. Compliance and adaptation to these factors are crucial for business success.
• Technological Trends: Exploring technological advancements and innovations that affect the industry. Staying up-to-date with technology trends can be essential for competitiveness and growth.
• Economic Factors: Considering economic conditions, such as inflation rates, interest rates, and economic cycles, that influence the industry's performance.
• Social and Cultural Trends: Examining societal and cultural shifts, including changing consumer values and lifestyle trends that can impact demand and preferences.
• Environmental and Sustainability Factors: Evaluating environmental concerns and sustainability issues that affect the industry. Industries are increasingly required to address environmental responsibility.
• Supplier and Distribution Networks: Analyzing the availability of suppliers, distribution channels, and supply chain complexities within the industry.
• Risk Factors: Identifying potential risks and uncertainties that could affect industry stability and profitability.

Objectives of Industry Analysis

Industry analysis serves several critical objectives for businesses and decision-makers:

• Understanding Market Dynamics: The primary objective is to gain a comprehensive understanding of the industry's dynamics, including its size, growth prospects, and competitive landscape. This knowledge forms the basis for strategic planning.
• Identifying Growth Opportunities: Industry analysis helps identify growth opportunities within the market. This includes recognizing emerging trends, niche markets, and underserved customer segments.
• Assessing Competitor Strategies: By examining competitors' strengths, weaknesses, and strategies, businesses can formulate effective competitive strategies. This involves positioning the company to capitalize on its strengths and exploit competitors' weaknesses.
• Risk Assessment and Mitigation: Identifying potential risks and vulnerabilities specific to the industry allows businesses to develop risk mitigation strategies and contingency plans. This proactive approach minimizes the impact of adverse events.
• Strategic Decision-Making: Industry analysis provides the data and insights necessary for informed strategic decision-making. It guides decisions related to market entry, product development, pricing strategies, and resource allocation.
• Resource Allocation: By understanding industry dynamics, businesses can allocate resources efficiently. This includes optimizing marketing budgets, supply chain investments, and talent recruitment efforts.
• Innovation and Adaptation: Staying updated on technological trends and shifts in customer preferences enables businesses to innovate and adapt their offerings effectively.

Importance of Industry Analysis in Business

Industry analysis holds immense importance in the business world for several reasons:

• Strategic Planning: It forms the foundation for strategic planning by providing a comprehensive view of the industry's landscape. Businesses can align their goals, objectives, and strategies with industry trends and opportunities.
• Risk Management: Identifying and assessing industry-specific risks allows businesses to manage and mitigate potential threats proactively. This reduces the likelihood of unexpected disruptions.
• Competitive Advantage: In-depth industry analysis helps businesses identify opportunities for gaining a competitive advantage. This could involve product differentiation, cost leadership, or niche market targeting .
• Resource Optimization: Efficient allocation of resources, both financial and human, is possible when businesses have a clear understanding of industry dynamics. It prevents wastage and enhances resource utilization.
• Informed Investment: Industry analysis assists investors in making informed decisions about allocating capital. It provides insights into the growth potential and risk profiles of specific industry sectors.
• Adaptation to Change: As industries evolve, businesses must adapt to changing market conditions. Industry analysis facilitates timely adaptation to new technologies, market shifts, and consumer preferences .
• Market Entry and Expansion: For businesses looking to enter new markets or expand existing operations, industry analysis guides decision-making by evaluating the feasibility and opportunities in target markets.
• Regulatory Compliance: Understanding the regulatory environment is critical for compliance and risk avoidance. Industry analysis helps businesses stay compliant with relevant laws and regulations.

In summary, industry analysis is a fundamental process that empowers businesses to make informed decisions, stay competitive, and navigate the complexities of their respective markets. It is an invaluable tool for strategic planning and long-term success.

How to Prepare for Industry Analysis?

Let's start by going through the crucial preparatory steps for conducting a comprehensive industry analysis.

1. Data Collection and Research

• Primary Research: When embarking on an industry analysis, consider conducting primary research . This involves gathering data directly from industry sources, stakeholders, and potential customers. Methods may include surveys , interviews, focus groups , and observations. Primary research provides firsthand insights and can help validate secondary research findings.
• Secondary Research: Secondary research involves analyzing existing literature, reports, and publications related to your industry. Sources may include academic journals, industry-specific magazines, government publications, and market research reports. Secondary research provides a foundation of knowledge and can help identify gaps in information that require further investigation.
• Data Sources: Explore various data sources to collect valuable industry information. These sources may include industry-specific associations, government agencies, trade publications, and reputable market research firms. Make sure to cross-reference data from multiple sources to ensure accuracy and reliability.

2. Identifying Relevant Industry Metrics

Understanding and identifying the right industry metrics is essential for meaningful analysis. Here, we'll discuss key metrics that can provide valuable insights:

• Market Size: Determining the market's size, whether in terms of revenue, units sold, or customer base, is a fundamental metric. It offers a snapshot of the industry's scale and potential.
• Market Growth Rate: Assessing historical and projected growth rates is crucial for identifying trends and opportunities. Understanding how the market has evolved over time can guide strategic decisions.
• Market Share Analysis: Analyzing market share among industry players can help you identify dominant competitors and their respective positions. This metric also assists in gauging your own company's market presence.
• Market Segmentation : Segmenting the market based on demographics, geography, behavior, or other criteria can provide deeper insights. Understanding the specific needs and preferences of various market segments can inform targeted strategies.

3. Gathering Competitive Intelligence

Competitive intelligence is the cornerstone of effective industry analysis. To gather and utilize information about your competitors:

• Competitor Identification: Begin by creating a comprehensive list of your primary and potential competitors. Consider businesses that offer similar products or services within your target market. It's essential to cast a wide net to capture all relevant competitors.
• SWOT Analysis : Conduct a thorough SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for each competitor. This analysis helps you identify their internal strengths and weaknesses, as well as external opportunities and threats they face.
• Market Share Analysis: Determine the market share held by each competitor and how it has evolved over time. Analyzing changes in market share can reveal shifts in competitive dynamics.
• Product and Pricing Analysis: Evaluate your competitors' product offerings and pricing strategies . Identify any unique features or innovations they offer and consider how your own products or services compare.
• Marketing and Branding Strategies: Examine the marketing and branding strategies employed by competitors. This includes their messaging, advertising channels, and customer engagement tactics. Assess how your marketing efforts stack up.

Industry Analysis Frameworks and Models

Now, let's explore essential frameworks and models commonly used in industry analysis, providing you with practical insights and examples to help you effectively apply these tools.

Porter's Five Forces Model

Porter's Five Forces is a powerful framework developed by Michael Porter to assess the competitive forces within an industry. This model helps you understand the industry's attractiveness and competitive dynamics.

It consists of five key forces:

• Threat of New Entrants: This force evaluates how easy or difficult it is for new companies to enter the industry. Factors that increase barriers to entry include high capital requirements, strong brand loyalty among existing players, and complex regulatory hurdles. For example, the airline industry has significant barriers to entry due to the need for large capital investments in aircraft, airport facilities, and regulatory approvals.
• Bargaining Power of Suppliers: This force examines the influence suppliers have on the industry's profitability. Powerful suppliers can demand higher prices or impose unfavorable terms. For instance, in the automotive industry, suppliers of critical components like microchips can wield significant bargaining power if they are few in number or if their products are highly specialized.
• Bargaining Power of Buyers: The bargaining power of buyers assesses how much influence customers have in negotiating prices and terms. In industries where buyers have many alternatives, such as the smartphone market, they can demand lower prices and better features, putting pressure on manufacturers to innovate and compete.
• Threat of Substitutes: This force considers the availability of substitute products or services that could potentially replace what the industry offers. For example, the rise of electric vehicles represents a significant threat to the traditional gasoline-powered automotive industry as consumers seek eco-friendly alternatives.
• Competitive Rivalry: Competitive rivalry assesses the intensity of competition among existing firms in the industry. A highly competitive industry, such as the smartphone market, often leads to price wars and aggressive marketing strategies as companies vie for market share.

Example: Let's consider the coffee shop industry . New entrants face relatively low barriers, as they can set up a small shop with limited capital. However, the bargaining power of suppliers, such as coffee bean producers, can vary depending on the region and the coffee's rarity. Bargaining power with buyers is moderate, as customers often have several coffee shops to choose from. Threats of substitutes may include energy drinks or homemade coffee, while competitive rivalry is high, with numerous coffee chains and independent cafes competing for customers.

SWOT Analysis

SWOT Analysis is a versatile tool used to assess an organization's internal strengths and weaknesses, as well as external opportunities and threats. By conducting a SWOT analysis, you can gain a comprehensive understanding of your industry and formulate effective strategies.

• Strengths: These are the internal attributes and capabilities that give your business a competitive advantage. For instance, if you're a tech company, having a talented and innovative team can be considered a strength.
• Weaknesses: Weaknesses are internal factors that hinder your business's performance. For example, a lack of financial resources or outdated technology can be weaknesses that need to be addressed.
• Opportunities: Opportunities are external factors that your business can capitalize on. This could be a growing market segment, emerging technologies, or changing consumer trends.
• Threats: Threats are external factors that can potentially harm your business. Examples of threats might include aggressive competition, economic downturns, or regulatory changes.

Example: Let's say you're analyzing the fast-food industry. Strengths could include a well-established brand, a wide menu variety, and efficient supply chain management. Weaknesses may involve a limited focus on healthy options and potential labor issues. Opportunities could include the growing trend toward healthier eating, while threats might encompass health-conscious consumer preferences and increased competition from delivery apps.

PESTEL Analysis

PESTEL Analysis examines the external macro-environmental factors that can impact your industry. The acronym stands for:

• Political: Political factors encompass government policies, stability, and regulations. For example, changes in tax laws or trade agreements can affect industries like international manufacturing.
• Economic: Economic factors include economic growth, inflation rates, and exchange rates. A fluctuating currency exchange rate can influence export-oriented industries like tourism.
• Social: Social factors encompass demographics, cultural trends, and social attitudes. An aging population can lead to increased demand for healthcare services and products.
• Technological: Technological factors involve advancements and innovations. Industries like telecommunications are highly influenced by technological developments, such as the rollout of 5G networks.
• Environmental: Environmental factors cover sustainability, climate change, and ecological concerns. Industries such as renewable energy are directly impacted by environmental regulations and consumer preferences.
• Legal: Legal factors encompass laws, regulations, and compliance requirements. The pharmaceutical industry, for instance, faces stringent regulatory oversight and patent protection laws.

Example: Consider the automobile manufacturing industry. Political factors may include government incentives for electric vehicles. Economic factors can involve fluctuations in fuel prices affecting consumer preferences for fuel-efficient cars. Social factors might encompass the growing interest in eco-friendly transportation options. Technological factors could relate to advancements in autonomous driving technology. Environmental factors may involve emissions regulations, while legal factors could pertain to safety standards and recalls.

Industry Life Cycle Analysis

Industry Life Cycle Analysis categorizes industries into various stages based on their growth and maturity. Understanding where your industry stands in its life cycle can help shape your strategies.

• Introduction: In the introduction stage, the industry is characterized by slow growth, limited competition, and a focus on product development. New players enter the market, and consumers become aware of the product or service. For instance, electric scooters were introduced as a new mode of transportation in recent years.
• Growth: The growth stage is marked by rapid market expansion, increased competition, and rising demand. Companies focus on gaining market share, and innovation is vital. The ride-sharing industry, exemplified by companies like Uber and Lyft, experienced significant growth in this stage.
• Maturity: In the maturity stage, the market stabilizes, and competition intensifies. Companies strive to maintain market share and differentiate themselves through branding and customer loyalty programs. The smartphone industry reached maturity with multiple established players.
• Decline: In the decline stage, the market saturates, and demand decreases. Companies must adapt or diversify to survive. The decline of traditional print media is a well-known example.

Example: Let's analyze the video streaming industry . The introduction stage saw the emergence of streaming services like Netflix. In the growth stage, more players entered the market, and the industry saw rapid expansion. The industry is currently in the maturity stage, with established platforms like Netflix, Amazon Prime, and Disney+ competing for market share. However, with continued innovation and changing consumer preferences, the decline stage may eventually follow.

Value Chain Analysis

Value Chain Analysis dissects a company's activities into primary and support activities to identify areas of competitive advantage. Primary activities directly contribute to creating and delivering a product or service, while support activities facilitate primary activities.

• Primary Activities: These activities include inbound logistics (receiving and storing materials), operations (manufacturing or service delivery), outbound logistics (distribution), marketing and sales, and customer service.
• Support Activities: Support activities include procurement (acquiring materials and resources), technology development (R&D and innovation), human resource management (recruitment and training), and infrastructure (administrative and support functions).

Example: Let's take the example of a smartphone manufacturer. Inbound logistics involve sourcing components, such as processors and displays. Operations include assembly and quality control. Outbound logistics cover shipping and distribution. Marketing and sales involve advertising and retail partnerships. Customer service handles warranty and support.

Procurement ensures a stable supply chain for components. Technology development focuses on research and development of new features. Human resource management includes hiring and training skilled engineers. Infrastructure supports the company's administrative functions.

By applying these frameworks and models effectively, you can better understand your industry, identify strategic opportunities and threats, and develop a solid foundation for informed decision-making.

Data Interpretation and Analysis

Once you have your data, it's time to start interpreting and analyzing the data you've collected during your industry analysis.

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1. Analyze Market Size and Growth

Analyzing the market's size and growth is essential for understanding its dynamics and potential. Here's how to conduct a robust analysis:

• Market Size Calculation: Determine the total market size in terms of revenue, units sold, or the number of customers. This figure serves as a baseline for evaluating the industry's scale.
• Historical Growth Analysis: Examine historical data to identify growth trends. This includes looking at past year-over-year growth rates and understanding the factors that influenced them.
• Projected Growth Assessment: Explore industry forecasts and projections to gain insights into the expected future growth of the market. Consider factors such as emerging technologies, changing consumer preferences, and economic conditions.
• Segmentation Analysis: If applicable, analyze market segmentation data to identify growth opportunities in specific market segments. Understand which segments are experiencing the most significant growth and why.

2. Assess Market Trends

Stay ahead of the curve by closely monitoring and assessing market trends. Here's how to effectively evaluate trends within your industry.

• Consumer Behavior Analysis: Dive into consumer behavior data to uncover shifts in preferences, buying patterns, and shopping habits. Understand how technological advancements and cultural changes influence consumer choices.
• Technological Advancements: Keep a keen eye on technological developments that impact your industry. Assess how innovations such as AI, IoT, blockchain, or automation are changing the competitive landscape.
• Regulatory Changes: Stay informed about regulatory shifts and their potential consequences for your industry. Regulations can significantly affect product development, manufacturing processes, and market entry strategies.
• Sustainability and Environmental Trends: Consider the growing importance of sustainability and environmental concerns. Evaluate how your industry is adapting to eco-friendly practices and how these trends affect consumer choices.

3. Evaluate Competitive Landscape

Understanding the competitive landscape is critical for positioning your business effectively. To perform a comprehensive evaluation:

• Competitive Positioning: Determine where your company stands in comparison to competitors. Identify your unique selling propositions and areas where you excel.
• Market Share Analysis: Continuously monitor market share among industry players. Identify trends in market share shifts and assess the strategies that lead to such changes.
• Competitive Advantages and Weaknesses: Analyze your competitors' strengths and weaknesses. Identify areas where you can capitalize on their weaknesses and where you need to fortify your own strengths.

4. Identify Key Success Factors

Recognizing and prioritizing key success factors is crucial for developing effective strategies. To identify and leverage these factors:

• Customer Satisfaction: Prioritize customer satisfaction as a critical success factor. Satisfied customers are more likely to become loyal advocates and contribute to long-term success.
• Quality and Innovation: Focus on product or service quality and continuous innovation. Meeting and exceeding customer expectations can set your business apart from competitors.
• Cost Efficiency: Strive for cost efficiency in your operations. Identifying cost-saving opportunities can lead to improved profitability.
• Marketing and Branding Excellence: Invest in effective marketing and branding strategies to create a strong market presence. Building a recognizable brand can drive customer loyalty and growth.

5. Analyze Customer Behavior and Preferences

Understanding your target audience is central to success. Here's how to analyze customer behavior and preferences:

• Market Segmentation: Use market segmentation to categorize customers based on demographics, psychographics , and behavior. This allows for more personalized marketing and product/service offerings.
• Customer Surveys and Feedback: Gather customer feedback through surveys and feedback mechanisms. Understand their pain points, preferences, and expectations to tailor your offerings.
• Consumer Journey Mapping: Map the customer journey to identify touchpoints where you can improve engagement and satisfaction. Optimize the customer experience to build brand loyalty.

By delving deep into data interpretation and analysis, you can gain valuable insights into your industry, uncover growth opportunities, and refine your strategic approach.

How to Conduct Competitor Analysis?

Competitor analysis is a critical component of industry analysis as it provides valuable insights into your rivals, helping you identify opportunities, threats, and areas for improvement.

1. Identify Competitors

Identifying your competitors is the first step in conducting a thorough competitor analysis. Competitors can be classified into several categories:

• Direct Competitors: These are companies that offer similar products or services to the same target audience. They are your most immediate competitors and often compete directly with you for market share.
• Indirect Competitors: Indirect competitors offer products or services that are related but not identical to yours. They may target a slightly different customer segment or provide an alternative solution to the same problem.
• Potential Competitors: These companies could enter your market in the future. Identifying potential competitors early allows you to anticipate and prepare for new entrants.
• Substitute Products or Services: While not traditional competitors, substitute products or services can fulfill the same customer needs or desires. Understanding these alternatives is crucial to your competitive strategy.

2. Analyze Competitor Strengths and Weaknesses

Once you've identified your competitors, you need to analyze their strengths and weaknesses. This analysis helps you understand how to position your business effectively and identify areas where you can gain a competitive edge.

• Strengths: Consider what your competitors excel at. This could include factors such as brand recognition, innovative products, a large customer base, efficient operations, or strong financial resources.
• Weaknesses: Identify areas where your competitors may be lacking. Weaknesses could involve limited product offerings, poor customer service, outdated technology, or financial instability.

3. Competitive Positioning

Competitive positioning involves defining how you want your business to be perceived relative to your competitors. It's about finding a unique position in the market that sets you apart. Consider the following strategies:

• Cost Leadership: Strive to be the low-cost provider in your industry. This positioning appeals to price-conscious consumers.
• Differentiation: Focus on offering unique features or attributes that make your products or services stand out. This can justify premium pricing.
• Niche Market: Target a specific niche or segment of the market that may be underserved by larger competitors. Tailor your offerings to meet their unique needs.
• Innovation and Technology: Emphasize innovation and technology to position your business as a leader in product or service quality.
• Customer-Centric: Prioritize exceptional customer service and customer experience to build loyalty and a positive reputation.

4. Benchmarking and Gap Analysis

Benchmarking involves comparing your business's performance and practices with those of your competitors or industry leaders. Gap analysis helps identify areas where your business falls short and where improvements are needed.

• Performance Benchmarking: Compare key performance metrics, such as revenue, profitability, market share, and customer satisfaction, with those of your competitors. Identify areas where your performance lags behind or exceeds industry standards.
• Operational Benchmarking: Analyze your operational processes, supply chain, and cost structures compared to your competitors. Look for opportunities to streamline operations and reduce costs.
• Product or Service Benchmarking: Evaluate the features, quality, and pricing of your products or services relative to competitors. Identify gaps and areas for improvement.
• Marketing and Sales Benchmarking: Assess your marketing strategies, customer acquisition costs, and sales effectiveness compared to competitors. Determine whether your marketing efforts are performing at a competitive level.

Market Entry and Expansion Strategies

Market entry and expansion strategies are crucial for businesses looking to enter new markets or expand their presence within existing ones. These strategies can help you effectively target and penetrate your chosen markets.

Market Segmentation and Targeting

• Market Segmentation: Begin by segmenting your target market into distinct groups based on demographics , psychographics, behavior, or other relevant criteria. This helps you understand the diverse needs and preferences of different customer segments.
• Targeting: Once you've segmented the market, select specific target segments that align with your business goals and capabilities. Tailor your marketing and product/service offerings to appeal to these chosen segments.

Market Entry Modes

Selecting the proper market entry mode is crucial for a successful expansion strategy. Entry modes include:

• Exporting: Sell your products or services in international markets through exporting. This is a low-risk approach, but it may limit your market reach.
• Licensing and Franchising: License your brand, technology, or intellectual property to local partners or franchisees. This allows for rapid expansion while sharing the risk and control.
• Joint Ventures and Alliances: Partner with local companies through joint ventures or strategic alliances. This approach leverages local expertise and resources.
• Direct Investment: Establish a physical presence in the target market through subsidiaries, branches, or wholly-owned operations. This offers full control but comes with higher risk and investment.

Competitive Strategy Formulation

Your competitive strategy defines how you will compete effectively in the target market.

• Cost Leadership: Strive to offer products or services at lower prices than competitors while maintaining quality. This strategy appeals to price-sensitive consumers.
• Product Differentiation: Focus on offering unique and innovative products or services that stand out in the market. This strategy justifies premium pricing.
• Market Niche: Target a specific niche or segment within the market that is underserved or has particular needs. Tailor your offerings to meet the unique demands of this niche.
• Market Expansion : Expand your product or service offerings to capture a broader share of the market. This strategy involves diversifying your offerings to appeal to a broader audience.
• Global Expansion: Consider expanding internationally to tap into new markets and diversify your customer base. This strategy involves thorough market research and adaptation to local cultures and regulations.

International Expansion Considerations

If your expansion strategy involves international markets, there are several additional considerations to keep in mind.

• Market Research: Conduct in-depth market research to understand the target country's cultural, economic, and legal differences.
• Regulatory Compliance: Ensure compliance with international trade regulations, customs, and import/export laws.
• Cultural Sensitivity: Adapt your marketing and business practices to align with the cultural norms and preferences of the target market.
• Localization: Consider adapting your products, services, and marketing materials to cater to local tastes and languages.
• Risk Assessment: Evaluate the political, economic, and legal risks associated with operating in the target country. Develop risk mitigation strategies.

By carefully analyzing your competitors and crafting effective market entry and expansion strategies, you can position your business for success in both domestic and international markets.

Risk Assessment and Mitigation

Risk assessment and mitigation are crucial aspects of industry analysis and strategic planning. Identifying potential risks, assessing vulnerabilities, and implementing effective risk management strategies are essential for business continuity and success.

1. Identify Industry Risks

• Market Risks: These risks pertain to factors such as changes in market demand, economic downturns, shifts in consumer preferences, and fluctuations in market prices. For example, the hospitality industry faced significant market risks during the COVID-19 pandemic, resulting in decreased travel and tourism .
• Regulatory and Compliance Risks: Regulatory changes, compliance requirements, and government policies can pose risks to businesses. Industries like healthcare are particularly susceptible to regulatory changes that impact operations and reimbursement.
• Technological Risks: Rapid technological advancements can disrupt industries and render existing products or services obsolete. Companies that fail to adapt to technological shifts may face obsolescence.
• Operational Risks: These risks encompass internal factors that can disrupt operations, such as supply chain disruptions, equipment failures, or cybersecurity breaches.
• Financial Risks: Financial risks include factors like liquidity issues, credit risk , and market volatility. Industries with high capital requirements, such as real estate development, are particularly vulnerable to financial risks.
• Competitive Risks: Intense competition and market saturation can pose challenges to businesses. Failing to respond to competitive threats can result in loss of market share.
• Global Risks: Industries with a worldwide presence face geopolitical risks, currency fluctuations, and international trade uncertainties. For instance, the automotive industry is susceptible to trade disputes affecting the supply chain.

2. Assess Business Vulnerabilities

• SWOT Analysis: Revisit your SWOT analysis to identify internal weaknesses and threats. Assess how these weaknesses may exacerbate industry risks.
• Financial Health: Evaluate your company's financial stability, debt levels, and cash flow. Identify vulnerabilities related to financial health that could hinder your ability to withstand industry-specific challenges.
• Operational Resilience: Assess the robustness of your operational processes and supply chain. Identify areas where disruptions could occur and develop mitigation strategies.
• Market Positioning: Analyze your competitive positioning and market share. Recognize vulnerabilities in your market position that could be exploited by competitors.
• Compliance and Regulatory Adherence: Ensure that your business complies with relevant regulations and standards. Identify vulnerabilities related to non-compliance or regulatory changes.

3. Risk Management Strategies

• Risk Avoidance: In some cases, the best strategy is to avoid high-risk ventures or markets altogether. This may involve refraining from entering certain markets or discontinuing products or services with excessive risk.
• Risk Reduction: Implement measures to reduce identified risks. For example, diversifying your product offerings or customer base can reduce dependence on a single revenue source.
• Risk Transfer: Transfer some risks through methods such as insurance or outsourcing. For instance, businesses can mitigate cybersecurity risks by purchasing cyber insurance.
• Risk Acceptance: In cases where risks cannot be entirely mitigated, it may be necessary to accept a certain level of risk and have contingency plans in place to address potential issues.
• Continuous Monitoring: Establish a system for continuous risk monitoring. Regularly assess the changing landscape and adjust risk management strategies accordingly.

4. Contingency Planning

Contingency planning involves developing strategies and action plans to respond effectively to unforeseen events or crises. It ensures that your business can maintain operations and minimize disruptions in the face of adverse circumstances. Key elements of contingency planning include:

• Risk Scenarios: Identify potential risk scenarios specific to your industry and business. These scenarios should encompass a range of possibilities, from minor disruptions to major crises.
• Response Teams: Establish response teams with clearly defined roles and responsibilities. Ensure that team members are trained and ready to act in the event of a crisis.
• Communication Plans: Develop communication plans that outline how you will communicate with employees, customers, suppliers, and other stakeholders during a crisis. Transparency and timely communication are critical.
• Resource Allocation: Determine how resources, including personnel, finances, and equipment, will be allocated in response to various scenarios.
• Testing and Simulation: Regularly conduct tests and simulations of your contingency plans to identify weaknesses and areas for improvement. Ensure your response teams are well-practiced and ready to execute the plans effectively.
• Documentation and Record Keeping: Maintain comprehensive documentation of contingency plans, response procedures, and communication protocols. This documentation should be easily accessible to relevant personnel.
• Review and Update: Continuously review and update your contingency plans to reflect changing industry dynamics and evolving risks. Regularly seek feedback from response teams to make improvements.

By identifying industry risks, assessing vulnerabilities, implementing risk management strategies, and developing robust contingency plans, your business can navigate the complexities of the industry landscape with greater resilience and preparedness.

Industry Analysis Template

When embarking on the journey of Industry Analysis, having a well-structured template is akin to having a reliable map for your exploration. It provides a systematic framework to ensure you cover all essential aspects of the analysis. Here's a breakdown of an industry analysis template with insights into each section.

Industry Overview

• Objective: Provide a broad perspective of the industry.
• Market Definition: Define the scope and boundaries of the industry, including its products, services, and target audience.
• Market Size and Growth: Present current market size, historical growth trends, and future projections.
• Key Players: Identify major competitors and their market share.
• Market Trends: Highlight significant trends impacting the industry.

Competitive Analysis

• Objective: Understand the competitive landscape within the industry.
• Competitor Identification: List direct and indirect competitors.
• Competitor Profiles: Provide detailed profiles of major competitors, including their strengths, weaknesses, strategies, and market positioning.
• SWOT Analysis: Conduct a SWOT analysis for each major competitor.
• Market Share Analysis: Analyze market share distribution among competitors.

Market Analysis

• Objective: Explore the characteristics and dynamics of the market.
• Customer Segmentation: Define customer segments and their demographics, behavior, and preferences.
• Demand Analysis: Examine factors driving demand and customer buying behavior.
• Supply Chain Analysis: Map out the supply chain, identifying key suppliers and distribution channels.
• Regulatory Environment: Discuss relevant regulations, policies, and compliance requirements.

Technological Analysis

• Objective: Evaluate the technological landscape impacting the industry.
• Technological Trends: Identify emerging technologies and innovations relevant to the industry.
• Digital Transformation: Assess the level of digitalization within the industry and its impact on operations and customer engagement.
• Innovation Opportunities: Explore opportunities for leveraging technology to gain a competitive edge.

Financial Analysis

• Objective: Analyze the financial health of the industry and key players.
• Revenue and Profitability: Review industry-wide revenue trends and profitability ratios.
• Financial Stability: Assess financial stability by examining debt levels and cash flow.
• Investment Patterns: Analyze capital expenditure and investment trends within the industry.

Consumer Insights

• Objective: Understand consumer behavior and preferences.
• Consumer Surveys: Conduct surveys or gather data on consumer preferences, buying habits , and satisfaction levels.
• Market Perception: Gauge consumer perception of brands and products in the industry.
• Consumer Feedback: Collect and analyze customer feedback and reviews.

SWOT Analysis for Your Business

• Objective: Assess your own business within the industry context.
• Strengths: Identify internal strengths that give your business a competitive advantage.
• Weaknesses: Recognize internal weaknesses that may hinder your performance.
• Opportunities: Explore external opportunities that your business can capitalize on.
• Threats: Recognize external threats that may impact your business.

Conclusion and Recommendations

• Objective: Summarize key findings and provide actionable recommendations.
• Summary: Recap the most critical insights from the analysis.
• Recommendations: Offer strategic recommendations for your business based on the analysis.
• Future Outlook: Discuss potential future developments in the industry.

While this template provides a structured approach, adapt it to the specific needs and objectives of your Industry Analysis. It serves as your guide, helping you navigate through the complex landscape of your chosen industry, uncovering opportunities, and mitigating risks along the way.

Remember that the depth and complexity of your industry analysis may vary depending on your specific goals and the industry you are assessing. You can adapt this template to focus on the most relevant aspects and conduct thorough research to gather accurate data and insights. Additionally, consider using industry-specific data sources, reports, and expert opinions to enhance the quality of your analysis.

Industry Analysis Examples

To grasp the practical application of industry analysis, let's delve into a few diverse examples across different sectors. These real-world scenarios demonstrate how industry analysis can guide strategic decision-making.

Tech Industry - Smartphone Segment

Scenario: Imagine you are a product manager at a tech company planning to enter the smartphone market. Industry analysis reveals that the market is highly competitive, dominated by established players like Apple and Samsung.

Use of Industry Analysis:

• Competitive Landscape: Analyze the strengths and weaknesses of competitors, identifying areas where they excel (e.g., Apple's brand loyalty ) and where they might have vulnerabilities (e.g., consumer demand for more affordable options).
• Market Trends: Identify trends like the growing demand for sustainable technology and 5G connectivity, guiding product development and marketing strategies.
• Regulatory Factors: Consider regulatory factors related to intellectual property rights, patents, and international trade agreements that can impact market entry and operations.
• Outcome: Armed with insights from industry analysis, you decide to focus on innovation, emphasizing features like eco-friendliness and affordability. This niche approach helps your company gain a foothold in the competitive market.

Healthcare Industry - Telehealth Services

Scenario: You are a healthcare entrepreneur exploring opportunities in the telehealth sector, especially in the wake of the COVID-19 pandemic. Industry analysis is critical due to rapid market changes.

• Market Size and Growth: Evaluate the growing demand for telehealth services, driven by the need for remote healthcare during the pandemic and convenience factors.
• Regulatory Environment: Understand the evolving regulatory landscape, including changes in telemedicine reimbursement policies and licensing requirements.
• Technological Trends: Explore emerging technologies such as AI-powered diagnosis and remote monitoring that can enhance service offerings.
• Outcome: Industry analysis underscores the potential for telehealth growth. You adapt your business model to align with regulatory changes, invest in cutting-edge technology, and focus on patient-centric care, positioning your telehealth service for success.

Food Industry - Plant-Based Foods

Scenario: As a food industry entrepreneur , you are considering entering the plant-based foods market, driven by increasing consumer interest in health and sustainability.

• Market Trends: Analyze the trend toward plant-based diets and sustainability, reflecting changing consumer preferences.
• Competitive Landscape: Assess the competitive landscape, understanding that established companies and startups are vying for market share.
• Consumer Behavior: Study consumer behavior, recognizing that health-conscious consumers seek plant-based alternatives.
• Outcome: Informed by industry analysis, you launch a line of plant-based products emphasizing both health benefits and sustainability. Effective marketing and product quality gain traction among health-conscious consumers, making your brand a success in the plant-based food industry.

These examples illustrate how industry analysis can guide strategic decisions, whether entering competitive tech markets, navigating dynamic healthcare regulations, or capitalizing on shifting consumer preferences in the food industry. By applying industry analysis effectively, businesses can adapt, innovate, and thrive in their respective sectors.

Conclusion for Industry Analysis

Industry Analysis is the compass that helps businesses chart their course in the vast sea of markets. By understanding the industry's dynamics, risks, and opportunities, you gain a strategic advantage that can steer your business towards success. From identifying competitors to mitigating risks and formulating competitive strategies, this guide has equipped you with the tools and knowledge needed to navigate the complexities of the business world.

Remember, Industry Analysis is not a one-time task; it's an ongoing journey. Keep monitoring market trends, adapting to changes, and staying ahead of the curve. With a solid foundation in industry analysis, you're well-prepared to tackle challenges, seize opportunities, and make well-informed decisions that drive your business toward prosperity. So, set sail with confidence and let industry analysis be your guiding star on the path to success.

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How to Write an Industry Analysis Report

Last Updated: March 28, 2024 Fact Checked

This article was co-authored by Michael R. Lewis . Michael R. Lewis is a retired corporate executive, entrepreneur, and investment advisor in Texas. He has over 40 years of experience in business and finance, including as a Vice President for Blue Cross Blue Shield of Texas. He has a BBA in Industrial Management from the University of Texas at Austin. This article has been fact-checked, ensuring the accuracy of any cited facts and confirming the authority of its sources. This article has been viewed 315,034 times.

An industry analysis report is a document that evaluates a given industry and the companies involved in it. Often included as part of a business plan, an industry analysis report seeks to establish how your company can gain an advantage in an industry by understanding the industry’s history, trends, competitors, products, and customer bases. In addition, this type of report allows investors, bankers, customers to understand the makeup of an industry. After conducting research and establishing an organizational framework for your report, you’ll be prepared to write.

Industry Analysis Report Template and Example

Identify Research Sources

• You might also need to conduct some cross-industry research. For example, a game developer may need to compile statistics on the console gaming market, PC gaming market, and handheld gaming market.

• For other countries, consult federal databases and agencies within your nation, or conduct an internet search with keywords like “government statistics [name of your industry]” to locate relevant information.

• You can also consult experts within your own company. Just bear in mind that their views may be biased or unreliable.

Developing a Framework for the Analysis

• Be sure to carefully analyze any underlying assumptions that your market analysis relies upon. This is particular important for a new product or a product that is undergoing rapid acceptance.
• Relevant market sizes should be calculated in both dollar amount and unit amount. In the foregoing example, the relevant market size might be $200 million per year, or 30,000 electric cars.

• How has the market size changed in the past year? the past five years? the past ten years?
• What is the expected growth of the relevant market?
• What factors will affect market growth? Are new demographics affecting the market? Are demographics changing?

• Does your competition engage in billboard, radio, TV, internet, or print ads? How many of each kind are effective? Address whether or not your company could meet or compete with their level of marketing.
• Think about recent innovations or mistakes the competition has made. Learn from their failures, and improve on their successes.

Writing the Analysis

• Emerging? (very new industry growing at less than 5% per year)
• Growing? (a state of steady growth a bit over 5% per year)
• Shaking out? (a state in which companies are merging or consolidating, and/or other companies are failing)
• Maturing? (growth is slowing to less than 5% per year)
• Declining? (a state in which there has been no growth for a prolonged period)

• Healthy industries are high-growth and generally profitable, with a stable customer base and few barriers to entry. Industries that should be avoided are those that are declining, generally unprofitable, highly competitive and regulated, or difficult to enter.

• Put yourself in the customer’s place. Think about what they see and experience when they first hear about or encounter your product or service. Consider how they think about their choices.
• In addition to considering your current customer base, think about how you can expand your product or service to attract new customers or pull customers away from your competitors.

• You could close with a call to action. A statement like “Given the current state of the market, it is advisable to implement the following business proposal” followed by a rough outline of your proposal can function as a smooth transition into the rest of the plan.

Expert Q&A

• Be sure to conduct a full investigation before finalizing the report. Thanks Helpful 2 Not Helpful 0
• Because industry analysis reports often form part of a business plan and are intended to indicate how a company can maximize its profits, the final section of your report will be most important. Thanks Helpful 3 Not Helpful 1
• An industry analysis is not simply a research report; all the information should be provided with an aim to position the company for success. Thanks Helpful 2 Not Helpful 3

You Might Also Like

• ↑ http://www.entrepreneur.com/article/241074
• ↑ https://sba.ubc.ca/business-basics/beginners-guide-business-research/industry-analysis
• ↑ https://bizfluent.com/info-7747775-importance-industry-analysis.html
• ↑ https://clarion.edu/sbdc/what-we-do/research-assistance/4SampleIndustryAnalysis.pdf
• ↑ https://www.sba.gov/business-guide/plan-your-business/market-research-competitive-analysis

About This Article

To write an industry analysis report, start with a broad description of the industry, including details of its size, products, and geographic scope. Then, provide a market analysis, indicating expected growth, trends in products and technology, and other influencing factors. Make sure to describe the major customer groups and their unique properties, such as age, race, needs and wants. You should also include a detailed timeline of specific goals, product development ideas, and workforce issues which could position your company for growth. Finally, edit the report down to two to three pages. For more tips from our Financial co-author, including how to identify different research sources, read on! Did this summary help you? Yes No

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A Critical Analysis of Porter’s 5 Forces Model of Competitive Advantage

Goyal, A. (2021). A Critical Analysis of Porter’s 5 Forces Model of Competitive Advantage. Retrieved from http://doi.one/10.1729/Journal.25126

4 Pages Posted: 9 Mar 2021

Anchit Goyal

Independent

Date Written: July 23, 2020

The 5 forces of competitive advantage, as outlined by Porter, attempt to explain how firms can achieve Competitive Advantage in the industry they belong too. While this theory is certainly applicable to a fair degree, it is not free from its limitations. This paper critically analyses the Porter’s 5 forces model while also comparing it with various other frameworks that attempt to explain Sustainable Competitive Advantage. It goes on to show the progress of tools used by management theorists to understand the importance of (sustainable) competitive advantage. This is done with the help of models that comprise of both the industry-based view, such as Porter’s 5 forces, and the resource-based view, such as Barney’s VRIN framework. The progress this paper looks at also includes relatively more revolutionary views and perspectives from thinkers like Grundy and Recklies. The paper broadly covers the explanation of the five forces with a few examples, after a short introduction, prior to examining the advantages and disadvantages of the framework. Here the paper outlines various other frameworks that suggest means of overcoming a few of the limitations highlighted in Porter’s model. This includes the work of authors like Barney, Hamel & Prahalad, Teece et al., Penrose and various other esteemed management theorists. The paper finally concludes with the view on Porter’s framework highlighting the most significant merits and demerits.

Keywords: Management, International Strategy, Resource-Based View, Industry-Based View, Management Theory

Suggested Citation: Suggested Citation

Anchit Goyal (Contact Author)

Independent ( email ), do you have a job opening that you would like to promote on ssrn, paper statistics, related ejournals, organizations & markets: formal & informal structures ejournal.

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Organizations & Markets: Policies & Processes eJournal

Resource based strategy & policy ejournal.

Industry Analysis

Understanding the competitiveness of an industry

What is Industry Analysis?

Industry analysis is a market assessment tool used by businesses and analysts to understand the competitive dynamics of an industry. It helps them get a sense of what is happening in an industry, e.g., demand-supply statistics , degree of competition within the industry, state of competition of the industry with other emerging industries, future prospects of the industry taking into account technological changes, credit system within the industry, and the influence of external factors on the industry.

Industry analysis, for an entrepreneur or a company, is a method that helps to understand a company’s position relative to other participants in the industry. It helps them to identify both the opportunities and threats coming their way and gives them a strong idea of the present and future scenario of the industry. The key to surviving in this ever-changing business environment is to understand the differences between yourself and your competitors in the industry and use it to your full advantage.

Learn more in CFI’s Corporate & Business Strategy Course .

Types of industry analysis

There are three commonly used and important methods of performing industry analysis. The three methods are:

• Competitive Forces Model (Porter’s 5 Forces)
• Broad Factors Analysis (PEST Analysis)
• SWOT Analysis

#1 Competitive Forces Model (Porter’s 5 Forces)

One of the most famous models ever developed for industry analysis, famously known as Porter’s 5 Forces , was introduced by Michael Porter in his 1980 book “ Competitive Strategy: Techniques for Analyzing Industries and Competitors. ”

According to Porter, analysis of the five forces gives an accurate impression of the industry and makes analysis easier. In our Corporate & Business Strategy course , we cover these five forces and an additional force — power of complementary good/service providers.

The above image comes from a section of CFI’s Corporate & Business Strategy Course .

1. Intensity of industry rivalry

The number of participants in the industry and their respective market shares are a direct representation of the competitiveness of the industry. These are directly affected by all the factors mentioned above. Lack of differentiation in products tends to add to the intensity of competition. High exit costs such as high fixed assets, government restrictions, labor unions, etc. also make the competitors fight the battle a little harder.

2. Threat of potential entrants

This indicates the ease with which new firms can enter the market of a particular industry. If it is easy to enter an industry, companies face the constant risk of new competitors. If the entry is difficult, whichever company enjoys little competitive advantage reaps the benefits for a longer period. Also, under difficult entry circumstances, companies face a constant set of competitors.

3. Bargaining power of suppliers

This refers to the bargaining power of suppliers . If the industry relies on a small number of suppliers, they enjoy a considerable amount of bargaining power. This can particularly affect small businesses because it directly influences the quality and the price of the final product.

4. Bargaining power of buyers

The complete opposite happens when the bargaining power lies with the customers. If consumers/buyers enjoy market power, they are in a position to negotiate lower prices, better quality, or additional services and discounts. This is the case in an industry with more competitors but with a single buyer constituting a large share of the industry’s sales.

5. Threat of substitute goods/services

The industry is always competing with another industry producing a similar substitute product. Hence, all firms in an industry have potential competitors from other industries. This takes a toll on their profitability because they are unable to charge exorbitant prices. Substitutes can take two forms – products with the same function/quality but lesser price, or products of the same price but of better quality or providing more utility.

#2 Broad Factors Analysis (PEST Analysis)

Broad Factors Analysis , also commonly called the PEST Analysis stands for Political, Economic, Social and Technological.  PEST analysis is a useful framework for analyzing the external environment.

To use PEST as a form of industry analysis, an analyst will analyze each of the 4 components of the model.  These components include:

1. Political

Political factors that impact an industry include specific policies and regulations related to things like taxes, environmental regulation, tariffs, trade policies, labor laws, ease of doing business, and overall political stability.

2. Economic

The economic forces that have an impact include inflation, exchange rates (FX), interest rates, GDP growth rates, conditions in the capital markets (ability to access capital), etc.

The social impact on an industry refers to trends among people and includes things such as population growth, demographics (age, gender, etc.), and trends in behavior such as health, fashion, and social movements.

4. Technological

The technological aspect of PEST analysis incorporates factors such as advancements and developments that change the way a business operates and the ways in which people live their lives (e.g., the advent of the internet).

#3 SWOT Analysis

SWOT Analysis stands for Strengths, Weaknesses, Opportunities, and Threats.  It can be a great way of summarizing various industry forces and determining their implications for the business in question.

The above image comes from a section of CFI’s Corporate & Business Strategy Course .  Check it out to learn more about performing SWOT analysis.

1. Internal

Internal factors that already exist and have contributed to the current position and may continue to exist.

2. External

External factors are usually contingent events. Assess their importance based on the likelihood of them happening and their potential impact on the company. Also, consider whether management has the intention and ability to take advantage of the opportunity/avoid the threat.

Importance of Industry Analysis

Industry analysis, as a form of market assessment, is crucial because it helps a business understand market conditions. It helps them forecast demand and supply and, consequently, financial returns from the business. It indicates the competitiveness of the industry and costs associated with entering and exiting the industry. It is very important when planning a small business. Analysis helps to identify which stage an industry is currently in; whether it is still growing and there is scope to reap benefits or has reached its saturation point.

With a very detailed study of the industry, entrepreneurs can get a stronghold on the operations of the industry and may discover untapped opportunities. It is also important to understand that industry analysis is somewhat subjective and does not always guarantee success. It may happen that incorrect interpretation of data leads entrepreneurs to a wrong path or into making wrong decisions. Hence, it becomes important to collect data carefully.

Additional Resources

Thank you for reading the CFI guide to industry analysis. To continue advancing your skills as a financial analyst, these additional CFI resources will be of value:

• Top Valuation Methods
• Business Lifecycle
• DCF Modeling Guide
• Strategic Analysis Guides
• See all management & strategy resources
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Part One: Industry Analysis

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This paper takes the view that strategic management is a cap-stone course intended to integrate the material students have accumulated throughout their course of study within a business school. Strategic management is, in fact, the only course that has as its stated purpose the integration and application of key management concepts. Normally, students are expected to have a working knowledge of the primary business management disciplines -- accounting, economics, finance, marketing, and operations -- when they begin the course. When instructors present case analysis, it is usually as a three-step process progressing from economic conditions, to industry analysis, and finally, to company analysis. In doing so they face the challenge of creating a classroom experience that enables students to conceptualize the framework as an integrated whole.

The challenges for the instructor are interesting to say the least. First, there is the need for the instructor to understand the intent of each of the primary business management disciplines as well as what the student can be expected to accomplish. Second, there is the need for instruments that will provide the necessary integration and opportunity for application of the knowledge they have acquired. Third, there is the reality that students do not always remember all that they should. This leaves a great deal to be accomplished within one semester.

An equally important challenge is the necessity to impart the basics of strategic management as a discipline in its own right. It is the theoretical foundation of strategic management that provides the rational for the integration. More importantly, the students need an understanding of ‘when’ to use ‘what’ techniques in the business world.

Given these challenges, I use – among other classroom techniques – case analysis. Students are required to provide analysis and discussion for a number of short cases throughout the semester. All are taken from current publications such as, Business Week , Fortune , Forbes and The Economist . I find that textbook cases do not provide the currency necessary. These cases are used to demonstrate the theory under discussion in the textbook and to show the relevance of specific elements of the major written cases. I require two major written cases. The first is an analysis of an industry, and the second is an analysis of a firm within that industry. Both are essential to achieve the learning objectives for the course.

            The learning objective for the course is to understand how the top manager (CEO) is responsible for ensuring the long term survival of the firm within its competitive environment.

            The learning objective for the written case analyses is to arrive at a point where the students can develop a sound business plan to ensure the survival of their chosen firm within its competitive environment. They are also to come to appreciate the complexities of collecting and understanding the relevance of the vast amount of information available.

            The learning objective for the industry analysis is to determine the opportunities and threats that exist for firms within a competitive environment. They should be able to appreciate how the various forces operating in an industry create or limit the chances for survival.

The learning objective for the firm analysis is to determine the strengths and weaknesses of a firm and to determine the core competence that can be built on to establish a competitive advantage. The final step is to develop a business plan that will align the capabilities of the firm with the requirements of the competitive environment.

Students are required to work in teams to complete the two major case write-ups. They will later make a presentation of their findings. I require teams because the most difficult part of management is the management of human resources. By setting specific guidelines for students I make their grade contingent on their management abilities as well as their ability to complete the projects. Team size is limited to 3 or 4 members.

            They are free to choose their firm and its industry. I strongly suggest that they select a firm that has a production function. This makes it easier to see the four organizational functions being integrated. I also encourage them to select an industry that would be suitable for their future employment based on their particular interests and primary area of concentration. For example, accounting majors are encouraged to examine an accounting firm. Finance majors are pointed toward the banking industry. In the end, the students make choices based on group consensus and personal interests. However, a mixture of majors can be an advantage when working on the papers. The possible collaboration and integration of different perspectives is one advantage; another is the opportunity to work on a part of the papers that is relevant to their discipline.

How firm’s performance is defined is left to the student. I must approve all choices prior to the student beginning work. In this way, I am sure that the projects are do-able. No two groups are allowed to do the same firm within the same class, but they can do different firms within the same industry. There are no ‘easy’ industries or firms. Each has its own challenges.

P rior to the students starting on the projects, a significant amount of time is spent covering analysis techniques and the resources available. They are also encouraged to divide the work up into specific areas. For example, for the industry paper: 1) do the five forces first; then do the introduction and conclusion, and   2) divide the work up along these lines: threat of new entrants, buyers and suppliers and substitutes, and rivalry. This gives a reasonable balance to the work load.

One common complaint about this approach to case writing is that a student working on one section of the paper will not learn about the other sections of the paper. Every approach to case writing has a limitation, but I think that this one is manageable. First, the intent is not to teach students about one particular industry. It is to teach them the relevance and the techniques of industry and firm analysis. Stressing this point early on is very important.

It is important to note that I do not give the students too many specific directions. I want them to do their own research and make discoveries along the way. There is no one right answer. Correctness – if such exists – is a product of the logic used in the analysis. For example, two measures of economies of scale are required. It does not matter which measures are used. What matters is that the student reasons through the problem and finds a means of justifying a position. If I give too much detail it limits the imagination of the student and prevents discoveries that could be significant.

To help get the students oriented, I do provide complete ‘sample’ papers from a previous class. I am careful to ensure that the sample papers are on an industry and firm not currently being done. I do not have to worry about copying or other forms of cheating. The papers must be up-to-date, which means significant recent citations in the bibliography. Additionally, I do provide the students with the opportunity of sending in parts of the project as they write. I then provide feedback to prevent them going off on tangents and wasting valuable time. Most students find this method beneficial as they work. I find the quality of the papers improves dramatically over the course of the semester. It is critical to stress that this is a business report; not an English paper. Each paper will take on significant size (30 to 50 pages) if just the required work is done. If focus is not maintained, the size becomes unmanageable.

Assumptions and common knowledge are not accepted. Everything has to be proven in some manner, if just by an interview with a business person. Quantitative and qualitative analysis are required. (I give a number of examples in class of how wrong ‘common knowledge’ can be.}

The primary theoretical foundation for industry analysis is taken from Porter (1980) [1] .

In what follows at this URL, I cover in some detail the outline for the industry. An industry analysis outline is attached for reference. Elements of the outline are in various colors for emphasis. Optional lecture notes and explanations are in blue. The text in black is given to the students with the handout  or as lecture material.

Industry Analysis

Learning objective: to determine the opportunities and threats that exist for firms within a competitive environment.

Method: Apply an adapted model of Porter’s (1980) five forces.

Student perspective and instructions: You are a team of analyst hired to answer a corporate-level question: should we enter this industry? You are outsiders looking in. In other words, when analyzing an industry, taking all factors into account, should we, as a corporation, enter this industry? The end result will be an understanding of what it takes to compete successfully.

Industry selection: Firm and industry selection are concurrent activities. Start with the firm. It must be publicly traded to give you access to an annual report and 10K, and it must have a definable problem. You are strongly advised to choose a firm with a production function, but exceptions are possible. Discuss this with your instructor first. From your initial reading about the firm, what industries does it compete in? Make a choice of industry to be analyzed based on personal interest, firm problems, or in consultation with your instructor. The firm’s primary source of revenue will in most cases define your industry choice.

Maintain your focus on the questions being asked. Provide a conclusions for each section and sub-section. Note carefully the form of the conclusion provided in each section. A decision matrix should be provided at the end of each section, and an overall matrix provided in the conclusion section.

Where quantitative analysis is required, provide average industry numbers expressed as ratios. Use five years of data to establish trends. Where qualitative analysis is required, provide citations to support your arguments. Assumptions and common knowledge are not accepted.

Continuity: I do read these papers! Be sure that if you make a declarative statement in one section, you do not contradict yourself in another. While it is a team project, I read it as the work of one person. Integrate the paper. Please number pages, and use section headings and sub-headings.

Help is just a mouse-click away! I strongly encourage you to show me your work as you progress. I can, and will, save you hours of frustration if you will show me what you are doing.

INDUSTRY PAPER

I.   Introduction  

This part of the paper is the only concession I make to an English paper – which every student begins writing.

A. Description This is to be a general introduction to the particular nature of the industry. A brief history, key players, and general information are required to set the stage.

B. Segments   Identify the segments of the industry, and specifically state the focus of the paper. Almost every industry has segments – some have too many, such as the computer industry. Students can not be expected to do all segments within one semester.

C. Caveats State limitations encountered in the study that prevent a complete analysis. No caveats are allowed without prior conversation with the instructor. Work-arounds are possible. Caveats that I agree exist are written because I can’t remember all the conversations.

II.   Socio-Economic

Learning objective: Determine the power of various stakeholder groups likely to have an impact on future competitive moves of firms within this industry.

Most texts cover in detail the many factors that can be relevant to any industry. Here the students must research their industry to find specific factors likely to impact firms within their industry. The orientation is toward the future. It is assumed that firms in the industry have adapted to past events. This material is available in magazine articles, and industry surveys, among other sources. Obviously this section will be very short for, say, the PC computer industry, and very large for the forestry products industry.

A. Relevant governmental or environmental factors An example would be the periodic efforts of the government to regulate auto gas mileage and emissions.

B. Economic indicators relevant for this industry   An example would be disposable income for firms in industries selling discretionary goods or services.

III. Porter’s Five Forces

Learning objective: Determine the relative strengths of each of the five forces.

A. Threat of New Entrants

Those industries with high entry barriers will have fewer firms entering. With fewer firms, there is less environmental complexity, and it is easier for one firm to begin to dominate the industry. Economic rents are usually higher in such an environment. This makes the industry attractive. For industries with low barriers to entry, such as the restaurant industry, new firms come and go with great rapidity. This prevents dominance by any one, or a few, firms. Economic rents are usually low. This makes the industry unattractive. The following elements will help determine the level of threat from new entrants.

1. Economies of scale

  If economies of scale exist, it represents a high barrier to entry. Firms within the industry will have achieved these economies, and if we enter, we will have to match their scale size, but without the benefits of the associated learning curve. Since economies of scale do not exist in any tangible way, you must prove their existence or non-existence. Provide two measures related to the basic premise that increases in capital investment should lead to lower unit costs. Reach a conclusion: based on your analysis, do economies exist? What does this do to the threat of new entrants? Does this make the industry attractive or unattractive? Provide similar conclusions for each of the following sub-sections.

2. Working capital requirements

  How much money will we have to tie up to keep the doors open? This is money that can not be invested in any other way. It will never earn an income. This is also a barrier to entry in that if firms must tie up large amounts of capital for daily operations, this will deter smaller firms from entering. Working capital requirements are usually provided in the cash flow financial statements.

3. Proprietary product differences

  Do you see that some firms have a secret process or secret formula? An example would be Coca-Cola. They have a secret formula for their cola soft drink that acts as a high barrier to entry. Very few firms try and compete head-to-head with Coke in the cola segment of the industry.

4. Absolute cost advantages

  Do you see the presence of patents or copyrights? These are legal constraints to entry created by the government. By definition, they constitute a high barrier to entry. Examples include patents on pharmaceuticals and copyrights on software.

5. Brand identity

  Is brand identity important in this industry? Do buyers make conscious choices based on brand identity? If so, this would be a high barrier to entry. Examples include Viagra, Coke, and Intel Pentium processors. You must prove that brand identity is or is not important. One way is through an interview with a buyer. Another is to examine marketing expenses for the industry as a percentage of sales across five years. If the trend is upward, then brand identity could be important.

6. Access to distribution

  How do firms get their product or service to market? Would we need to duplicate the distribution channels, or could we tap into existing channels? This is not an obvious question, and it requires first determining who the buyers are. Kia auto discovered that lack of a distribution system in the form of dealerships limited its access to markets in this country. This was a very high barrier to entry for them.

7. Expected retaliation

  Do you see indications of retaliation against prior newcomers? This will require research through many historical articles about the industry. An example would be the airline industry. Midway Airlines, a small regional carrier, competed head-to-head with American and USAir, and went bankrupt. Southwest has survived nicely by avoiding the markets dominated by larger airlines such as American and United. This is one of the high barriers to entry for the major segment of the airline industry.

              From your analysis, you will find that some of these points are not relevant to your industry. You should also appreciate that some points are more important than others. Lastly, you should find that some elements will say that the industry is attractive, while other elements say that the industry is unattractive. Provide a decision matrix to justify your final answer as to the barriers to entrants, the threat of new entrants, and the attractiveness of the industry.

B. Suppliers  

While we were concerned about threats in the "entrants" section, here we are concerned with power. Do suppliers have power over firms in this industry? If so, this would make the industry unattractive. The first step is to determine what this industry purchases. Not in detail, but as a generalization. Then, identify items that are recognized as being commodities. These can be dismissed from further consideration. Focus on suppliers of key items that firms in this industry must have. For example, in the micro brewing industry, all inputs are commodity items except hops. Since hops are the key ingredient for specialty beer production, supplier analysis would focus only on hops suppliers. Another example would be the PC industry. While this industry changes regularly, at the time of writing, only the central processing unit (CPU) is a key input. All other items are commodity in nature and would not be discussed. Evaluate the following elements only for the key item or items in the industry.

1. Suppler concentration

  Are there more or fewer suppliers than firms in this industry? If suppliers are concentrated (fewer of them) this could give them power over buyers in this industry. For example, Intel is one of only a few providers of CPUs for the PC industry. This gives them power over the PC industry.

2. Presence of substitute inputs

  The presence of substitute inputs lowers the power of suppliers. For example, in the auto industry, aluminum can substitute for steel. This lowers the power of the steel industry. A lack of substitutes, such as no substitute for the CPU gives the suppliers power.

3. Differentiation of inputs

  Are suppliers able to differentiate their products/services in some way? Whether legitimate or not, Intel has differentiated its CPU such that many consumers (not buyers) prefer computers with Intel inside. This ability to differentiate gives suppliers power.

4. Importance of volume to supplier

  Do we, as an industry, buy a significant percentage of the total production of the suppliers output? For example, the PC industry buys virtually all of the CPUs that Intel produces. This gives the PC industry power over the suppliers. Without the PC industry there would be no CPU manufacturers.

5. Impact of inputs on our cost or ability to differentiate

  If suppliers have a significant impact on an industry’s cost structure, or value chain, this gives them power. The same is true if they impact firms’ ability to differentiate their product or service. Again, the PC industry is a good example. Intel’s ability to impact PC manufacturers’ final product gives them power.

6. Threat of forward or backward integration

  Is there any indication that vertical integration is occurring? If suppliers are coming forward to gain access to distribution channels, this gives them power. If there are indications of firms backward integrating to capture margins, this gives firms in the industry power over suppliers.

7. Access to capital

  Assuming that we enter this industry, at some point in the future we will want access to capital for expansion or other business reasons. You need to determine whether we would likely have access to capital on acceptable terms. Since we can’t know the future, we have to use the past as an indication. Determine the average profitability for the industry over the last five years. Net income as a percentage of sales works. Plot a graph comparing industry profitability against inflation. In your opinion, does the return on investment represent a reasonable income? If so, we can expect that we would have access to debt financing on reasonable terms. If not, access to debt financing is likely to be expensive.

8. Access to labor

  If we enter, would we have access to labor on favorable terms? Does this industry have unions? If so, they limit access to labor and usually increase costs. Do firms in this industry require highly skilled knowledge workers? How is the present labor market for this industry?

             As with the threat of new entrants section, provide conclusions for each subsection as to the power of suppliers. Then provide an overall conclusion for this section using a decision matrix. Do suppliers have power and is the industry attractive?

C. Buyers  

  First, determine who the buyers are. This is not a marketing paper, so don’t think ultimate consumer. What are the channels of distribution for the industry? Your analysis should focus on the primary buyer, not on the consumer unless there are no intermediaries. Here again, we are concerned with power. Do buyers have power over firms in this industry? If so, the industry is unattractive. The easiest way to get answers is through an interview with a buyer. Most firms are willing to assist students. While it is not correct to generalize from one interview or observation, the experience and knowledge gained from the interview offset the methodological limitations.

1. Buyer concentration

  Are there more or fewer buyers than firms in the industry? If buyers are concentrated, this gives them power. An example would be the airframe industry. There is only one U.S. based buyer for commercial aircraft parts – Boeing. Therefore, the buyers for the commercial aircraft parts industry are concentrated, giving the buyers power, making the commercial aircraft parts industry unattractive.

2. Buyer switching costs

  Do buyers have switching costs that would limit their willingness to switch suppliers? If the industry has been able to create switching costs, that gives the industry power over the buyer and makes the industry attractive. An example would be the software industry. The switching costs are the time required to learn a new program. This makes it less likely that a buyer would switch readily from, say, Excel to Lotus. This buyer switching costs gives power to the software industry.

3. Buyer Information

  Do buyers understand what is happening in this industry? If so, it is less likely that the industry can make competitive moves to increase profit margins. An example would be the auto tire industry. Buyers (auto manufacturers) know what it takes to make a tire. Therefore, they have power over the tire industry. This is demonstrated by the relatively low margins in the tire industry.

4. Threat of backward integration

  Backward integration is the process of firms acquiring their suppliers, or beginning the process of providing for themselves the means to produce the input. This can occur for several reasons, among them: to guarantee a dependable source of the input or to capture the margins normally paid to the suppliers. Are there indications that buyers are backward integrating? If so, this gives them power, making the industry unattractive.

5. Pull through

  Have firms in this industry been able to create pull through? This requires that intermediaries exist. If brand identity is important in this industry then pull through most likely exists. Quantitative analysis of advertising expense as a percentage of sales over time for the industry is one way of demonstrating that pull through could exist. The easiest way to answer the question is through an interview. If pull through exists, this gives the industry power over the buyer. An example would be the cereal industry, which has established pull through such that major grocery chains have to carry major brands. This pull through gives the cereal industry power over the buyers, making the industry attractive.

6. Brand identity of buyers

  Does the industry impact the brand identity of its buyers? If so, this would give the industry power over the buyer. For example, while high performance tires with a brand name seen on racing cars would favorably impact the brand identity of a very expensive sports car, a brand of tire that automobile assembly plants put on compact cars would negatively impact the brand identity of this car.

7. Price sensitivity

  Are buyers price sensitive? This deals with elasticity of demand. Is the industry able to pass cost increases on to the buyer, or must they absorb them? If buyers are not price sensitive, this gives the industry power and makes it attractive.

8. Price to total purchases

  Do the buyers’ purchases of this industry’s product/service represent a significant percentage of their total purchases? If so, this would give the industry power over the buyers. They would be dependent on a constant supply of goods or services for their survival.

              As with the supplier section, provide conclusions for each subsection as to the power of buyers. Then provide an overall conclusion for this section using a decision matrix.

D. Substitute Products

  An industry will be attractive if there is no threat from substitute products. A substitute is any product or service that will fulfill the same need while using a different technology. An example would be substituting plastic for paper for food carry out. The electric car is a substitute for the internal combustion engine; therefore the auto as we know it, even though the auto industry is the primary developer. The relevance is that substitutes can render obsolete the present capital investment of the industry.

1. Relative price/performance relationship of substitutes

  The electric car has not caught on, in part, because it does not have the same performance characteristics as the traditional auto. Another example: few business people put cheap pens in their shirt pockets. They prefer a very expensive pen. The prestige factor is much higher for the higher-priced pen. The need being satisfied is not the ability to write, but the image being portrayed.

2. Buyer propensity to substitute

Despite the benefits offered by the substitute product or service, do people really want it? The ultra-sonic clothes washer was a flop. It got clothes as clean as the conventional washer, using cold water and no soap. But people preferred the hot water and soap despite the additional costs. Another example: special interest groups forced McDonald’s to switch from styrofoam containers to paper containers for carry out food.

           This section does not require a decision matrix. Based on your study of the industry, what do you conclude about the attractiveness of the industry?

E. Rivalry  

An industry characterized by high rivalry is unattractive because it limits the ability to achieve above normal economic rents. At the other extreme, industries with no rivalry are usually dominated by a few major firms which could limit strategic flexibility.

1. Degree of concentration and balance among competitors

  Here I cover lecture material on industry structure and the life cycle. Using a continuum, I show that some industries are fragmented, such as drug stores, while others are in near-monopoly conditions, such as main frame computers. The questions for the student are where is their industry on this continuum, and what are the economic forces acting on firms?

As the business cycle, or life cycle, progresses, there is a tendency for consolidation to occur within industries. At the beginning of the 20 th century, the US had around 300 firms in the auto industry. We now have two. As a rule of thumb, an industry is concentrated if five or fewer firms control 60% or more of market share. Concentration tends to increase rivalry, but must be considered along with balance.

If concentration does not exist, then balance is not an issue. The industry is, by definition, fragmented. This reduces rivalry and makes the industry attractive.   Assuming that the industry is concentrated, then look for balance. If the two largest firms have market shares within 10% of each other, then the industry is balanced. This increases rivalry, making the industry unattractive. If one firm is dominant in market share, this means that the larger firm is setting the competitive rules for the industry. This reduces rivalry and makes the industry attractive. A four cell matrix can be constructed to demonstrate these points.

2. Diversity among competitors  

Are firms following different strategies? If so, they have found market niches and this reduces rivalry. If they are all following the same strategy, they are fighting for the same markets and this increases rivalry, making the industry unattractive. Students have been exposed to Porter’s generic strategies by this point.

3. Industry growth rate (past and projected)

  If there is a positive trend to industry growth rate, and it is greater than the inflation rate, then firms are able to grow without taking market share from other firms in the industry. This reduces rivalry and makes the industry attractive. Quantitative analysis is required with a graph of the five year growth rate trend.

4. Fixed costs to value added

  It is necessary to demonstrate whether fixed costs and value added are high or low. If fixed costs are high, this usually means that economies of scale are possible in the industry. If fixed costs are high, and value added is low, the industry is at or near maturity, and the product/service is most likely a commodity. This increases rivalry and makes the industry unattractive.

Here I re-introduce break even analysis to show why fixed costs are important in an industry. What constitutes ‘high or low’ is left to the student to determine, and to support. This section is a good place to see if the students are working together in as much as the "entrants" section had to demonstrate economies of scale. The next element is value added. There are a number of ways to determine if the firms are able to create a reasonable profit margin, and the student can pick any supportable argument.

            This is one of the sections that allows real evaluation of the students’ analytical ability, and the ability to work with team members. As is obvious, fixed costs to value added is a very rich topic providing the instructor an opportunity to take a variety of approaches. More importantly, the student has an opportunity to integrate a number of significant concepts.

5. Intermittent overcapacity

  If the industry is running between 80% and 85% capacity utilization, this is a normal range. Lower utilization means that the industry is susceptible to intermittent overcapacity. This increases rivalry as firms attempt to maintain revenues. If the industry is over the normal range, this indicates that they may lack the capital investments necessary to meet unexpected demand. This reduces rivalry and makes the industry attractive.

The Department of Commerce provides figures for capacity utilization. These numbers are provided for the student, along with the web site for further data mining. While it is not applicable to all industries, most industries do have some measure of capacity utilization.

6. Product differentiation

  Are firms able to differentiate their product or service? If so, this reduces rivalry as each firm is able to find a market niche. If not, it increases rivalry and makes the industry unattractive. For example, BIC and Mont Blanc differentiate their pens on the basis of quality, image and cost, which reduces rivalry between these firms. In the airline industry each firm offers basically the same service. The lack of differentiation makes the industry unattractive.

7. Growth of foreign competition

  To what extend are foreign firms able to penetrate the US market? If there is a growth in foreign firms penetration, this increases rivalry making the industry unattractive. It also shows that US firms are not being globally competitive. While this is not an international management course, I do want students to be aware of the extent to which foreign firms are able to penetrate US markets. We also go over the reasons during lectures on the global economy.

8. Corporate stakes

  While most firms have revenue from a variety of industries, the question here deals with the degree of dependence on one industry segment. To what extent are firms dependent on this one industry segment for revenue? If the percentage of revenue is high, then the stakes are high, and this would increase rivalry, making the industry unattractive. This requires judgment on the part of the student, and quantitative support for the argument.

9. Exit barriers

  If we enter this industry, will we be able to get out again? A firm can exit by converting operations to another product/service, or by selling out – merger. If exit barriers are low, this reduces rivalry and makes the industry attractive.

             As with the other sections, in this one provide conclusions for each subsection as to the degree of rivalry. Then provide an overall conclusion for this section using a decision matrix.

IV. Conclusion

            You have, by now, discovered a number of factors: Firms do not provide their annual reports in any standardized manner. Reporting services will have conflicting data. Missing industry numbers can not be computed from firm data. But the biggest awakenings should be that a lot of the theory you have learned from other classes does not apply, and there are no correct answers! However, you are now in a position to look beyond the obvious and to see – and write about – the opportunities and threats facing firms in an industry.

            State what you consider to be the opportunities and threats for firms that would enter this industry. Use a decision matrix to support a final argument as to whether we should or should not enter this industry.

A. Critical Success Factors

  You need three. Two are quantitative, and one can be qualitative. A factor is critical if it defines the difference between a firm that will succeed and one that will fail. These should come from your analysis of the industry – they are not separate! For example, if you noticed that the industry is in the mature phase of the life cycle, and that fixed costs are high and value added is low, then efficiencies would be a critical factor to survival. Market share is not a critical factor – it is an obvious point that firms must grow. It is how they grow that matters.

              Most texts give material on key success factors. This is a laundry list. The point here is to narrow the list down to items that are really important within an industry. For the auto industry, being a low-cost provider is important, as is quality of products. These can be measured by the student from industry data. Another factor is reputation, as Ford found out with the Explorer problem.

B. Prognosis

  What is your assessment of this industry as an investment prospect? Is future growth possible? Will competitive forces contribute to consolidation? These are just suggestions. Your analysis should lead you to reasonable conclusion.

V. Bibliography  

            I would prefer to see not only the references that you cite, but also a listing of the material that contributed to your body of knowledge. Where did you look for answers? If it helped you, please include a reference.

VI. Appendices

           Here you can put anything that you think is important to an understanding of this industry. At a minimum you need a set of industry ratios covering the most recent five year period.

            I prefer electronic submissions. You can submit earlier than the required submission date.

Final Notes: It could be said that there is too much structure in this outline, and that the student is being driven toward a single conclusion. From experience, I don’t believe that this is the case. The analysis required is focused. This means the student must learn certain techniques that will be useful in their future endeavors. However, as students discover that all theory does not apply in all cases, this is where they have the chance to see beyond the obvious and discover new solutions.

            One example of this process: We all know that the auto industry is unattractive. It is mature, with saturated markets, excess capacity, and strong labor unions. Despite this, firms still enter and find ways to survive. Witness Honda and Kia. Others fail, for example, Jugo. When the analysis is finished, the student is able to discern the opportunities and threats of the industry, and I believe that the structure of the industry analysis contributes to achieving this objective.

INDUSTRY PAPER OUTLINE

I. Introduction

A. Description

B. Segments

II. Socio-Economic

A.   Relevant governmental or environmental factors, etc.

B.   Economic indicators relevant for this industry

III. Porters Five Forces

secret formulae or processes

4. Absolute cost advantages:

                   patents or copyrights

B. Suppliers

1. Supplier concentration

5. Impact of inputs on cost or differentiation

1. Buyer concentration versus industry concentration

3. Buyer information

6. Brand identity of Buyers

1.    Relative price/performance relationship of substitutes

2.     Buyer propensity to substitute

2. Diversity among competitors

3. Industry growth rate (past & projected)

4. Fixed costs/value added

A. Critical Success Factors. At least three, two of which must be quantitative.

B. Prognosis - your assessment of the future of this industry.   Summarize the five forces discussion. Threat, power, attractiveness. Should we enter this industry?

  V.   Bibliography

Industry Ratios

Other relevant indices

  Go to the second part of this article.

[1] Porter, Michael E. 1980. Competitive strategy . New York: The Free Press.

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State of the Consumer 2024: What’s now and what’s next

If you think you know consumer behavior, think again. Middle-income consumers are feeling the squeeze and worrying about inflation but aren’t holding back on splurges. Rather than sticking to tight budgets in retirement, aging consumers are splurging too. Speaking of older shoppers, it turns out that the brand loyalty they’ve long been known for is a thing of the past. And young consumers in Asia and the Middle East are more likely than those in Western markets to switch to higher-priced brands.

These are just some of the large-scale shifts taking place in the global consumer landscape. Consumers have continued to defy expectations and behave in atypical ways , keeping consumer goods manufacturers and retailers on their toes. More than ever, companies that cultivate a detailed, up-to-date understanding of today’s and tomorrow’s consumers—who they are, what they want, and where and how they shop—will be best positioned to succeed.

You’re invited

Join us for a discussion of our report, Rescuing the decade: A dual agenda for the consumer goods industry , on June 26 at 10:00 a.m. ET | 4:00 p.m. CET.

In this article, we draw on our ConsumerWise  research to delve into nine trends shaping the global consumer sector and four imperatives to help consumer businesses move from “now” to “next.”

Nine trends defining the global consumer market

To forecast where the global consumer landscape is heading, we surveyed more than 15,000 consumers in 18 markets that together make up 90 percent of global GDP. Their answers revealed surprising nuances about demographic groups, seemingly contradictory consumer behaviors, and categories poised for growth.

Who is the future consumer?

Consumers no longer fit into traditional archetypes. Some of the most influential consumers of tomorrow are currently underserved.

1. Young people in emerging markets. By 2030, 75 percent of consumers in emerging markets will be between the ages of 15 and 34. Our data indicates these consumers may be optimistic about the economy and willing to spend.

Among this group, young consumers aged 18 to 24 in Asian and Middle Eastern nations, such as India and Saudi Arabia, will be particularly important to consumer businesses, given their pent-up demand and willingness to spend. These consumers indicate a strong desire to spend on premium products, so much so that they are up to two times more likely to trade up—meaning opt for higher-priced brands and retailers—than young consumers in advanced economies. They are also up to three times more optimistic about their respective economies (Exhibit 1). This optimism could translate into higher levels of future consumption. It’s worth noting that young consumers in Latin America are actually less likely to trade up than young consumers in other emerging economies.

2. Retired and ready to spend. Longer life expectancies and declining birth rates, particularly in advanced economies, are pushing the global population of people older than 65 to increase at a quicker rate than the population of people younger than that age. 1 “Ageing,” United Nations, accessed May 29, 2024. Yet for all the data relating to aging populations, older consumers are often misunderstood.

Despite the financial constraints that may accompany retirement, aging consumers across all income levels are willing to spend on discretionary items. In experiential categories such as travel, older consumers’ intent to splurge is even higher than that of millennials, who have historically been big travel spenders. High-income baby boomer and Silent Generation consumers (those whose household incomes exceed $100,000) are a sizable cohort in the United States, making up 30 percent of the market—and they’re more likely to spend on discretionary purchases, such as home improvement and gardening, compared with lower-income consumers their age.

In emerging markets, it’s not just younger consumers who are ready to spend but their parents, too. Wealthy aging consumers in emerging markets are more optimistic, expect to spend more on discretionary items, and plan on treating themselves more than wealthy aging consumers in advanced markets. In one of the starkest examples, 42 percent of wealthy aging consumers in emerging markets 2 Forty-two percent of consumers in Brazil, China, India, Mexico, and Saudi Arabia. said they expect to spend more on entertainment, compared with 7 percent of comparable consumers in Europe 3 Throughout this article, we will refer to “Europe” to indicate France, Germany, Italy, Spain, and the United Kingdom. and 11 percent in the United States. We see a similar willingness to spend in categories such as home improvement, airline flights, and hotel stays. Consumer businesses that market exclusively to younger consumers are thus missing out; they ignore wealthy aging consumers at their own risk.

3. The squeezed-but-splurging middle. We expect that cost-of-living increases in advanced economies will continue to put pressure on middle-income consumers. While conventional wisdom would suggest that these consumers will clamp down on discretionary spending as a result, our data reveals something different: instead, middle-income consumers in Europe and the United States say they plan to splurge on discretionary items at a rate that is comparable with that of high-income consumers.

This intent to splurge appears across various categories, including experience-based categories such as travel and dining out, as well as groceries and discretionary goods. Middle-income consumers might typically be expected to delay purchases during economically challenging times, but our research shows that they’re only slightly more inclined to delay purchases than wealthier consumers. They’re also not much more likely to trade down than higher-income consumers.

What will consumers want?

What consumers want is changing too. Weakened brand loyalty, affordability over sustainability, and heightened interest in wellness products and services reflect the preferences and priorities of consumers across ages and geographies.

4. Brand exploration. When they couldn’t find exactly what they needed because of pandemic-era supply chain disruptions, roughly half of consumers  switched products or brands. That behavioral change has proved quite sticky: consumers continue to be open to exploring alternatives, and brand loyalty is fading across demographic groups.

In advanced markets, over a third of consumers have tried different brands, and approximately 40 percent have switched retailers in search of better prices and discounts (Exhibit 2). Inflation and economic uncertainty are almost certainly inducing this behavior.

This weakening of brand loyalty is not limited to a specific age group. In the past, older consumers remained consistently loyal to their preferred brands, but today, they’re just as likely to embrace new brands and retailers. In Europe and the United States, Gen Zers and millennials are only slightly more likely than older consumers to trade down to lower-priced brands and retailers.

One beneficiary of this rampant downtrading is private labels. Thirty-six percent of consumers plan to purchase private-label products more frequently, and 60 percent believe private brands offer equal or better quality.

5. Sustainability: Value upstages values. In recent years, young consumers in our survey data said they prioritized sustainability considerations when making purchases. It wasn’t all talk: in the United States, sales of products with sustainability-related claims  outpaced sales of products without such claims.

While young consumers still say they care about sustainability, they are now making clear trade-offs in the face of economic uncertainty and inflation. In Europe and the United States, fewer Gen Zers and millennials ranked sustainability claims as an important purchasing factor at the beginning of 2024 than in 2023 (Exhibit 3).

Younger consumers aren’t just deprioritizing sustainability in their purchase decisions; they’ve also become less willing to pay a premium for sustainable products. In Europe and the United States, the percentage of young consumers willing to pay a premium for products with sustainability claims declined by up to four percentage points across product categories. Among these consumers, only a very small percentage were willing to pay a premium for personal care and apparel products with sustainability claims.

6. The worldwide wellness wave. We estimate the global wellness market to be worth more than $1.8 trillion , growing 5 to 10 percent annually. 4 “ The trends defining the $1.8 trillion global wellness market in 2024 ,” McKinsey, January 16, 2024. In advanced economies, health and wellness products and services have been in high demand over the past several years. Today, these categories are also growing quickly in emerging markets, and in some cases, growth in intent to spend on health and wellness products in emerging markets is outpacing growth in advanced markets.

In emerging markets such as China, India, and the Middle East, the percentage of consumers who intend to increase their spending on wellness products and services is two to three times higher than in advanced markets such as Canada and the United States (Exhibit 4).

It’s not only Gen Zers and millennials who are propelling growth in this space, but also Gen Xers and baby boomers. To be sure, regional variations appear. According to our research, for example, 63 percent of baby boomers in China intend to spend more on fitness in the near future, while only 4 percent of the same cohort in India plan to do so.

Weight management products and services, in particular, could help induce growth in the wellness sector over the next several years.

By 2035, just over half of the world’s population is projected to be overweight or obese. At the same time, the availability of weight management drugs is expected to grow as more health plans approve coverage, doctors are able to prescribe them for more uses, and doses are made available in pill form. Adoption of these drugs, compared with other weight management solutions (such as dieting or exercise), will depend on cultural norms and beliefs, too. Less than 30 percent of Chinese and UK consumers consider weight loss drugs to be very effective . 5 “ The trends defining the $1.8 trillion global wellness market in 2024 ,” McKinsey, January 16, 2024.

7. Wellness for women. Investments in women’s wellness are also growing . Consumers in both advanced and emerging markets are indicating a greater interest in spending on women’s wellness products and services, as well as on adjacent personal-care categories. We estimate that closing the women’s health gap could be worth $1 trillion annually  by 2040. 6 Kweilin Ellingrud, Lucy Pérez, Anouk Petersen, and Valentina Sartori, Closing the women’s health gap: A $1 trillion opportunity to improve lives and economies , McKinsey Health Institute, January 17, 2024.

A higher percentage of women in emerging markets (48 percent), in fact, indicate an intent to splurge on beauty and personal-care products and fitness, compared with women in advanced markets (27 percent). And young women are especially interested in wellness: Gen Z women across both emerging and advanced markets said they expect to spend more on personal-care goods and services, compared with Gen Xers and baby boomers. As innovation in women’s health continues to push the sector forward, we expect spending to increase as well.

Where will consumers shop?

Knowing what consumers want means little if businesses do not meet consumers where they are. Global migration patterns—both to and from major urban hubs—are changing where consumers spend their time and money in the physical world, while growth in social commerce accounts for new movement in the digital world.

8. The new urban hot spots. In both advanced and emerging markets, people are moving to seek out new opportunities and a better quality of life. In advanced markets like the United States, consumers are moving away from larger cities in the Pacific Northwest and the Northeast to “secondary cities,” or those with populations between 50,000 and 500,000 people. Two-thirds of the fastest-growing US cities are in the South and West. In these cities, the cost of living is lower than in larger cities, and remote work opportunities are plentiful. Millennials, Gen Xers, and boomers are propelling this trend.

Just because US consumers are moving to scaled-down versions of metropolises does not mean they are curtailing their spending: just as many consumers in secondary cities say they plan to splurge as do consumers in the largest American cities. Meanwhile, 1.3 times more consumers in secondary cities say they plan to splurge, compared with US consumers in rural areas.

Emerging markets will continue to see urban-population growth in both megacities and secondary cities as consumers move in search of better economic opportunities and improved well-being. By 2035, for example, 43 percent of the Indian population may reside in urban areas, up from 35 percent in 2018. In China, the percentage of middle-class households is expected to increase in both tier-one and tier-two cities as well as in tier-three and tier-four cities by 2030. And by 2040, there will be 537 million people in African urban centers, making the African urban population the largest in the world.

9. Social commerce takes flight. For several years, China has led the world in the adoption of social commerce, in which consumers browse and buy directly through social media and content creation platforms. Today, social-commerce markets in both China and India continue to mature, while those in other emerging-market countries—such as Brazil, Saudi Arabia, and the United Arab Emirates—are close behind (Exhibit 5). Consumers in these countries consistently spend more on purchases made through social media platforms, compared with consumers in Europe and the United States.

Attempts to grow the social-commerce market  in the West have had limited success. Companies simply may have been too early to embrace this opportunity. We expect social commerce in the United States to expand to $145 billion by 2027, up from $67 billion today. 7 “ Social commerce: The future of how consumers interact with brands ,” McKinsey, October 19, 2022. Gen Zers and millennials are propelling this growth: they make purchases on social media four times more often than older generations do. More than a third of Gen Z and millennial survey respondents said they had made a purchase on social media in the prior three months.

Four imperatives to win the consumer of the future

In light of these nine forward-looking themes, what should consumer companies do? The most successful ones will be those that act on four imperatives:

Build microtargeting capabilities

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QuantumBlack, McKinsey’s AI arm, helps companies transform using the power of technology, technical expertise, and industry experts. With thousands of practitioners at QuantumBlack (data engineers, data scientists, product managers, designers, and software engineers) and McKinsey (industry and domain experts), we are working to solve the world’s most important AI challenges. QuantumBlack Labs is our center of technology development and client innovation, which has been driving cutting-edge advancements and developments in AI through locations across the globe.

Rather than putting consumers in predefined—and often outdated—boxes, companies should focus on microtargeting to build a richer understanding of consumer preferences. This involves taking a “smart reach” approach , whereby consumer businesses use their consumer data to target specific microsegments of consumers who may demonstrate particular shopping behaviors or preferences. Generative AI can help consumer businesses reach these microsegments  at scale by increasing creative output and automating marketing outreach. Through microtargeting, companies can engage high-potential consumer groups—for example, younger people in emerging markets or wealthy aging individuals—and provide personalized experiences that build brand love and loyalty and propel future purchases.

Invest in wellness

A rise in both consumer interest and purchasing power presents tremendous opportunities in the $1.8 trillion global-consumer-wellness space. Consumer goods leaders have a chance to reevaluate their product development road maps and consider whether they have more opportunities to introduce personalized-wellness products to priority consumer groups. Consumers across the globe want data- and science-backed health and wellness solutions. Best-in-class companies should evaluate opportunities to lean into these offerings and other wellness growth areas (such as women’s health and healthy aging).

Propel the social–digital experience

Companies should take steps to engage with consumers on social media and other digital platforms. This involves identifying the right channels and platforms, creating attractive content, and tailoring strategies to meet evolving consumer needs. This is especially important as industry lines blur (for example, as consumer companies enter the healthcare space and vice versa) and as ecosystems (networks or partnerships that cut across different industries)  become more important.

We see innovative, international companies testing new approaches to social commerce to connect with consumers on a local level. Some are mobilizing local key opinion leaders to precisely target consumers and create viral digital campaigns that resonate with them. Social media and private chats through platforms such as WeChat help to continually engage consumers.

Offer premium products where they matter

Offering premium products in relevant categories can help improve brand loyalty. Consumer brands should identify which categories are ripe for this, such as experiential travel—where splurge activity is common even across middle-income and aging consumers. Conversely, some categories are more suitable for value plays based on trade-down behavior or frequent brand exploration. Integrating loyalty and pricing strategies , instituting pricing tiers, and tailoring product assortments at the local and channel levels are ways that consumer businesses can provide value to consumers, while also managing economic pressures.

In this consumer landscape—one in which standards, complexity, and stakes are all higher—leaders should understand the new nuances that define who the “next” shoppers are, what they care about, and how they shop. These insights, which should then inform strategic category and channel investments, can lead to long-term, profitable growth and sustained competitive advantage.

The authors wish to thank Cait Pearson, Heather Gouinlock, and Keir Sullivan for their contributions to this article.

This article was edited by Alexandra Mondalek, an editor in the New York office.

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A forest companies typology regarding their contribution to circular economy: a sustainability reporting-based analysis

• Open access
• Published: 19 June 2024
• Volume 5 , article number  120 , ( 2024 )

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• Dimitra Panori 1 ,
• Konstantinos G. Papaspyropoulos 1 &
• Ioannis E. Nikolaou 2  

Relatively recently, the residuals of forest industry have been considered very important and useful to be reused through bioeconomy and circular economy practices in order to reduce the use of non-renewable natural resources. The majority of current studies have been based on interview protocols and questionnaire-based surveys to examine how managers of forest industry contribute to sustainable development and circular economy. Despite the usefulness of these surveys, there is a degree of subjectivity in the respondents' responses and an orientation to what forest companies propose to do in the circular economy. To overcome the weaknesses of previous research, this paper aims at drawing appropriate information from sustainability reporting of a sample of forest companies to provide a more unambiguous understanding of the way that forest companies meet the circular economy principles. Thus, a circular economy measurement framework is developed which is based on scoring systems and GRI guidelines to draw reliable and harmonized information from corporate sustainability reporting. Furthermore, it results in a four-type company typology according to the number of the circular economy principles and the number of items they achieve for each principle such as pioneer circular company, lagging circular company, innovative circular company and infant circular company. The suggested framework is tested on a sample of 20 forest companies with higher revenue in 2022. The findings show that half of the sampled companies can be considered as infants at the CE practices, while a positive statistical relationship is revealed between forest companies’ circular economy practices and their revenues.

Avoid common mistakes on your manuscript.

1 Introduction

Circular economy (CE) is a concept which gains a great momentum in the literature of sustainable development [ 1 ]. It is considered appropriate to assist in transforming the current linear production model to a circular one by narrowing, slowing and closing the loops of materials [ 2 ]. Several studies have been conducted in the field of CE that could be classified in three general categories [ 3 , 4 ]. The first category puts more emphasis on examining micro-level of firms and products in which different sectors adopt CE principles (e.g. reduce, reuse, and remanufacture) to contribute to sustainable production and consumption both from firm side (production) and consumers (consumption) side [ 5 ]; the second category includes examples that focus on cooperation between firms [ 6 ] which exchange end of life products and materials as raw materials; the third category focuses on region, city and country level circular economy practices [ 7 ].

Another critical point of CE pertains to the selection of appropriate procedures that economic actors adopt to contribute to the technical and biological cycles. The former type (technical) of cycle includes mainly artificial materials that could be made under technical transformation (e.g. refurbish, remanufacture, reuse, and recycle) to be ready, again, for production and consumption. It is considered a good prospect for maintaining mainly non-renewable natural resources for a longer time in production and consumption phases. It may also be a good answer to issues such as strong sustainability and the rebound effect [ 4 ]. The later type (biological) of cycles pertains renewable natural resources which have the capability to sustainably return back to the production and the consumption procedures [ 8 ]. The products in the biological cycle should be designed with intention to protect safe minimum standards of renewable natural resources so as to maintain their ability to regenerate. A very good diagrammatical representation is provided by the butterfly diagram of Ellen MacArthur Foundation which shows a number of principles that are associated with technical cycle (right side of the diagram) such as share, reuse, reduce, recycle and recover, while highlight cascade use and biogas prospect of biological cycle (left side of the diagram).

To this logic, many company sectors provide direct and indirect contribution to technical cycle of natural resources by adopting several circular manufacturing strategies such as cleaner production, circular business models, waste management, disassembly manufacturing, recycling, close loop supply chains and reverse logistic, industrial symbiosis, and circular design [ 9 ]. In a more systematic way, [ 10 ] provide four types of strategies that assist companies in contributing to biological cycle of products such as physical (e.g. pressing, milling, separation, fibers separation, upgrading, fractionation, and extraction), chemical (e.g. hydrolysis, oxidation and pulping), biotechnological (e.g. anaerobic digestion, aerobic fermentation, enzymatic conversion) and combined strategies (e.g. combustion and gasification). Actually, it is very difficult to separate technical and biological cycle. Thus, the majority of studies focus on examining the contribution of companies to CE by examining the types and the number of CE principles they adopt (e.g. refuse, reduce, reuse, recycle, remanufacture and refurbish) which is known also as ‘Rs’ models.

Some critical points of this discussion have been transferred into the forestry sector which plays and is expected to play a significant role in the European economy, as it accounts for a fifth of the total EU manufacturing sector. This requires the harmonization of its operation with the principles of the CE [ 11 ]. This sector is concerned with a renewable resource and can contribute simultaneously in the biological and CE cycle by adopting appropriate strategies.

Although the circularity of forest companies is of great interest for sustainable development, their contribution to circular economy is nevertheless clearly less studied in the relevant literature. Circular economy and its relation to forest companies has been mainly examined through literature review studies [ 12 , 13 ], interviews with experts in forest companies [ 14 ], and questionnaires to forest companies [ 15 ], methodology strategies that are subjective to these companies’ views on circular economy. This fact causes a strong interest in investigating the contribution of this specific sector to the CE by examining a rather more independent source of information, the forest companies’ sustainability reports. Today, the majority of these studies focus on examining only how these forest companies contribute to different aspect of sustainability such as economy, environmental and social. The findings of these studies mainly focus on identifying critical points that will be useful for understanding the relevant field without any analysis of primary data on the performance of the companies in the relevant field. The literature of the relevant field needs to record the current state of efforts undertaken by forest companies to promote bioeconomy and circular economy issues. In this sense, the necessary data should be drawn from the sustainability reports of forestry companies since they are important databases with real data on their practices in the protection of the natural environment. Thus, by using corporate sustainability reports, the objective of the present research is to answer the following research questions:

RQ1: To what extent have companies in the forestry sector adopted the principles of the circular economy?

RQ2: What techniques have been used in the forestry sector to satisfy the principles of the circular economy?

RQ3: What types of circularity are present in the forestry sector?

These research questions will be answered by extracting information from corporate sustainability reporting and through scoring/benchmarking techniques which is based on the GRI standard. Finally, it concludes on a typology regarding forest companies according to the CE principles. It is applied in a sample of 20 forest companies in the European region. The findings showed that some forest companies are classified as innovative in CE practices which follow more than the four most used principles (Reduce, Reuse, Recycle, and Recover), and three of the sampled firms are classified as the Pioneer Circular Forest Companies being the leaders in CE practices.

The rest of the paper is classified into four sections. The second section analyzes the theoretical background regarding CE and forest companies. The third section presents the methodology of the paper. The fourth section includes the results of the research and the final section describes conclusions of the paper.

2 Theoretical underpinning

Although a number of theoretical and empirical research studies have been conducted regarding CE, there is a lack of a consensus regarding its content among scholars and practitioners’ cycles [ 16 ]. Exploring the multitude of the CE definitions [ 17 ], identify 114 definitions placing different emphasis on ‘Rs’ strategies by replacing the ‘end-of-life’ thinking from production system with alternative ‘Rs’ strategies such as reduce, reuse, recover, recycle. By updating their research after 5 years, [ 18 ] gather 221 definitions about CE by pointing out a strong relationship between CE and sustainable development. Many other scholars have analyzed the CE definition by focusing on CE principles ( ‘Rs’ ), influences from international organizations (e.g. Elen MacArthur Foundation, European Union) and scientific observations [ 19 , 20 , 21 ].

It is important to highlight every component of CE concept: circular (C) and economy (E) (Fig.  1 ). The first component implies the protection and preservation of renewable and non-renewable natural resources in order to meet current and future needs of societies (Technical Cycle). This signifies that actors on production side should adopt certain strategies in order to extend the life of the non-renewable materials and avoid using ‘virgin’ natural resources. Furthermore, cascading use for renewable natural resources is promoted in order to use biomass in production stages as well as to eliminate waste generation (Biological Cycle). The other component is another significant aspect, implying less costs, increased revenues and profits of companies (Economy).

Circular economy

The analysis of the definitions and practices adopted by companies in the CE is usually made based on the principles they adopt since they indicate the degree of their contribution to the CE sector. Indeed, many scholars analyze the circular economy through the various ‘Rs’ strategies with the dominant models being the ‘3Rs’ (reduce, reuse and recycle) and ‘4Rs’ (reuse, reduce, recycle and remanufacture) models [ 22 ]. Potting et al. [ 23 ] provide a ‘ 10Rs’ strategy model which focuses on smarter products (e.g. refuse, rethink and reduce), improves circularity (e.g. reuse, repair, refurbish, remanufacture, repurpose) and promotes useful use of materials (e.g. recycle and recover), while it contributes to economic direction by eliminating costs of production and consumption of materials.

As presented in the international literature, forest industry contributes to both components of CE such as through bioeconomy (biological cycle) by utilizing wood waste and through ‘Rs’ strategies to eliminate and extend end of life of forest products [ 24 , 25 ]. Forest industry contributes both to technical and biological cycle by adopting different strategies. In the biological cycle, cascading poses challenges in forecasting future environmental, social, or economic benefits within forest and related bio-based industries, particularly due to the extended life cycle of certain wood products [ 26 ].

Although it is clear that the contribution to both of these cycles is extremely important for sustainable development, nevertheless in the context of this paper emphasis will be placed on the analysis of the contribution of the forest companies to the CE for which less knowledge exists today. In this logic, [ 27 ] examine 28 forest companies which consume 83.6% of their raw materials from ‘virgin’ natural resources and identify that over 90% of their waste is intended for energy recovery. In the forest sector [ 12 ] put emphasis on the effects of CE strategies on the ecosystems conservation by examining Slovak forest sector. By conducting an interview-based survey in a sample of 15 experts in the Slovak forest sector, they find a significant role of forest sector to improve wood efficient use through CE strategies and its contribution to increase capability of forest companies to substitute non-renewable resources with wood residuals which offering economic benefits for companies and protecting ecosystems.

Tedesco et al. [ 15 ], in a questionnaire-based study conducted within Brazilian forestry companies using the ReSOLVE framework, emphasize that regenerating and exchanging practices receive the highest scores for implementing CE, while sharing and virtualizing practices show lower implementation levels. They, also, highlight that challenges regarding the implementation of CE originate from issues such as employee training and awareness, shifts in behavior and organizational culture, and a general lack of interest, underscoring the significance of focusing on education and training, support from public policies, and collaboration within the market.

Similarly, [ 28 ] identify that circularity practices within the planted tree industry of Brazil, as assessed by the ReSOLVE framework, are predominantly adopted by large companies, particularly those engaged in pulp and paper production. Their survey also underscores the significant role of industrial symbiosis in facilitating the transition towards CE.

To protect the forest ecosystems, forest companies could adopt industrial symbiosis and effectively reduce waste, conserve resources, and yield economic and social benefits [ 29 ]. Moreover, they can use chemical techniques, thermal methods and nanotechnologies to extend the life span of wood materials. Some promising sectors that are expected to assist in reusing and recycling wood residuals are the construction and pulp and paper industry. By conducting two case studies [ 30 ] examined different prospects of forest companies to contribute to CE. In the former case study, they utilize questionnaire-based survey to examine the prospects of a sample of forest companies in the Kymenlaakso region which adopt CE and bioeconomy strategies to manage the amount of waste material and energy efficiency. They, also, identify some barriers to develop the concept of CE in the forest sector which are associated with the loose regulatory regime and limited demand for wide-scale cascading of solid wood in Finland. Finally, they conclude to some principles of CE that could promote cascading use of materials such as reuse of wooden packages and energy recovery.

Parallel, [ 14 ] points out that forest industry needs a long-time strategy to promote CE such as resource efficiency, recycling and closing the loop of wood materials. By conducting an interview-based survey, the researcher identifies that respondents highlight the traditional closed-loop thinking of the Finnish forest industry which reuses and recycles wood residuals. It is also identified that respondents highlight that the majority of the current discussion has a societal orientation which is alienated from the business world. Essentially, the behavior of businesses is affected from an appropriate market-based and command-and-control regime to create a competitive and concrete context in order forest companies to exploit opportunities from CE practices.

Similarly [ 31 ], conduct a study to examine how the different business sectors (e.g. construction, real estate and forest industry) through CE can reduce their impacts on biodiversity. They highlight some specific strategies like material efficiency, cascading use of wood, reuse of materials, extending buildings’ lifetime which can play a critical role in creating appropriate conditions in order companies to reduce extraction of virgin raw materials. They highlight also that although the use of forest products has impact on biodiversity (in Finland where this study focus) and eliminates the use of non-renewable materials in construction industry, nevertheless it requires specific policies in order to protect biodiversity. This is a serious point since the global growing demand for wood products will obviously lead the economy to a rebound effect with more and severe consequences on biodiversity without adopting certain prevention and protection strategies.

Furthermore, [ 32 ] examine the attitude of leaders of forest industry regarding CE strategies by conducting interviews-based survey and analysis of secondary data of companies (e.g. information from websites). They identify a positive attitude of leaders to adopt ‘ 10Rs’ principles (e.g. refuse, reduce, recycle, remanufacture and recover). Additionally, they classify forest companies in three categories according to the type of principles they adopt such as short-loops (e.g. refuse, reduce, reuse and repair), medium loops (e.g. refurbish, remanufacture and repurpose) and long loops (e.g. recycle, recover and re-mine). Similarly, [ 33 ] developed a new theoretical framework to examine cascading use with ‘10Rs’ by drawing knowledge from relative literature. Many scholars have focused on examining specific circular economy principles such as wood remanufacturing [ 34 , 35 ], forest recycling and recovery materials [ 16 ].

The majority of these studies focus on questionnaire-based and interviews-based survey to draw information about the CE strategies that forest companies adopt. Although their findings are very useful for scholars and practitioners, nevertheless there is a need for more empirical and accurate findings to improve scholars understanding of the behavior of forest companies in adopting different ‘Rs’ strategies. One significant and appropriate way is to draw information from sustainability reports of the forest industry in which information about environmental, social and governance (ESG) practices is disclosed. These reports are adequate inventory that any type of companies’ accurate and reliable information about ESG and CE is disclosed.

3 Methodology

3.1 research structure.

To conduct this research study, a new methodological framework is developed to draw information from corporate sustainability reporting, in order to estimate the level of the circularity behavior within the forest industry. It is based on four fundamental steps, as shown in Fig.  2 , such as research questions development (S1), measurement technique design (S2), Matrix Typology development (S3) and data selection criteria presentation (S4) (Fig.  2 ). Afterwards, a data analysis has been performed to draw useful information for current literature and a discussion has been made to identify similarities and differentiations regarding the behavior of forest companies towards CE topics.

Research structure

3.2 Research questions

Nowadays, as analyzed previously, there are two basic cycles in the CE thinking that forest companies can contribute in order to protect natural resources such as the biological and technical cycle. The former implies the adoption, by part of forestry companies, of bioeconomy principles that forest companies can adopt in the procedures to use natural resources in order to maintain the resource regeneration rate of renewable natural resources, while the latter suggests that forest companies can, through the principles of the CE, use end-of-life materials. The dimension of the CE in the forest sector has been less explored which is a significant trigger for this research. It is indeed a very crucial point for the current literature to shed light under a reliable evidence on the practices adopted by forest companies regarding CE. The analysis of the theoretical background shows that forest companies adopt various CE models including single or multiple CE principles (e.g. reduce, reuse or recycle). Consequently, the first scientific question that will be investigated in this research is:

First Research Question (RQ1): To what extent have companies in the forest sector adopted the principles of the CE?

Another important part of the relevant literature is the identification and investigation of the techniques used by forest companies to achieve CE principles. It is extremely important to recognize the actual practices that forest companies adopt to reduce, reuse, recycle and remanufacture wood residuals, rather than just examine the trends and perceptions of managers about the prospects to adopt such practices. In this sense, the next scientific question of this research is:

Second Research Question (RQ2): What techniques have been used in the forest sector to satisfy the principles of the CE?

However, the degree of integration of CE principles adopted by forest companies, as seen from the analysis of the previous theoretical background, differs among them. There are companies that have adopted one principle (e.g. reuse or recycle) and others that have adopted many more principles (e.g. ‘10Rs’ ). There are still identified differences within the practices adopted among companies even for the same principle of CE (e.g. for reduce). Consequently, the number of principles and the range of practices adopted by forest companies may lead to different types of classifications and investigation of these companies. In this sense, the next scientific question of this research is:

Research Question (RQ3): What types of circular behavior are present in the forest sector?

3.3 Measurement system

It is important to note that corporate sustainability reports can serve as an important inventory of information on the environmental, social and governance (ESG) performance of companies. However, the unsystematic way in which this information is disclosed in voluntary corporate sustainability reporting has led researchers to develop scoring and content analysis techniques to draw reliable information for reasons of uniformity, comparability and completeness [ 36 , 37 ]. The specific techniques are based on the use of quantifiable items from the yet established information recording standards (e.g. GRI, SASBs and IR) and evaluate each information either for its content (e.g. content analysis techniques) or for its degree of completeness (e.g. scoring techniques) [ 38 , 39 ]. Given the relevant literature, a three-task measurement framework was developed for the analysis of sustainability reports for CE performance. First, the 10Rs ' model was recorded from the literature, then each principle was harmonized with the guidelines of the GRI, and finally, the scoring technique for each information was developed.

The selection of CE principles is based on the research works of [ 17 , 23 , 32 , 40 ]. The first column of Table  1 displays the principles selected in the proposed methodology. In the second column, the appropriate items from the GRI standard are described and classified per CE principle, and in the third-fourth columns, mathematical formulas are described. Finally, the Total Circular Score arisen form GRI items (TCS_GRI) indicates the score that a forest company achieves in the field of CE. The score of TCS_GRI ranges from 0 to 44, where 0 implies the min score (none CE principles and GRI indicators be adopted) and 44 represents the max score (all CE principles and GRI indicators be adopted). It is noteworthy that in case an indicator is used by a company and this indicator is related to more than one CE principles, the score is calculated based on the assumption that the indicator as used by the company refers to the principle. Otherwise, the use of the indicator is not assigned to the principle.

3.4 Matrix typology

The suggested classification highlights the behavior of forest companies on CE topics. A quick, reliable and simple way to classify forest companies is the number of CE principles adopted by them and the number of items/strategies they implement for each CE principle.

This can be measured in a two-axis system where the GRI items will be measured vertically and the number of principles adopted by forest companies on the horizontal axis. Setting a limit between the mean score achieved by a company in the GRI items and the mean score achieved in the principles of the CE (Fig.  3 ) makes possible the distinction of four categories of forest companies according to their behavior in the CE.

A typology matrix in accordance to CE principles and GRI index

These categories are as follows:

Pioneer Circular Forest Companies that simultaneously adopt five or more CE principles and achieve score TCS_GRI ≥ 22. Having achieved these scores it could be stated that the companies have a very quick adaptation to the principles of the CE and therefore they are considered pioneers.

Innovative Circular Forest Companies that have adopted five or more of the principles of the CE and achieve score TCS_GRI < 22. Companies of this category are considered innovative due to the fact that they adopt many of the principles of the CE which is a new and not mandatory concept.

Lagging Circular Forest Companies that have adopted less than five principles of CE and achieve score TCS_GRI \(\ge\) 22. These companies present a lag regarding the principles of CE.

Infant Circular Forest Companies that have adopted less than five principles and achieve score TCS_GRI < 22. These companies seem to adopt the CE but have a low index of assimilation of the principles.

3.5 Data selection and manipulation

The study is, specifically, focused on leading companies of the forest industry, based on their 2022 revenue. They are situated in Europe. Large European companies were selected because such entities possess a potentially greater influence on the natural environment, compared to SMEs [ 41 ]. Furthermore, EU has conspicuously committed itself to matters germane to the CE influencing and countries attached to it, such as Norway and United Kingdom.

The sample has been sourced from data compiled by Statista's research dataset [ 42 , 43 ] and the Sawmills database [ 44 ]. It comprises all companies sourced from those two databases that have publicly disclosed their non-financial reports for the financial year 2022. The twenty companies, subjected to analysis and processed to conduct the research, are the following: Smurfit Kappa, UPM Kymmene, Stora Enso, DS Smith, Metsa Group, Billerud, Navigator Company, Holmen, Svenska Cellulosa, Mayr-Melnhof Karton AG (MM), HS, Sveaskog, Junckers, Moelven, Norske Skog, Södra, Ence, Altri, Setra και Bergs.

The information was drawn from the sustainability reports and annual reports, released by the companies, in the English language, for the financial year 2022. If the report wasn’t composed and published in English language, then the company wasn’t selected. The first author performed the content analysis, and then discussed it with the other two authors, which confirmed the findings. The data gathered were analyzed with main descriptive statistics and helped for the classification of the twenty companies to the four CE categories. Finally, the classification was related to the 2022 revenues of the companies to take an insight on the relation of CE practices and financial indicators.

4.1 Sample analysis

The 20 companies presented a median revenue for the 2022 of 1.92 bn € (min = 0.05, max = 12.82). As expected, all of them issued information on sustainability matters. The 35% of the companies in the sample published a stand-alone Sustainability Report, while 45% of them integrated the Sustainability Report into the Annual Report. The remaining 20% of companies published either only an Annual Report, or an "Integrated Report", or a "Consolidated Non-financial Report", or a stand-alone Corporate Social Responsibility Report ("CSR Report").

4.2 Circular economy principles adoption

Regarding the circular economy principles adoption by the 20 leading forest companies, the analysis of the sustainability reports showed that all companies report that they implement the following two principles: (i) reduce, and (ii) recycle. Two more principles seem to be used almost profoundly (more than 80%) by the companies, which, specifically, are the following principles: (i) reuse and (ii) recover. By applying these principles the companies seem to take preventive and corrective measures for issues related to the management of their waste as well as the design of their packaging. Additionally, these principles seem to operate as indicators for the evaluation and measurement of circularity by companies. This is also evident in the schematic representations of the CE in the companies' reports, which include at least one of the above four principles.

However, it seems that most of the companies are not particularly familiar with the other principles of the CE. Specifically, only one company states that it applies the principle of Refusal. In particular, it has replaced typical packaging with mono-material packaging to encourage its customers to refuse packaging that is difficult to recycle and is not biodegradable. It is worth noting that mono-materials are products consisting of a single material, making them easier to separate, recover, and recycle [ 45 ]. The Repurposing principle, although not explicitly mentioned, is applied by one company, which mentions that it uses parts of products intended for disposal (e.g., pulp) to produce products with different functions (e.g., tall oil converted into liquid fuel). Additionally, the Remanufacturing principle is applied by 2 companies within the frameworks of the circularity strategies they follow. The repair principle for the design and production of sustainable packaging is followed by three companies.

Finally, two principles are not applied by any company. These are the Rethink and Refurbish principles. It is noteworthy that one company uses the words "Repair" and "Refurbish" in the definition it proposes for the circular economy, indicating its intention and commitment to applying these principles in the future. Table 2 summarizes the above information by showing the number of companies that apply each one of the 10 CE principles.

Figure  4 shows the frequency of the companies regarding the maximum CE principles they adopt according to their sustainability reports. On the x axis there is the number of Rs used by them, while on the y axis there is the absolute frequency of companies. As shown, there is only one company that adopts 7 of the 10 Rs , no company adopting 6 Rs , while 10 out of 20 companies adopt the main four aforementioned Rs, reduce, recycle, reuse, recover.

Frequency of the companies regarding the maximum CE principles

4.3 Companies circular performance

Eighteen out of the 20 companies use GRI indicators to publish information related to their performance in terms of financial, social, environmental, and governance (ESG) issues. The other two companies present sustainability information on their websites (CSR and Integrated reports respectively), without citing GRI indicators. The information derived from the tools they use, show that they only adopt two Rs , namely reduce and recycle.

In regard to the other 18 companies, the GRI Standards Set, as aforementioned, reveals that the indicators through which companies can disclose data and information regarding the implementation of circular economy methods are thirteen in number. It is noteworthy that, out of these indicators, none is used by all these companies. The most used indicator by companies, in comparison to others, is the "306–3 Waste generated" indicator (used by 70% of the sample companies). Following are the indicators "305–5 Reduction of GHG emissions," and "306–2 Management of significant waste-related impacts" (65% of the sample companies). Finally, the least used indicators are "203–2 Significant indirect economic impacts” (25%), "301–3 Reclaimed products and their packaging materials", and "416–1 Assessment of the health and safety impacts of product and service categories" used by 30% of the sample companies.

There is one company which uses all the 13 indicators, while three companies use only one indicator. On average, each company uses 48.09% of the 13 indicators. The 75% of the companies use the 86.53% of these indicators.

Table 3 shows the relation of GRI indicators with the Rs. The median TCS_GRI score achieved by the 20 companies in each CE principle is presented. The next column shows the percentage to the max possible TCS_GRI score, as indicated on Table  1 .

The results show that at least half of the companies do not achieve a TCS_GRI score in 6 of the 10Rs , and on other three Rs at least half of them achieve less than half of the max score. Although not used by all the companies, the Recover principle has a mean score 3 out of 5 (max) which shows that at least half of the companies seem to achieve a TCS_GRI score more than half of the max score (they pass the threshold of 50% score).

4.4 Circular companies typology

This section presents the typology of the forest companies in the context of Fig.  3 . Table 4 shows the descriptive statistics for the Total Circularity Score ( TCS_GRI ) that the companies achieved according to the methodology of Table  1 .

The Table  4 shows that most of the companies are measured below the threshold of 22 which is one of the two criteria for allocating them into one of the four categories. Indeed, those that pass above the threshold are in total 6 out of 20 with scores ranging from 26 to 36.

Figure  5 shows the allocation of the companies in the Fig.  3 model by applying the methodology of Table  1 . The x axis shows the total number of CE principles ( Rs ) the company follows, and the y axis the Total Circularity Score as measured for each one. The circles in Fig.  5 . represent two companies (which they share the same coordinates), while the triangles one company.

Forest companies circularity typology

Figure  5 shows that the majority of the forest companies (10 out of 20) are classified as infants in Circular Economy practices. The companies in this category follow either the four most used principles (Reduce, Reuse, Recycle, and Recover), or only Reduce and Recycle. One company follows the Reduce, Recycle, and Recover principles. All the companies are measured a TCS_GRI ranging from 0 to 17 with the lowest scores being allocated to those companies following only two Rs .

The Lagging Circular Forest Companies are four in total in this sample of 20 companies. They all follow the Reduce, Reuse, Recycle, and Recover principles and are measured higher than the 22 threshold in the TCS_GRI. The scores range between 26 and 31.

The Innovative Circular Forest Companies are three out of 20. They all follow 5 CE principles. In addition to the four most used CE Rs, each of these three companies follow each one a different R. These three Rs are Refuse, Repair, and Repurpose showing a different policy among these three innovating CE companies. Here the scores are 1, 15, and 16.

The rest three companies are classified as Pioneers in the CE practices. Two of them follow five Rs, and one follows seven Rs. The additional to the Reduce, Reuse, Recycle, Recover principles are the Repair and Remanufacture ones for the companies with five Rs, while for the most pioneering company is added to the adoption of Refuse, Repair and Remanufacture principles. The scores here are 29, 29, and 36.

Finally, Fig.  6 presents the revenues of the companies that are classified to the four categories. The most pioneering company in CE practices disclosed the highest revenue during 2022 (€ 12.82 bn). All the companies with almost € 7 bn and more were classified as either pioneer, or lagging CE forest companies. On the other hand, the infant and innovative companies disclosed a revenue of less than € 4 bn with a minimum of € 0.05 bn.

Companies classification according to their revenue and circularity performance

This seemingly positive relationship is also confirmed by applying the Spearman’s rank correlation test. It was applied to the pair variables of 2022 revenues and TCS_GRI. It was estimated to rho = 0.745 with p < 0.001, indicating a statistically significant positive relationship between the two aforementioned variables, meaning that CE practices and revenues are positively related.

5 Discussion

The findings show many contributions on both theoretical and empirical level of relative literature. At a theoretical level, this paper contributes to the field of CE and sustainable development by developing a technique for mining data from sustainability reports and offering real data on the behavior of companies in the forest sector regarding CE. The mining data technique was based on the experience of the field of environmental reporting which is more advanced in these techniques [ 37 ]. The proposed methodology is extremely promising as it responds to researchers' requests for relevant information [ 14 ]. The transfer of this know-how assists in examining behavioral issues of forest sector that until now have only been examined with the assistance of questionnaire-based surveys that could contain biased information that are difficult to detect and influenced by overestimating or underestimating research findings [ 46 ]. This agrees with the research of [ 47 ] who argue that more reliable information is needed to record the trends of forest enterprises in bioeconomy issues. Quantitative information requirements are high and necessary for reliable findings.

The suggested scoring system also provides contribution to the development of a cooperative, reliable and useful for every forest companies system regarding CE issues. The proposed methodology helps to overcome the limits set by the research of [ 48 ] in which measurement techniques are limited resulting in biased measurements. The lack of evaluation systems of circularity performance of forest companies is addressed by the suggested methodology. Ensuring the uniformity and comparability of information is achieved with the help of GRI indicators, offering certain categories of information that should be evaluated in order to measure the cyclicality of companies. This is confirmed by [ 49 ] that point out that more reliable and transparent information is needed arisen from corporate sustainability reporting. The suggested technique contributes, also, to the general literature of the measuring of the cyclicality of companies, which recently has incurred a relevant development [ 50 , 51 ]. The assessment of different components of sustainability, such as the circular economy, offers important lessons in the field of analyzing the quality of non-financial information and calculating the degree of risk [ 52 , 53 ].

Another important theoretical contribution is made on typologies of forest companies behavior towards CE. So far, most studies have focused on examining experts’ suggestions about CE strategies for deploying circular economy strategies for forest products [ 54 ] and cluster analysis to categorize groups of forest companies in accordance with their perceived performance in CE [ 55 ]. Some of the findings is explained from [ 56 ] study which shows that the behavior of forest firms is affected from institutional and market-driven incentives. The advantage of the proposed typology lies in the reveal of the existing behavior, rather than the eventual intention of forest companies on CE issues. It is a technique intended for capturing the result and not the intention as seen today in most of the existing research studies. An equally significant contribution to the relevant literature is the four categories of behavior that the typology concludes since it emphasizes pioneers, innovators, lagging and infant. These categories provide for the first time a classification of behaviors that is useful to both theorists and practitioners for the examination of forest enterprises. The proposed typology of forest companies’ behaviors overcomes the fragmented literature on the motivations of forest companies to switch to the bioeconomy [ 24 , 57 ]. Although it agrees with various studies on some types of the behaviors [ 14 , 58 ], it, nevertheless, identifies more alternative motivations that interpret this shift of forest enterprises to the bioeconomy as pioneers and innovators.

This research, furthermore, contributes to empirical research by analyzing real data from high revenue forest companies. Despite the small number of the sample, it is extremely encouraging that the companies in the sector have entered either to a greater or lesser extent into the circular economy sector. This agrees with the research findings presented in [ 59 ], which demonstrate that the relatively newly founded forest companies may lack the experience necessary to introduce topics related to bioeconomy. The findings suggest an awareness among companies of CE practices. Nevertheless, there exists an opportunity for companies to enhance their CE initiatives through the implementation of supplementary measures, since most of the companies were found to be infant in terms of CE practices. This was related to lower revenues compared to higher revenue companies, which showed a better performance on CE issues. This is confirmed by [ 14 ] who emphasizes resource efficiency as a critical factor influencing the adoption of sustainable bioeconomy practices by forest companies.

The research additionally showed that CE can be applied to all stages and activities of the value chain and not only to waste management. This is also proven by the GRI indicators. In other words, it is observed that circularity practices can be applied, apart from the waste management sector (“GRI 306: Waste 2020”) and in the sectors of materials, water, effluents and GHG emissions. Furthermore, CE practices can be applied in areas of the assessment of the environmental behavior of suppliers and the health and safety of customers, highlighting the responsibility of all those involved in the value chains activities and giving social dimensions to the implementation of the circular economy. It is also observed that circularity is linked to areas of economic performance and indirect economic impacts ("GRI 201: Economic Performance 2016" and "GRI 203: Indirect Economic Impacts 2016" respectively), thus giving economic dimensions to the adoption circularity strategies.

6 Conclusions

The present research studied the CE practices of the forest sector through their disclosure in the annual non-financial reporting. It is one of the first papers which used the sustainability reports of the forest companies to derive knowledge about the contribution of the sector to circular economy. By doing that, a theoretical contribution has been made by the provision of a scoring system to mine information about the CE practices of the companies, and produce a typology of their contribution to CE. Empirical data, also, showed that most of the sample companies can be considered as infants at the CE practices, representing a moderate adoption of CE principles. Some forest companies are classified as innovative in CE practices which follow more than the four most used principles (Reduce, Reuse, Recycle, and Recover), and three of the sampled firms are classified as the Pioneer Circular Forest Companies being the leaders in CE practices. Finally, statistical analysis indicated positive relationship between CE practices and revenues of the forest companies.

However, like any other research study, there are some limitations that should be analyzed in order to ensure the reliability of the findings and create the appropriate conditions for future research. An important limitation is the way in which the thresholds are defined in the Typology Matrix, such as the five CE principles and more than half of the GRI indicators. These thresholds were based on the approach of rewarding "best in class" companies, which is a common practice in these measurement techniques [ 60 ]. However, it lacks empirical and research documentation, a fact that cannot ensure the avoidance problems such as the rebound effect, a fact that forms the conditions for future research that may clarify, depending on the company's activity, which principles, how many principles, which indicators and how many indicators should be satisfied in order to be classified in the suggested Typology Matrix.

A second limitation is that the sample selection includes only large companies that publish sustainability reports which excludes the study of SMEs. This approach may negatively affect the generality of findings. In the future, it would be possible to investigate other types of forest companies with lower revenues, from different countries and continents, to examine the effects of the institutional regime on CE behavior. Another limitation or rather a conclusion that requires further investigation is whether the implementation of the CE increases the revenue of the sampled forest companies or whether the forest companies with high revenue have the financial capital to invest in more CE principles. It would be an excellent area of future research to investigate intermediate variables such as intellectual capital, innovations and knowledge creativity induced by the application of CE principles.

Data availability

Data are available upon request to corresponding author.

Code availability

Not applicable.

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Panori, D., Papaspyropoulos, K.G. & Nikolaou, I.E. A forest companies typology regarding their contribution to circular economy: a sustainability reporting-based analysis. Discov Sustain 5 , 120 (2024). https://doi.org/10.1007/s43621-024-00304-4

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Examining the response to covid-19 in logistics and supply chain processes: insights from a state-of-the-art literature review and case study analysis.

1. Introduction

• RQ1 (scientific): How have researchers studied the impact of COVID-19 on logistics and supply chain processes? Which industrial sectors were mostly studied and why? Which additional topics can be related to COVID-19 and logistics/supply chain?
• RQ2 (practical): What effects of COVID-19 on logistics and supply chain processes were experienced by companies?

2. Materials and Methods

2.1. systematic literature review, 2.1.1. sample creation, 2.1.2. descriptive analyses, 2.1.3. paper classification.

• Macro theme: sustainability, resilience, risk, information technology, economics, performance, planning and food security. This classification represents paper’s core topic.
• Industrial sector: aerospace, agri-food, apparel, automotive, construction, e-commerce, electronic, energy, fast-moving consumer goods, food, healthcare, logistics, manufacturing and service.
• Data collection method: questionnaire/interview, third-party sources or case study. This classification represents the method used by the authors to collect the data useful to their study.
• Research method: statistical, decision-making, simulation, empirical, literature review or economic. This category describes the tool used by the authors to conduct the study and reach the related goals.
• Specific method, e.g., descriptive statistics, structural equation modeling (SEM), multi-criteria decision making (MCDM), etc.; this feature describes more accurately the type of work carried out by the authors and the tools used.
• Country: it reflects the geographical area in which the study was carried out, in terms, for instance, of the country in which a sample of people has been interviewed or where empirical data were collected, or where the simulation was set. This method of classification, although more elaborated, was preferred over traditional approaches, in which the country of the study is defined based merely on the affiliation of the first author of the paper, because the exact knowledge of the country in which the study was carried out is, for sure, a more representative source of information about the research. This is true in general, but it is even more important for this subject matter, as the management of the COVID-19 pandemic was made on a country or regional basis, with significant differences from country to country; knowing the exact location of the study helps in better interpreting the research outcomes. Possible entries in this field also include “multiple countries” and “not specified”, with the obvious meanings of the terms.

2.1.4. Cross-Analyses

2.1.5. interrelated aspects, 2.2. case study, 2.2.1. data collection.

• Economic data: some key economic data were retrieved from the company’s balance sheet, from 2019 up to the latest available document, which refers to 2022.
• Organizational data: these data describe changes in the operational, decision-making and business structure of the company in terms, e.g., of number of employees hired, number of drivers, etc.
• The related data were collected and elaborated between July and September 2023.

2.2.2. Survey Phase

2.2.3. analysis and summary, 3. results—systematic literature review, 3.1. descriptive statistics, 3.2. common classification fields, 3.2.1. macro theme, 3.2.2. industrial sector, 3.2.3. data collection method, 3.2.4. research method, 3.2.5. country, 3.3. cross-analyses, 3.3.1. macro theme vs. industrial sector, 3.3.2. research method vs. macro theme, 3.4. interrelated aspects, 4. results—case study, 4.1. company overview, 4.2. pre-covid-19 period, 4.3. covid-19 period, 4.4. post-covid-19 period, 4.5. analysis and summary.

• Strengths : at present, Company A benefits from a robust network of relationships with customers and suppliers (e.g., drivers), which was leveraged during the pandemic period to provide a rapid response to the increased request by the consumers. The company has also leveraged the usage of digital technologies, which made logistics activities more efficient and, again, allowed the company to respond to consumer demand in the pandemic period.
• Weaknesses : Company A has suffered from low economic results, in particular in the post-COVID-19 period, mainly due to the high production costs. Efforts must be made by the company to reduce expenses. At the same time, however, the service level, in terms of delivery lead time or on-time delivery, should be safeguarded.
• Opportunities : the growth of e-commerce, experienced in the COVID-19 period but expected to last over time, creates opportunities for increasing the volume of items handled by Company A. Indeed, the survey phase demonstrated that the company’s consumers have shifted towards the usage of online sales; hence, the company could consider investing in this area to increase its market share. By leveraging the e-commerce logistics and diversifying service, expansions could also be possible at an international level. Even if the company has already embraced the implementation of digital technologies, some emerging technologies (e.g., drones or advanced traceability systems) could also be introduced for further improving the logistics efficiency. Finally, sustainability is another opportunity to be leveraged, because of the current push towards the adoption of environmental-friendly logistics solutions. Examples of those solutions include a reduction in CO 2 emissions, and the usage of electric vehicles or zero-impact materials.
• Threats : the growth of e-commerce can be seen as an opportunity, but because many logistics companies have already entered this field, the sector is characterized by very high competition, which could limit the market share of Company A; this could instead be seen as a threat needing to be properly managed. Another threat comes from the increased cost of fuel, which, for sure, for a logistics company plays an important role in determining the cost of the transport activities (also, having previously observed that the company suffered from a limited revenue in recent years). This factor could further push towards the adoption of environmentally friendly transport modes (e.g., electric vehicles), which have been previously mentioned as an opportunity for leveraging in the logistics sector.

5. Conclusions

5.1. answer to the research questions, 5.2. scientific and practical implications, 5.3. suggestions for future research directions, author contributions, institutional review board statement, informed consent statement, data availability statement, conflicts of interest.

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Monferdini, L.; Bottani, E. Examining the Response to COVID-19 in Logistics and Supply Chain Processes: Insights from a State-of-the-Art Literature Review and Case Study Analysis. Appl. Sci. 2024 , 14 , 5317. https://doi.org/10.3390/app14125317

Monferdini L, Bottani E. Examining the Response to COVID-19 in Logistics and Supply Chain Processes: Insights from a State-of-the-Art Literature Review and Case Study Analysis. Applied Sciences . 2024; 14(12):5317. https://doi.org/10.3390/app14125317

Monferdini, Laura, and Eleonora Bottani. 2024. "Examining the Response to COVID-19 in Logistics and Supply Chain Processes: Insights from a State-of-the-Art Literature Review and Case Study Analysis" Applied Sciences 14, no. 12: 5317. https://doi.org/10.3390/app14125317

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