Elias
Expert
Experienced strategy consultant, now running own consulting business
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What is market/industry dynamics

Someone asked on Nov 14, 2018 - 2 answers

Hello Everyone,

I have a basic doubt that is making me feel confused, and I would really appreciate your help

- What do we mean when we talk about market dynamics (auto industry) and how would it be exemplified?

Other related questions:

- What is the difference between market dynamics and industry dynamics (if there is one) and how differs from market and industry analysis?

- Finally, is there any relationship between the previous concepts and SWOT?

Thank you very much,
Best

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Elias
Expert
updated his answer on Nov 15, 2018
Experienced strategy consultant, now running own consulting business

Agree with Vlad.

But keep in mind that business is not a precise science (if you can consider it a science at all..)

So people may say "industry" and mean "market", and vice versa. So you may have to narrow down or widen your approach on the fly.

Reg. the dynamics itself, I'd add to Vlad's list major shifts in technology, production methods, and value chain configurations.

Examples:

  • TV manufacturers switching from cathode tubes to plasma to LED to OLED (technology)
  • Auto industry in the 90s adopting just in time manufacturing, Kaizen and TQM (production methods)
  • Auto industry going electric (technology, production methods)
  • IT departments going from full-stack on-premise infrastructures to cloud-based microservice architectures (technology, production methods, value chain config)
  • Machine learning technologies switching from CPU-based calculations to GPU-based (and now TPUs, if they're using Tensor Flow) (technology)
  • Outsourcing / off-shoring larger parts of value creation (i.e. customer service being done by "Gary" from Bangalore)
  • Switch from PC-first to mobile-first software development
  • Shift from linear TV to Video on Demand
  • Shift from Cable and Telephony to OTT services
  • ...

We could continue this list forever, but you get the point, I guess.

The important thing is that these shifts (usually) have an impact on the things that Vlad has mentioned - growth, market concentration, the emergence of new players, the death of old ones...

For example, if you look at what's happening in TV/entertainment:

The emergence of streaming video on demand has killed major corporations (e.g. Blockbuster), spawned huge new ones (e.g. Netflix), lead to major M&A activity (e.g. Disney / 20th Century Fox, Comcast and many others). A "simple" change in technology has huge effects on the entire entertainment value chain, from how actors are cast and paid, changing power dynamics directors, producers and studios, what movies and series are being produced, how awards are given out, all the way to how intellectual property rights and licenses are treated globally. You could even argue that it has induced societal change, that the Weinstein case and therefore the #MeToo movement would not have happened in the pre-Netflix era...

(edited)

Vlad replied on Nov 15, 2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

Hi,

  • The industry is bigger than the market (e.g. steel production industry vs. real estate water pipes market)
  • Dynamics = size and growth / decline trends. In a broader sense, it may mean segments size / growth and players size / growth.
  • Forget about SWOT - this concept is not used in the consulting interviews (and I don't recommend using it since it's very theoretical)

Best!

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