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1、AGuideforIndustryStudyandtheAnalysisofFirmsandCompetitiveStrategyThispageisaguidetoapplyingtheprinciplesofeconomicstoresearchingandunderstandingamarketandtheindustriesandfirmsthatmakeupthemarket.I.IntroductionTherearetwodistinctyetrelatedmodelsforstudyingmarkets.Onemethodofanalysisisthe"Struct
2、ure-Conduct-Performance"paradigmfromtheIndustrialOrganizationfieldofeconomics.AnotherisPorter'sFiveForces.Aswewillseeshortly,Porter'sFiveForcesandthe"Structure-Conduct-Performance"paradigmoverlapinmanyways.Thispagecombinesbothmethodsintoaunifiedguideforindustrystudiesandtheanalysisoffirmsandco
3、mpetitivestrategy.I.A.Porter'sFiveForcesI.A.1.Introduction"TheStructuralAnalysisofIndustries"iscoveredquitewellinChapter1ofPorter,MichaelE.,CompetitiveStrategy:TechniquesforAnalyzingIndustriesandCompetitors,1980andnewintroductionin1998,TheFreePress,NewYork,NY.Figure1isagraphicalrepresentationo
4、fPorter'sFiveForces.Figure1:Porter'sFiveForcesPorterdetailsthefactorsthatimpacteachforceanddevelopsananalyticalmodeltostudyindustries.Thepurposeofthisanalysisistoassesstheprofitabilitypotentialofindustries.TheanalyticaltoolsofPorter'sbookwillnotbereproducedhere.However,Porter'sframeworkincorpo
5、ratestheanalysisofmarketstructureandverticalsupplychainsandeachoftheseconceptswillbeaddressedfromtheperspectiveofaneconomist.I.A.2.TheMicrofoundationsofPorter'sFiveForcesTherealgeniusofPorter'sFiveForcesisthatitbuildsonandcombinestwotoolsfrommicroeconomics,namelytheanalysisofmarketstructureand
6、verticalboundaries.Theanalysisofmarketstructureisthefirstelementofthe"Structure-Conduct-Performance"paradigm.I.A.2.a.MarketStructureTheverticalelementsofPorter'sFiveForcesareshowninFigure2.Figure2:TheVerticalElementsofPorter'sFiveForcesEachoftheseelementscorrespondstoadeterminantofmarketstruct
7、ureasdetailedinTable1below.Table1:Porter'sFiveForcesandMarketStructureElementofPorter'sFiveForcesDeterminantofMarketStructurePotentialEntrantsBarrierstoEntryIndustryCompetitorsNumberofSellers(DirectSubstitutes)ProductCharacteristicsIndi