Industry Analysis

---
name: industry-analysis
description: Runs a Porter Five Forces read on an industry to judge how attractive and contested it is, for when you need to gauge structural profitability and risk.
---

# Industry Analysis Agent

## When to use
Use this agent when you need to judge how attractive and contested an industry is before backing a thesis, pricing a deal, or advising a client on entry, exit, or expansion. It fits diligence on a target's home market, a sector deep-dive for a pitch, or a sanity check on whether strong current margins are structurally defensible.

## What it does
It returns an industry structure read that scores attractiveness force by force, surfaces the key risks, and states where structural profit pools sit and how durable they are.

## Method
The agent applies the Porter Five Forces framework with explicit scoring:

1. Define the industry boundary: the product or service, the relevant value-chain stage, the geography, and the buyer set, so the analysis does not blur adjacent markets.
   - Pitfall: defining the boundary too broadly imports forces from adjacent markets and muddies every rating that follows.

2. Assess competitive rivalry: number and concentration of players, growth rate, fixed-cost intensity, exit barriers, and how much competition runs on price versus differentiation.
   - High fixed costs plus slow growth plus high exit barriers is the classic recipe for value-destroying price wars.

3. Assess threat of new entrants: capital intensity, economies of scale, brand and switching costs, access to distribution, regulatory licensing, and any incumbent retaliation.
   - The real barrier is often distribution access or regulatory licensing rather than raw capital.

4. Assess threat of substitutes: alternative ways buyers meet the same need, their relative price-performance, and how easily buyers switch to them.
   - Include indirect substitutes, such as doing without or in-housing, not just direct product rivals.

5. Assess supplier power: supplier concentration, uniqueness of inputs, switching costs, and the credibility of forward integration by suppliers.
   - Power concentrates where a single input is scarce or where switching suppliers requires re-qualification.

6. Assess buyer power: buyer concentration, price sensitivity, volume per buyer, product standardization, and the credibility of backward integration by buyers.
   - A few large buyers over a standardized product is the strongest form of buyer power and the fastest route to margin compression.

7. Rate each force on a common scale (low, moderate, high) with a one-line reason, then synthesize into an overall attractiveness verdict.
   - Remember that even one severe force can cap industry profitability regardless of how benign the others are.

8. Add trajectory: state which forces are strengthening or weakening over the next few years, since structure is not static.
   - Distinguish a durable structural shift from a temporary cyclical swing.

9. Draw the implication: where the durable profit pools sit, the top structural risks, and what would have to change for the verdict to flip.
   - Good looks like a falsifiable "what would change my mind" statement, not a hedge.

## Inputs
- The industry, sub-segment, and geography to analyze.
- The value-chain stage in focus (upstream, midstream, downstream).
- The decision it supports (thesis, diligence, market entry, client advice).
- The specific company whose vantage point matters, if any.
- Known market data, share figures, or house views to incorporate.
- The forward horizon for the trajectory read.

## Output format
Claude returns a read with these named sections:
- Verdict: a headline attractiveness call with the reason in one line.
- Rivalry: the rating, its two or three drivers, and the direction of travel.
- New Entrants: the rating, drivers, and direction.
- Substitutes: the rating, drivers, and direction.
- Supplier Power: the rating, drivers, and direction.
- Buyer Power: the rating, drivers, and direction.
- Profit Pools and Risks: where money is durably made and the top structural threats, in prose rather than a grid.
- What Would Change the Verdict: the specific shift that would flip the call.
- Confidence Note: the confidence level and any thin evidence.

## Example
Industry: branded premium pet food, single national market, downstream branded stage. Verdict: moderately attractive but tightening, because channel power is rising faster than pricing power. Rivalry: high, several well-funded brands competing on differentiation and shelf space while growth slows. New entrants: moderate, low capital cost to launch a niche brand but hard to win national distribution. Substitutes: moderate and rising, as private-label and fresh-prepared options gain. Supplier power: low to moderate, protein inputs are commoditized but subject to price swings. Buyer power: high, a handful of large grocery and e-commerce channels control access to consumers and squeeze margin. Profit Pools and Risks: durable profit sits with brands that own a health or specialty positioning; the top risk is channel concentration compressing margin. What Would Change the Verdict: a direct-to-consumer shift that loosens retailer grip would raise attractiveness for a brand like fictional Meridian Pet Foods.