The purpose of this article is to get started, not to impart knowledge, so I will follow the order of getting started and talk about a few key points that I think, without introducing various tools and methods. Now start the first item-the clarity of the concept.
(1) Comparison of related concepts in industry analysis
Industry analysis is an integral part of economic analysis (research). Understanding the relationship between it and each component in economic analysis will help us to draw the boundaries of industry analysis, and then clarify the focus and value of industry analysis.
1. Enterprises, industries and industries
The composition of the economy is a single enterprise at the micro level, and enterprises that provide similar products or services (hereinafter directly refer to products or services as products) constitute an industry. In other words, "industry = enterprise group". This has reached the meso level of the economy. And all industries add up to the overall economy, which is the macro level. The industry we generally talk about is a concept between the industry and the macro economy, which can be large or small. It is so small that it can be used interchangeably with the industry concept, and it is at the meso level. But this is not a complete division of the economy, this is only from the perspective of supply. The economy is basically a supply and demand relationship, so from the perspective of demand, in addition to the supply and demand relationship between the industries in the above division, the final consumption is outside all industries. So the exact expression of the composition of the macro economy should be "all industries" + "final consumption".
Industry refers to a collection of enterprises that produce the same type or highly replaceable products or services; industry refers to a collection of multiple industries that have a collaborative relationship in the output of products or services.
Figure 1 Relationship of industry-related economic concepts
Figure 1 Relations between related concepts in industry research.
From the above statement, it is not difficult to understand that the industry is a supply concept, a collection of enterprises connected by products as a link. That is the characteristics of the industry, one is a specific product, and the other is a corporate group. This must be remembered frequently so as not to get lost in the face of complicated analysis work and numerous information in the future. In the future, I will repeatedly start the industry analysis work from these two points.
2. Industry and market
Corresponding to the concept of "industry" is the concept of "market". In practice, I have found many times that these two concepts are very easy to be confused, including when I found that I wrote a string when I wrote it, but the focus is on describing the industry, but I wrote a lot around the market, or It's the opposite. So what exactly is a "market" and where is the difference and connection between it and the industry?
The "market" in life often reflects the concentration of suppliers, but the analysis of the "market" in economic research mainly focuses on the demand and trading behavior. To illustrate with a common example, what we mean by "market size" refers to the sum of buyers 'spending, not the sum of sellers' sales. Speaking of which, some friends may say that the scale of sales should be equal, how to reflect their differences? Indeed, in a closed economic environment, "market size" and "industry output value" are equal, but our actual analysis is often limited to a certain geographical area, and rarely take the global thing. Under the conditions of an open economy, the existence of economic exchanges between different regions will make the supply of one place not correspond to the local demand one by one, and may even be completely irrelevant. For example, the output value of China's Christmas decorations will far exceed the scale of China's Christmas decorations market. In addition, there are often multiple links between supply and demand, and these links will also cause the output value of the supply to not match the market size. Therefore, distinguishing between "market" and "industry" is not only a need for different research tasks, but also a need to accurately describe reality in the analysis.
Finally, emphasize industry = supply, market = demand.
After analyzing the difference between the market and the industry, let's talk about the connection between the two.
(1) Two roles in one industry
Speaking of which, I have to come up with two other concepts-"consumer goods" and "industrial goods". Simply put, consumer products are products used by consumers, and industrial products are products used by enterprises, thus forming "consumer products industry" and "consumer product market", "industrial product industry" and "industrial product market". How to explain these four concepts, you can try it yourself.
Start to feel dizzy, this is why we have to explain many concepts in detail at the beginning. Only at this stage will it be clear that in the future when faced with a lot of dizzying concepts, the analysis will not go wrong, the expression will be accurate, and the conclusion will be convincing.
Due to the division of labor, most industries need to consume or use products provided by other industries when providing products. Therefore, on the final consumer goods market, there is also an industrial product market, that is, an industry market. For example, the production of mineral enterprises needs construction machinery, the production of construction machinery enterprises needs steel, and the production of steel enterprises needs mineral products. Then the mineral industry is the market for the construction machinery industry, the construction machinery industry is the market for the steel industry, and the steel industry is the market for the mineral industry. So from a product perspective, it is "industry", and from a purchasing or consumption perspective, it is "market". From a micro-enterprise perspective, the performance is that the two activities of purchasing and sales endow the enterprise with two roles, which ultimately combine two economic concepts of "market" and "industry".
(2) The definition of the consumer goods industry is centered on the market, and the definition of the industrial goods industry is centered on products
From the perspective of real life, products are diverse, and which products can be classified into one category, so that companies that provide such products are classified as an industry, and the standards are also diverse.
As far as the meaning or purpose of a product is concerned, there is only one, which is to meet specific needs. The definition of the consumer goods industry with the market as the core is to define the consumer goods industry with demand. Why should buy be used to define selling, not the other way around? The reason is simple. The consumer goods industry is demand-driven, and the purpose of consumers buying things is to use them. Therefore, the definition of the consumer goods industry is generally carried out from the perspective of user needs. At the same time, it is necessary to remind that the user's needs are multi-dimensional, not only the functional requirements. For example, toothpaste and mouthwash are functionally used to meet the needs of oral care. They can be classified into the cavity care product industry, although their product forms are different. But at the same time they will also be classified into the fast-selling goods industry, which is the industry division from the perspective of user purchasing behavior or consumption habits, which is also part of the demand. In addition, the so-called luxury goods industry, entertainment industry, etc. are all divided from one aspect of user needs.
The purpose of buying things in the industrial products industry is for production, so the industrial products industry is driven by technology, so the definition is more from the perspective of products or technology.
After clarifying some basic concepts, although I am a bit confused, we can proceed to the next step anyway. The first thing industry analysis should do-
(To be continued)
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