Industry Environment Analysis Meaning & Definition

Published by MBA Skool Team, Last Updated: April 23, 2013

What is Industry Environment Analysis?

Industry Environment Analysis is a study or exercise done to assess the current industry environment. This exercise helps understand the various aspects and predict trends of the industry better, and helps in many other ways. Generally, industry analysis is done by external research agencies, consulting firms or businesses themselves.

The major objectives of industry environment analysis are:

-          To identify key success factors of that industry

-          To assess attractiveness and growth prospects for entry

-          To formulate competitive strategy

-          To study changes over time and predict trends

The industry environment is composed of the following stakeholders, around which analysis is done. Namely: Competitors, Suppliers and Buyers. There are also other major considerations like the political, legal, technological aspects which are a part of the environment analysis.

To analyse these aspects of the industry, models such as PEST, PESTEL, and PORTER’s 5 forces have been developed.

Let us look at the automobile industry.

PEST and PESTEL are two models used to analyze political, legal, economic, social, environmental and technological factors pertaining to that particular industry.

Example: PEST analysis for the automobile industry

pestel automobile

Porter’s 5 forces analysis is done to study aspects like Suppliers, Buyers, Competitors, new potential entrants and substitutes of that industry.

Example: Porter’s 5 force analysis for automobile industry:

Porter Automobile

Hence, this concludes the definition of Industry Environment Analysis along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

Browse the definition and meaning of more similar terms. The Management Dictionary covers over 2000 business concepts from 5 categories.

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