Industry analysis

30 terms · each links to a full explanation with a worked example and the exam traps

ARPUAverage revenue earned per subscriber over a period — the key top-line KPI analysts use to track telecom and other subscription businesses.
Attractive industryAn industry structure, under Porter's Five Forces, with low competition, high entry barriers and weak buyer or supplier power — letting its companies earn strong, durable margins.
Barriers to entryWhatever makes it hard, slow or expensive for a new competitor to enter an industry — and therefore what allows the companies already in it to keep earning above-normal profits.
BCG matrixThe Boston Consulting Group's grid classifying a company's business segments as Stars, Cash Cows, Question Marks or Dogs by market growth, market share and cash generation.
Bottom-up approachSizing a market by taking the revenue of individual companies and aggregating it upward — accurate where companies disclose, blind where they do not.
Business life cycleThe stages an industry passes through from emergence to decline — pioneering, growth, maturity, decline, and rarely reinvention — driven by the secular trends around it.
Business modelHow a company actually makes money — what it sells, to whom, and how it delivers and prices it — which the workbook treats as the real basis of competition between companies.
Business sectorA broad grouping of related industries serving similar economic functions — wider than a single industry but narrower than a whole economic sector such as agriculture or services.
CommoditisationA market state where competing products are seen as interchangeable, so competition happens almost entirely on price and no seller can sustain a premium.
Customer concentration ratioThe share of a company's revenue earned from its largest customers — a high ratio signals dependence on a handful of clients who could walk away or squeeze pricing.
Customer Lifetime ValueThe total revenue a start-up earns from one customer across the whole relationship — average purchase value multiplied by the average number of purchases that customer makes.
Deep cyclical industryAn industry whose revenues swing to extremes with the economic or commodity cycle — the workbook names capital goods and steel as its examples.
Defensive industryAn industry whose products have low income elasticity, so demand barely moves when incomes rise or fall — the workbook names food, agricultural inputs and healthcare.
GICSThe Global Industry Classification Standard — a four-tier system widely used by global investors, with 11 sectors, 25 industry groups, 74 industries and 163 sub-industries.
Industry landscapingStudying every player in an industry — competitors, customers, suppliers, regulators and new technology — and how they interact, so the analyst can predict how the industry reacts to an outside shock.
Industry life cycleThe four stages an industry passes through over time — introduction, growth, maturity, and decline — each with a different pattern of sales growth and profit margin.
PESTLE analysisA scan of a country's Political, Economic, Socio-cultural, Technological, Legal and Environmental conditions — the external factors that shape a business operating there.
Porter's Five ForcesMichael Porter's framework for judging how much profit an industry can sustain, through five competitive pressures: rivalry, new entrants, substitutes, and the bargaining power of suppliers and of buyers.
Pricing powerA company's ability to set and raise its own prices — passing on cost increases and growing margins — without losing customers to competitors.
Product differentiationMaking a product distinct from competitors' through features, quality or functionality, so customers see genuine reasons to prefer it beyond price alone.
Same-store sales growthGrowth in sales at stores that were open for a full year in both periods being compared, stripping out the effect of newly opened stores — the key like-for-like growth metric for retailers.
SCP analysisStructure-Conduct-Performance analysis — studying an industry's competitive structure, the behaviour that structure produces in its firms, and the financial performance that follows.
Secular trendA long-term shift in how goods or services are produced or consumed, driven by technology, regulation, demographics or lifestyle — unrelated to any single year's economic cycle.
Semi-cyclical industryAn industry whose sales grow in economic expansions and shrink in downturns, but never below a base level of demand — sitting between defensive and deep-cyclical industries.
Serviceable Available MarketThe slice of the Total Addressable Market a company can realistically reach given its own business model and revenue targets — the market it is actually built to serve.
Serviceable Obtainable MarketThe share of the Serviceable Available Market a company can actually capture in the long run with a sustainable marketing approach — and the number a venture-stage valuation is built on.
Top-down approachSizing a market by starting from macro-economic or population-level data and narrowing down to the industry — the opposite of aggregating individual companies.
Total Addressable MarketThe whole revenue opportunity that exists for a product if every possible buyer bought it — the outermost of the three market-size numbers a venture investor tests a start-up against.
Unit of pricingWhat a company or industry treats as the unit it charges for — quantity of goods for a manufacturer, loan value for a bank, airtime for a broadcaster — one factor guiding an analyst's choice of KPIs.
Value migrationLong-term shareholder value shifting from one entity to another — across geographies, industries, the value chain, or between rivals in the same industry — usually triggered by a secular trend.