What are the characteristics of industrial analysis?

What are the characteristics of industrial analysis?

Meaning of industrial analysis:- When any investor would like to invest in any portfolio. He is required to do industrial analysis. He should consider those industries that promise the most favourable opportunities in the coming years. Successful investors are those who analyse the economic growth of industries and invest in those that offer continued success.

CHARACTERISTICS OF INDUSTRIAL ANALYSIS

The most important characteristics of the industrial that are to be evaluated as following

Earning Performance and Sale Trends
Cost Structure
Technology
Government\’s policy towards industry
Labour conditions
Competitive Pressure
Demand for products
Management
Future Prospectus
Share market of industry
Economic Environment of the country
Installed and utilised Capacity
Raw Material and Inputs

(1). Earning Performance and Sale Trends:- The performance of historical sales and future trends plays very crucial rules. Past behaviour of the performance of industry is required to know. Because the past performance may not be repeated. So analysis will help to know, where to go its future conditions as per the past sales and trends. So after the analysis investors will be able to observe the stability of the performance in terms of sales and earnings as well as the growth rates.

(2). Cost Structure:- This factor is concerned with the sales and earning. As this factor studies the relationship between sales and fixed costs. Higher the fixed cost will lead to, higher the break even point as well as higher will be sales volume to be achieved. Lower fixed cost will help a firm to achieve its break even point. What are the characteristics of industrial analysis?

(3). Technology:- We know that technology is a main part of industrial development. Because by accepting the technology and industry can be achieved maximum output level. Which can meet the target\’s sales level. So investors must view the technology\’s changes. If investors concluded that some specific industry will vanish in an extremely short period of time due to the adopted efficient technology. It would be foolish to invest in such an industry. Because changes in technology may erode his investment due to the product obsolescence.

(4). Government Policy towards Industry:- Every policy of the government concerned with the industry will influence the decision of investors. So they must analyse the regulations and government policy before proposing to invest. The government policy concerned with the installed capacity, granted clearance and reservation of products for small scale of industry sector are to be considered. So investors must have knowledge of the regulations of the government as well as their implications. Then they will be able to predict the changes to take place in the regulations in the near future.

(5). Labour Conditions:- The industry which is labour intensive and capital intensive has to use labour of indifferent categories. So investors have to analyse and examine the various policies concerning the labour laws. Because some reasons are those which may halt the production process. In result of which profit will fall out. If industry faces strikes, lockouts and productivity then investors are unwelcomed by these situations. So labour intensive industries will not lose their customers. So labour conditions will be helpful for investors in making decisions.

(6). Competitive Pressure:- Investors must assess the competition pressure before the investment. Profits are expected more in an industry which has less pressure of competition. Mainly there are three competitions which analyze the existence of product differentiation, Absolute cost Advantages and Advantages rising from economy of scale.

Economics of scale are generally realised when production leves are high. As a new entrant obtains a significant share of the market if he expects a competitive cost structure.

(7). Demand for the product:- Those industries will have profitability, whose demand of products is expanding and is not controlled by the government. If the demand is income and price elastic the supplier will be able to sell the products at a growing rate. So if the demand for products increases then profit will increase. So demand for products will be analysed before the investment. What are the characteristics of industrial analysis?

(8). Management:- A well managed management is an indicator for a bright prospectus. The management will have to be assessed in terms of capability, popularity, honesty and integrity. In the case of a new industry, there is no track of management performance. So investors have carefully assessed the project reports and assessment of the financial institutions in this regard. If management is efficient, then their profit will be more. What are the characteristics of industrial analysis?

(9). Future Prospects:- Future prospects of industry must also be analysed before the investment. An organisation has to be assessed in terms of its strategies to meet the challenges as emerging. If the future prospectus is good then investment for the future will be positive.

(10). Industry Shares Prices:- Prices of shares must be analysed before the investment. Underpriced shares are always the best option. He must always examine the fact that share prices are not high. Generally shares of these companies experience high fluctuations depending upon the public behaviour. If trends of share prices are increasing constantly then it\’s a good indicator of investment. What are the characteristics of industrial analysis?

(11). Economic Environment of the Country:- The economic environment in a country also affects the industrial analysis. If the country is poor then cheap products will be sold there. As demand for these products would be higher than quality and long lasting products. But in a good situation economically there will be more demand for higher price and better quality products. What are the characteristics of industrial analysis?

(12). Installed and Utilised Capacity:- On the basis of Demand capacity licence is issued by the government to such industry. If the demand for products are rising as expected and the market is good for the products. Then such a company\’s capacity of utilisation will be higher as well as profitability will also be more. So before investing, investors must assess the installed and utilised capacity, which is a best indicator of investment\’s return. What are the characteristics of industrial analysis?

(13). Raw Material and Inputs:- A industry which has limited supply of raw material and inputs. So its prospect growth will be less. Because such a type of industry may face the difficulty of growth. But its reverse, Raw material also be assessed on the way of investment. There will be an uninterrupted supply of material and growth will be high then. If raw material is more available then production can be increased and orders will be met by the management. Which is an indicator of growth and prospect for the investors by potential investors. What are the characteristics of industrial analysis?

Conclusion:- Now we get the answer to the question: What are the characteristics of industrial analysis? These characteristics are analysed before the investment by all investors. Which will be helpful for their investment. What are the characteristics of industrial analysis?

Note:- Very important question is following besides this question What are the characteristics of industrial analysis?

Appropriate Avenues of the investments

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