This is the second blog in a five-part series outlining the whys and wherefores of strategic planning for family, middle-market, and closely held businesses.
In “Alice in Wonderland,” the Cheshire Cat tells Alice, “If you don’t know where you want to go, it doesn’t matter which path you take.” For business leaders, this wisdom cuts straight to the heart of strategic planning: knowing your destination isn’t enough—you need to understand the terrain you’re navigating.
Most companies define their destination through financial targets: revenue growth, EBIT expansion, or debt reduction. These goals are important, but they’re incomplete. The critical question isn’t just where you want to go, but whether the path you’ve chosen can actually get you there. This is why doing an industry analysis for strategic planning is so important.
Why Industry Context Matters
History is littered with well-managed companies executing well-crafted plans that still failed—not because of poor execution, but because they were navigating industries that had fundamentally shifted beneath them. Bookstores, razor manufacturers, and breweries offer cautionary tales: even excellence can’t overcome structural headwinds.
Understanding how your industry is evolving—and will continue to evolve—is what enables you to chart the right course to your goals. It’s the difference between setting ambitious targets and actually achieving them. For middle-market leaders, this understanding isn’t just valuable—it’s often a competitive advantage you already possess.
The Middle Market Advantage
Leading a middle-market firm can have advantages over larger companies.
Typically, middle-market leaders have deep domain experience, whether from earning multiple promotions in a company or through family ownership. Often, the conversations around the family dinner table involve growing the family business. And often, the firm’s leader is in frequent contact with key customers and suppliers, generating a strong pulse of the market.
Being deeply embedded in your business can have significant advantages–if you are willing to listen carefully and ultimately change.
How to Do an Industry Analysis: 3 Critical Tips
Below, we outline three critical tips for doing an industry analysis and better understanding your market:
1. Define Your Industry
Defining your industry sounds like a simple question, and to many companies, it is. A homebuilder serves the residential construction industry, which might include single-family homes, multi-family buildings, demolition, remodeling, etc.
However, for some companies, defining their industry is a complex question. For example, a specialty chemical company could serve multiple macro sectors, ranging from semiconductors to oil and gas to mining.
When doing an industry analysis for strategic planning, it’s essential to define the industry broadly before narrowing in on your company and your competition.
2. Use the Right Tools
When determining how to do an industry analysis, a thorough approach will start broadly and be based on data. Some of the following lenses can be helpful:
Market Dynamics
Review how your industry has grown over time and how market share has shifted among competitors. These patterns reveal which players are winning and why.
It’s also important to examine profit trends across the industry. If margins are expanding or contracting, what’s driving the change? Understanding profitability dynamics helps you anticipate where the industry is headed.
Value Chain Analysis
Where does value get created in your industry—and where does it get captured? A value chain analysis identifies which steps are most critical and compares margin rates across different stages.
Consider the oil and gas giants: historically, they’ve earned profits extracting oil from the earth, not selling gasoline to consumers. Recognizing these lower retail margins, they expanded into selling snacks, convenience items, and car washes at the pump. They followed the value.
Trend Analysis
Look forward, not just backward. Understanding likely changes in technology, demographics, or customer behavior helps you anticipate where your industry is headed. The companies that thrive are the ones that see around corners.
Porter’s Five Forces
This framework remains one of the most valuable capstone tools for assessing your industry or segment. It provides insights into the current and future health of your market—and signals how leading competitors may shift toward more lucrative positioning.
Evaluate Your Customers and Competition
You have company, customers, and competition as the 3Cs. Examining the latter two should be a part of every industry analysis:
- Customers: Understanding customer needs—both met and unmet—is paramount. Customer expectations evolve, sometimes dramatically. Consider the Major League Baseball experience: 30 years ago, fans bought programs and pencils to keep score from narrow concourses. Today, ballparks feature open spaces where younger fans congregate and socialize, with the game as backdrop. The product didn’t change; the customer did.
- Competition: Your competitors are likely conducting their own strategic planning right now. How do they view the world? What are their core competencies and limitations? One agriculture company knew a competitor’s strategy so well that they could predict every move. They understood the competitor’s technology and cost position in detail. This knowledge revealed that the competitor would price-match down to a specific threshold—but once prices fell below their variable costs, they’d shut down operations. Armed with this insight, the company executed a pricing strategy that eliminated a key competitor from the market.
3. Stay Objective—Even When It’s Uncomfortable
One key success factor when doing an industry analysis for strategic planning is eliminating preconceived notions and staying open to what the data reveals. This sounds simple, but it’s remarkably difficult in practice.
Too many leaders approach industry analysis hoping to confirm what they already believe—whether that’s justifying a pet project, protecting a legacy business line, protecting their role in the organization, or avoiding a hard truth about where their market is headed. This kind of confirmation bias doesn’t just waste time and resources: it postpones inevitable decisions until circumstances force your hand, usually at the worst possible moment.
The most valuable industry analyses are the ones that challenge your assumptions. If your analysis only tells you what you want to hear, you’re not analyzing—you’re rationalizing. And that won’t help you win.
Where Can You Gather This Information?
At this point, you might be thinking: this sounds like a mountain of work for an analysis that could simply confirm the status quo. And yes, there’s a chance your industry analysis will validate that nothing has fundamentally changed.
But if you’re wrong—if you’ve missed a critical shift—the consequences for your company and people could be severe.
The good news? You don’t need an army of consultants to gather meaningful industry intelligence. What you need is a strategic approach to tapping the right sources:
- Your People: Particularly those who interact with customers or suppliers daily.
- Industry Veterans: Retirees from your company or competitors who can speak candidly.
- Industry Consultants: Specialists with cross-company visibility.
- Trade Associations and Publications: Where trends and challenges are openly discussed.
- Government Data: Including international databases that track privately held companies.
- Third-Party Research: Industry reports, market studies, and analyst coverage.
- Public Company Filings: 10-Ks and 10-Qs from competitors and adjacent players.
- Survey Data: Customer feedback, market research, and industry benchmarking.
The key is combining multiple perspectives to build a complete picture of where your industry is heading.
Why Industry Analysis for Strategic Planning Matters: Real Implications
After completing the industry analysis, your company could either face a status quo world, or you could be facing some gut-wrenching decisions.
For example, one firm’s industry analysis concluded (correctly, we might add, given years of hindsight) that the industry was going to consolidate. To that end, the company could be an acquirer or a seller, but it could not continue as an independent entity, as this would result in getting left out of the consolidation without the scale to compete.
Given the company’s limited ability to raise capital and their risk tolerance, they concluded that acquiring other firms was not a viable path. This left the company with the realization that the best way to maximize shareholder value was to be acquired.
As the company was acquired by a rival firm, which was later swallowed by a second, larger rival firm, the decision was a windfall for shareholders who retained a percentage of the company ownership through both transactions.
Where Do You Go From Here?
Now that you understand how to do industry analysis and have a thorough understanding of your market, you have earned the right to create your strategic plan. So, take a minute to level-set your leadership team around your industry today and how you expect it will unfold.
The next step is translating that understanding into focused action. JACO Advisory Group helps middle-market companies build strategic plans that leverage their strengths, target the right opportunities, and deliver measurable results. Contact us today for a confidential consultation.
