With respect to global industry analysis, there are many key elements related to return expectations.

  1. Demand
    To begin with global industry analysis, an estimation of demand is needed. This could also include an analysis of substitutes for the company's product. In this context, demand analysis is based on worldwide demand.
  2. Value Creation
    This element focuses on the sources of value that can be extracted through the value chain. The value chain consists of suppliers of raw materials, but also the delivery firms that deliver the finished product to the consumers.
  3. Industry Life Cycle
    Analyzing the industry life cycle in a global context is important much like it is in domestic industry analysis. It is important to understand an industry's growth prospects to determine an appropriate growth rate.
  4. Competition
    Competition in a global industry is much more complicated as the analysis is done with global industries and laws in mind.

The industry life cycle is made up of the following stages:

  1. Pioneering Phase
  2. Growth Phase
  3. Mature Growth Phase
  4. Stabilization/Maturity Phase
  5. Deceleration/Decline Phase


1)Pioneering Phase
This phase is characterized by low demand for the industry's product and large upstart costs. Industries in this phase are typically start-up firms, with large upfront costs and few sales.

2) Growth Phase
After the pioneering phase, an industry can transfer into the growth phase. The growth phase is characterized by little competition and accelerated sales. Industries in this phase have typically survived the pioneering phase and are beginning to recognize sales growth.

3) Mature Growth Phase
After the growth phase, an industry will reach the mature growth phase. The mature growth phase is characterized above average growth, but no longer accelerating growth. Industries in this phase now face increasing competition and, as a result, profit margins begin to erode.

4) Stabilization/Maturity Phase
After the growth phases, an industry will enter in the stabilization/maturity phase. The stabilization/maturity phase is characterized by growth that is now average. Industries in this phase have significant competition and the return on equity is now more normalized. This is typically the longest phase an industry will go through.

5) Deceleration/Decline Phase
The deceleration follows the growth and maturity phases. The deceleration/decline phase is characterized by declining growth as demand shifts to other substitute (new) products.



The Concentration Ratio and the Herfindahl Index

Related Articles
  1. Trading

    The Stock Cycle: What Goes Up Must Come Down

    Stock prices seem random, but there are repeating cycles. Learn to take advantage.
  2. Investing

    Business Cycle Investing: Ratios to Use For Each Cycle

    Examine economic and sector performance over the business cycle to determine which ratios are most important for each phase of the cycle.
  3. Retirement

    What Is a Phased Retirement and How Do I Get One?

    Workers around the country are redefining what retirement looks like. One way is a phased retirement, in which you gradually exit the workforce.
  4. Financial Advisor

    How to Help Clients Plan a Phased Retirement

    The notion of phased retirement is gaining traction. Here's how advisors can help clients plan accordingly.
  5. Retirement

    Bonds: They're Not Just For Seniors

    In this article, we'll show you how investors at any stage of life can keep these fixed-income investments. Keep Reading.
  6. Personal Finance

    Secure Your Financial Future With These 3 Steps

    Take these steps to help secure your financial future.
  7. Insights

    8 Stages Of New Drug Development

    Understanding biotech data isn't easy. What is a clinical trial, what are the various phases, and why do the results of these trials and applications often create double-digit moves in the price ...
  8. Retirement

    Are You Ready for the Four Phases of Retirement?

    Longevity planning is essential in dealing with the four phases of retirement.
Frequently Asked Questions
  1. How do you calculate r-squared in Excel?

    Calculate R-squared in Microsoft Excel by creating two data ranges to correlate. Use the Correlation formula to correlate ...
  2. What is the Difference Between International Monetary Fund and the World Bank?

    Learn about the International Monetary Fund and the World Bank and how they are differentiated by their respective functions ...
  3. Where Did the Bull and Bear Market Get Their Names?

    The terms bull and bear are used to describe general actions and attitudes, or sentiment, either of an individual (bear and ...
  4. What's the difference between Google's GOOG and GOOGL stock tickers?

    Learn the difference between Google's GOOG and GOOGL ticker symbols. Splitting shares into classes prevents management from ...
Trading Center