Industry Overview
Industrial Goods - correct answer-•Large and diverse industry that provides
products/services primarily used to produce other goods •Main sectors -Electrical Equipment
and Components -Industrial Automation/Heavy Machinery -Construction and Engineering
-Aerospace & Defense •Key Players include: GE, Siemens, Cummins, Boeing, Lockheed
Martin, Northrop Grumman, Eaton, Honeywell, Raytheon, 3M, Caterpillar, Emerson Electric,
Fluor, Tyco, Waste Management, Bosch Rexroth
Energy - correct answer-Major E&P players like BP, ExxonMobil, Pertrobras, Aramco are
involved in both upstream and downstream. Upstream Steps: 1.Exploration: Finding oil,
including geological exploration, research, and purchasing/leasing land. Offshore is leased
from gov¡¦ts through auctions 2.Drilling. Companies drill exploratory wells to determine size;
if satisfactory, add¡¦lwells are developed. Overheating can cause explosions (¡§blowouts¡¨).
3.Well Completion. Post drilling, engineers put cement in the walls Steps 1-3 are often
contracted out from E&P firms to firms like TransOcean. Delays are very expensive ($500k a
day), and may be charged to contractors; but E&P firms make decisions Downstream Steps:
Production „³Refining „³Marketing Liability for spills is extremely costly ($1-4k per barrel
spilled, 205M gallons est. spilled)
Airlines - correct answer-•Airlines provide air transport services for passengers and freight
•The industry was deregulated in 1978 free from government control of fares, routes, merger
and acquisitions. This helped to completely transform air travel from a luxury to a
mass-market service INDUSTRY STRUCTURE: Major Airlines: revenues > $1B National
Airlines: revenues $100 M -$1B Regional Airlines: revenues < $100M •Airlines is a
low-margin industry COMPETITION •Price Competition: airlines compete to provide the
lowest fares to the passengers •To attract leisure travelers they advertise huge discounts
•Niche players like JetBlue, Southwest, and Spirit have entered
Automotive - correct answer-The automotive industry is engaged in the design, production,
marketing, sale, and servicing of motor vehicles. New light vehicle sales in the US expected
at 11.7 million for 2010. Volume increase is forecastedin 2011, to 13.5 million. Heavy capital
commitmentsrequired to keep pace with product development and model changeovers.
Demandis naturally affected by economic environment. Auto parts manufacturershighly
fragmented: produce original parts and accessories for new vehicles, replacement parts, and
accessories for older vehicles, or both Labor is often unionized and wields power.
Competition Extremely competitive.The US is the world's most competitive auto market.
Detroit Three losing market share: GM, Ford, and Chrysler. The top three foreign companies
have a combined US market share of 41.5%: Toyota, Honda, and Nissan.
Online Services and Storage - correct answer-The online industry consists of companies that
provide virtual-environment services and products, including data search, cloud data
storage, social networking, big data analytics, music and video streaming, e-Stores (fashion,
media, etc.), news and gaming. INDUSTRY STRUCTURE: Total Revenues: ~$1.8Trillion
Industry Leader in Revenues: Google ($29.3 Billion) COMPETITION •Innovation: companies
try to differentiate themselves by investing heavily in innovation, or "the next big thing", such
, as YouTube, Facebook or eBay, most of which are monopolies in their own specific market.
•In the consumer world, major players include online services companies such as Google or
DropBox, e-Retailers such as Amazon and Gilt, entertainment providers such as NetFlixand
Hulu, and social networks such as Facebook and Twitter. In the business arena, companies
such as IBM, McKinsey, Accenture and other professional services companies are taking the
lead.
Computer Software - correct answer-The software industry includes businesses for
development, maintenance and publication of software, including productivity suites, games,
mobile apps, hardware-specific software (both firmware and custom made software) and
operating systems (including mobile platforms). INDUSTRY STRUCTURE: Total Revenues:
$303Billion (in 2010) Industry Leader in Revenues: Microsoft $69Billion (in 2010)
COMPETITION •Software companies compete not only with other software companies, but
also with other technology-based services providers, by focusing on specific clients -whether
by creating simple and cheap mobile apps for clients on the go, or niche expertise-based
products for sophisticated clients. •Major players include very large companies such as
Microsoft, IBM, Oracle, Symantec and Adobe, which focus on the working environment, and
of smaller companies such as Electronic Arts, which focus on gaming across multiple
platforms.
Hardware and Digital Devices - correct answer-The Computer Hardware industry consists of
companies engaged in assembling and manufacturing computers, computer hardware and
computer peripherals, including storage devices, keyboards, printers, monitors, mouse and
other pointing devices, Webcams and PC cameras. INDUSTRY STRUCTURE: Total
Revenues: $842.1 Billion Industry Leader in Revenues: Apple ($156.5 Billion)
COMPETITION •Price/Feature Competition: companies try to differentiate either by selling at
low prices and relying on complementary products, or by increasing consumer benefit
through innovation and features. •Major players include manufacturers such as Appleand
Samsung, but also Google, which does not manufacture but has tremendous influence over
the industry due to its Android mobile operating system and its collaboration with
manufacturers such as LG.
Semiconductor - correct answer-Industry: The research, development, production, and
marketing of semi-conductors Products: Industry is made up of four product categories:
1.Memory -Memory chips are temporary storehouses of data and pass information to and
from computer 2.Microprocessors -central processing unit that contain the basic logic to
perform tasks 3.Commodity Integrated Circuit -"standard chips" -produced in large batches
for routine processing purposes 4.Complex SOC -"System on a Chip" -integrated chip with
entire system's capability on it Key Ratios/Terms: Moore's Law-number of transistors on a
chip doubling every two years "Fabless" Chip Makers -semi-conductor companies that carry
out design and marketing, but outsource the actual manufacturing R&D/Sales-research and
development expenses as a percent of sales -want high % Yield-# of operational devices out
of all mfg.
Pharmaceuticals - correct answer-Historically among the world's most profitable industries
•Total domestic expenditures for prescription drugs were roughly $234.1B in 2008, and is
increasing •Worldwide sales are expected to increase 5-8% per year (similar figures in the
US), and reach $1.1 trillion in sales by 2014 •In 2009, the US and Europe markets made up
Industrial Goods - correct answer-•Large and diverse industry that provides
products/services primarily used to produce other goods •Main sectors -Electrical Equipment
and Components -Industrial Automation/Heavy Machinery -Construction and Engineering
-Aerospace & Defense •Key Players include: GE, Siemens, Cummins, Boeing, Lockheed
Martin, Northrop Grumman, Eaton, Honeywell, Raytheon, 3M, Caterpillar, Emerson Electric,
Fluor, Tyco, Waste Management, Bosch Rexroth
Energy - correct answer-Major E&P players like BP, ExxonMobil, Pertrobras, Aramco are
involved in both upstream and downstream. Upstream Steps: 1.Exploration: Finding oil,
including geological exploration, research, and purchasing/leasing land. Offshore is leased
from gov¡¦ts through auctions 2.Drilling. Companies drill exploratory wells to determine size;
if satisfactory, add¡¦lwells are developed. Overheating can cause explosions (¡§blowouts¡¨).
3.Well Completion. Post drilling, engineers put cement in the walls Steps 1-3 are often
contracted out from E&P firms to firms like TransOcean. Delays are very expensive ($500k a
day), and may be charged to contractors; but E&P firms make decisions Downstream Steps:
Production „³Refining „³Marketing Liability for spills is extremely costly ($1-4k per barrel
spilled, 205M gallons est. spilled)
Airlines - correct answer-•Airlines provide air transport services for passengers and freight
•The industry was deregulated in 1978 free from government control of fares, routes, merger
and acquisitions. This helped to completely transform air travel from a luxury to a
mass-market service INDUSTRY STRUCTURE: Major Airlines: revenues > $1B National
Airlines: revenues $100 M -$1B Regional Airlines: revenues < $100M •Airlines is a
low-margin industry COMPETITION •Price Competition: airlines compete to provide the
lowest fares to the passengers •To attract leisure travelers they advertise huge discounts
•Niche players like JetBlue, Southwest, and Spirit have entered
Automotive - correct answer-The automotive industry is engaged in the design, production,
marketing, sale, and servicing of motor vehicles. New light vehicle sales in the US expected
at 11.7 million for 2010. Volume increase is forecastedin 2011, to 13.5 million. Heavy capital
commitmentsrequired to keep pace with product development and model changeovers.
Demandis naturally affected by economic environment. Auto parts manufacturershighly
fragmented: produce original parts and accessories for new vehicles, replacement parts, and
accessories for older vehicles, or both Labor is often unionized and wields power.
Competition Extremely competitive.The US is the world's most competitive auto market.
Detroit Three losing market share: GM, Ford, and Chrysler. The top three foreign companies
have a combined US market share of 41.5%: Toyota, Honda, and Nissan.
Online Services and Storage - correct answer-The online industry consists of companies that
provide virtual-environment services and products, including data search, cloud data
storage, social networking, big data analytics, music and video streaming, e-Stores (fashion,
media, etc.), news and gaming. INDUSTRY STRUCTURE: Total Revenues: ~$1.8Trillion
Industry Leader in Revenues: Google ($29.3 Billion) COMPETITION •Innovation: companies
try to differentiate themselves by investing heavily in innovation, or "the next big thing", such
, as YouTube, Facebook or eBay, most of which are monopolies in their own specific market.
•In the consumer world, major players include online services companies such as Google or
DropBox, e-Retailers such as Amazon and Gilt, entertainment providers such as NetFlixand
Hulu, and social networks such as Facebook and Twitter. In the business arena, companies
such as IBM, McKinsey, Accenture and other professional services companies are taking the
lead.
Computer Software - correct answer-The software industry includes businesses for
development, maintenance and publication of software, including productivity suites, games,
mobile apps, hardware-specific software (both firmware and custom made software) and
operating systems (including mobile platforms). INDUSTRY STRUCTURE: Total Revenues:
$303Billion (in 2010) Industry Leader in Revenues: Microsoft $69Billion (in 2010)
COMPETITION •Software companies compete not only with other software companies, but
also with other technology-based services providers, by focusing on specific clients -whether
by creating simple and cheap mobile apps for clients on the go, or niche expertise-based
products for sophisticated clients. •Major players include very large companies such as
Microsoft, IBM, Oracle, Symantec and Adobe, which focus on the working environment, and
of smaller companies such as Electronic Arts, which focus on gaming across multiple
platforms.
Hardware and Digital Devices - correct answer-The Computer Hardware industry consists of
companies engaged in assembling and manufacturing computers, computer hardware and
computer peripherals, including storage devices, keyboards, printers, monitors, mouse and
other pointing devices, Webcams and PC cameras. INDUSTRY STRUCTURE: Total
Revenues: $842.1 Billion Industry Leader in Revenues: Apple ($156.5 Billion)
COMPETITION •Price/Feature Competition: companies try to differentiate either by selling at
low prices and relying on complementary products, or by increasing consumer benefit
through innovation and features. •Major players include manufacturers such as Appleand
Samsung, but also Google, which does not manufacture but has tremendous influence over
the industry due to its Android mobile operating system and its collaboration with
manufacturers such as LG.
Semiconductor - correct answer-Industry: The research, development, production, and
marketing of semi-conductors Products: Industry is made up of four product categories:
1.Memory -Memory chips are temporary storehouses of data and pass information to and
from computer 2.Microprocessors -central processing unit that contain the basic logic to
perform tasks 3.Commodity Integrated Circuit -"standard chips" -produced in large batches
for routine processing purposes 4.Complex SOC -"System on a Chip" -integrated chip with
entire system's capability on it Key Ratios/Terms: Moore's Law-number of transistors on a
chip doubling every two years "Fabless" Chip Makers -semi-conductor companies that carry
out design and marketing, but outsource the actual manufacturing R&D/Sales-research and
development expenses as a percent of sales -want high % Yield-# of operational devices out
of all mfg.
Pharmaceuticals - correct answer-Historically among the world's most profitable industries
•Total domestic expenditures for prescription drugs were roughly $234.1B in 2008, and is
increasing •Worldwide sales are expected to increase 5-8% per year (similar figures in the
US), and reach $1.1 trillion in sales by 2014 •In 2009, the US and Europe markets made up
