Chapter: Business Science : Security Analysis and Portfolio Management : Fundamental Analysis

Industry Life Cycle

Pioneering/ Introduction stage: Introduction of new product

INDUSTRY LIFE CYCLE

 

1.     Pioneering/ Introduction stage: Introduction of new product

 

2.     Expansion/ Growth stage: overcoming the problem to improve financially and competitively

 

3.     Stagnation/ Maturity stage: stagnation to have a new life cycle

 

4.     Decay/ Decline stage: decline death signals and implement proactively



Industry forecasting Methods

 

1.     Market profile: no of establishments, geographical locations, value if sales etc.,

 

2.     Cumulative methods: based on statistical measurements. a. Surveys: Carried by researchers, consultants

 

b. Correlation and regression analysis: Demand measurements

 

3. Time series:

 

a.     Trend(T): Result of basic development in population, capital formation and technology

 

b.     Cycle(C ): Helps in intermediate range forecasting( wave like movement of sales)

 

c.      Seasons( S): Sales movement within a year

 

d.     Erratic Events: Unpredictable events as strikes, riots, floods etc.,

 



INDUSTRY CLASSIFICATION

 

1. Classification by reporting Agencies

 

¸       Under Reserve bank of India-industries- 32 groups

 

¸    Under SEBI- 10 groups

 

¸       Under Economic times-10 groups

 

¸    Under financial express- 19 groups

 

2.Classification by Business cycle

 

a.     Cyclic industries : Related to business cycle and changes

 

b.     Defensive industries: Products of having relatively inelastic demand eg., food processing industry

 

c.      Cyclical growth industries: Based on technical and economical changes eg., Airlines industry

 

3. Industry groups:

 

a.     Small size units: Small scale industries with a capital of 30 Lac will be listed in OTCEI

 

b.     Medium size units: Industry with a capital of 5 crores will be listed in the regional stock exchanges like cochin, Coimbatore etc.,

 

c.      Large scale units: Industry with a capital of 10 crores will be listed in BSE & NSE.

 


4. Input based Classification

 

¸ Chemical based products

 

¸ Agro based products

 

¸ Forest based products

 

¸ Metal based products

 

¸ Marine based products

 


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Business Science : Security Analysis and Portfolio Management : Fundamental Analysis : Industry Life Cycle |


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