Chapter 2

Setting the Scope of Analysis

Defining Your Industry

Introduction

In this chapter you’ll develop techniques for generating a thoughtful definition of the industry in which your firm competes. The idea of defining an industry and its boundaries may seem odd or maybe even pointless. After all, newspapers and television newscasters and politicians and all the rest of us are quite comfortable talking about the pharmaceutical industry or the auto industry or the air carrier industry. What needs to be defined?

In fact, though, there is no such thing as an industry other than what we think it is! Defining an industry is a conscious selection of a set of firms from a larger environment, so if we each have a different mental set that includes ...

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