BUSSPP 0200 Lecture 7 Outline of Last Lecture I Recap Central Thesis II A thorough investigation of risk III Sources of money Outline of Current Lecture I What is an Industry II How do we analyze an industry Current Lecture I What is an Industry A Collection of firms in a very similar kind of business 1 Gut level if it looks like sounds like walks like a duck a Food SOME examples are these all in the same industry i Growing ii Distribution iii Manufacturing iv Preparation B Industries can be nested 1 Industries can exist within industries a Entertainment Sports Music Movies i Sports how many sports are there Industries within sports C Industries can be official 1 Governments have to be able to refer to them 2 SIC Standard Industrial Classification a Assigns a 6 digit number first 2 being general category i Second 2 digits Industry within the industry Next 2 industry within industry within industry 3 NAICS These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute D IN PRACTICE These systems aren t so good 1 Substitutability a Supply Side i Seller perspective ii Looking in broader range Who sells x Who could sell x in the future iii Sellers know more than buyers b Demand Side i Buyer s perspective ii Here and now In market to purchase x Who sells x From your perspective This is your industry 2 Buyers and sellers are likely to define the industry differently a Different sellers are likely to define the industry differently b Different buyers are likely to define the industry differently E Takeaways 1 Sense of industry a Gut feeling i Nesting ii Official code a In practice i Perception of the market is idiosyncratic from your perspective and experience ii Differs between buyers and sellers II Analyzing an Industry A Systems MANY 1 Porter 5 Forces Model a Empirical observation i some industries appear to be more profitable than others b Porter there has to be a reason why industry x makes MUCH more i 1980 publishes a book 2 Porter defines an industry by 5 forces a Competition among rivals b Customer power c Supplier power d Threat of new entrance e Threat of substitutes
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