The final stage of the analysis of the industry and the competitive situation is a comprehensive assessment of the situation in the industry based on the answers to the previous six questions and the development of a conclusion about the relative attractiveness or unattractiveness of the industry in the short and long term. A number of important factors need to be taken into account here: the growth potential of the industry; the prospect of return on investment under the current conditions of competition in the industry; prospects for changing competition in the future; the impact of the strengthening of the main driving forces on the profitability of the industry; the competitive position of the company and its possible change (the position of a leader or a strong competitor even in a not very attractive industry can provide the company with a satisfactory level of profitability; the prospect of a fierce struggle with stronger competitors reduces the company’s chances even in the most attractive industry). In addition, the company’s ability to exploit the vulnerability of weaker competitors (the ability to turn an unfavorable situation in the industry into a favorable one for companies); the company’s ability to counteract the negative influence of driving forces; the degree of risk and uncertainty in the future development of the industry; the severity of the challenges facing the industry as a whole; the impact of continued operations in the industry on the company’s position in other industries where it has business interests.
As a general rule, if there is a prospect of higher profits in an industry than the average for other industries, then the industry is considered attractive; if the level of possible profit is lower than the average for industries, this is an unattractive industry. However, it cannot be argued that the industry is equally attractive or unattractive to all existing and future participants. Attractiveness is relative, not absolute, and should be evaluated from the perspective of a particular company. An industry that is not attractive to weak competitors can attract strong players.
The conclusion about the general attractiveness of the industry means that the companies operating in it direct their efforts to strengthen long-term competitive positions and increase sales, willingly invest in equipment and production facilities. An industry is considered unattractive if the strongest players choose careful investment tactics, while trying to maintain the level of profitability and advantages of their competitive position, acquiring smaller companies if possible; in the long term, the most successful companies diversify their activities into more attractive industries. Weak companies in an unattractive industry should consider merging with their competitors to increase market share and increase profitability or, conversely, diversify their activities outside the industry.
It is important to understand that no method of strategic analysis gives the only correct solution, but this is not a reason to abandon the analysis altogether and rely only on intuition and observations. It is possible to create a better strategy if you know what questions need to be answered, be able to apply the technique of situational analysis and have the skills to predict changes in the industry and the competitive environment in which the firm operates [15 pp.95–129].