The economic viability, or ability of a firm to survive during a specified time period,
can be analyzed by examining the key industry strategic factors, the strategic factors
that pertain specifically to the firm, and the financial statements for the firm. The
key industry strategic factors include:
• Barriers to entry, which are expenses that will make it difficult for new entrants
to join the industry.
• Power of suppliers, which refers to the ability of firms in the industry to bargain
effectively for lower prices from suppliers.
• Power of customers, which refers to the ability of the customers for a particular
product to shop among the firm’s competitors, thus keeping prices down.
• Existence of substitute products, which refers to the present or future availability
of products with a similar function.
• The industry value chain, which must be evaluated to determine if the chain of
production and distribution for the industry is changing in ways that will benefit
or harm the firm.
• The nature of intra-industry competition, which must be evaluated to determine if
the competition within the industry is based on differentiated products and
services, price, the scope of the offerings, or the focus of the offerings and
whether any imminent changes in the nature of the competition will benefit or
harm the firm.
The key firm strategic factors include: