Industry Attractiveness

Industry Attractiveness

The overall attractiveness of industries tends to vary, and there are specific characteristics for the most attractive ones. An attractive industry is favoured by both environmental and business trends. Unless there are enablers such as a pleasant environment that favours an industry, it is not likely to do well.  One of the characteristics of attractive industries is their age. An attractive industry is young rather than old. A young industry has the potential of growth, which attracts the consumers because all the ideas and resources are never exhausted, as could be the case of old industries where resources are almost depleted.  Besides, the industry is deemed as early rather than late in its life cycle. In an industry life cycle, the earliest industry is better because of the many potentials available to be unlocked within the early cycles. Attractive industries are also fragmented rather than concentrated, and their growths are always evident. Such industries are ever-growing instead of shrinking. For a company to grow, there must be factors that favour it, such as technology, which means that it is not likely to shrink, thus making it attractive. .

Another characteristic of an attractive industry is that they tend to sell products that customers must have. These are products that customers cannot stay without; hence, they are compelled to buy. Attractive industries are never crowded, as is the case with the non-attractive industries. The operating margins are high because of the high level of sales experienced in the industry. For other industries that struggle, the operating margins are low because sales are less. Finally, attractive industries do not primarily depend on the historically low price of vital raw materials such as gasoline to remain profitable.