INTRODUCTION TO INDUSTRY AND COMPANY ANALYSIS
After completing this chapter, you will be able to do the following:
- Explain the uses of industry analysis and the relation of industry analysis to company analysis.
- Compare and contrast the methods by which companies can be grouped, current industry classification systems, and classify a company, given a description of its activities and the classification system.
- Explain the factors that affect the sensitivity of a company to the business cycle and the uses and limitations of industry and company descriptors such as “growth,” “defensive,” and “cyclical.”
- Explain the relation of “peer group,” as used in equity valuation, to a company’s industry classification.
- Discuss the elements that need to be covered in a thorough industry analysis.
- Illustrate demographic, governmental, social, and technological influences on industry growth, profitability, and risk.
- Describe product and industry life-cycle models, classify an industry as to life-cycle phase (e.g., embryonic, growth, shakeout, maturity, or decline) based on a description of it, and discuss the limitations of the life-cycle concept in forecasting industry performance.
- Explain the effects of industry concentration, ease of entry, and capacity on return on invested capital and pricing power.
- Discuss the principles of strategic ...