What goods are produced in the industry?
The required data, analyses and directed questions will be presented in the appendix. However, you should, as appropriate, refer to your tables or analyses to support your assessment of the five forces.
d. Appendix: Must include answers to data requests, data manipulations and directed questions. Note: You should NOT copy and paste tables or data directly into the appendix. Instead, enter data into Excel or Word, and manipulate and format as need.
Required Data, Analyses and/or Directed Questions
1. What goods are produced in the industry?
2. Firms that produce in the industry
a. Find a maximum of 5 “large” U.S. firms that produce in your industry. You are looking for the firms that are “large” in terms of U.S. consumer market share (i.e., you are looking for the “major U.S. players” in the industry). These firms may or may not have the industry as their primary line of business.
b. Be careful to find 5 independent companies
c. Research these firms in the context of the Five Forces Analysis. You may use infor-mation you found in the databases below or by reading annual reports or websites. Some items you might be able to discover are
i. An estimate of market share of the firms in the American market,
ii. The overall size of the firms (revenue and number of employees)
iii. Their degree of diversification (number of different NAICS codes in which they partici-pate).
iv. Economies of scale
v. Barriers to entry
d. Possible sources for Data
i. Hoovers Online Database
1. Click on the Build A List Option.
2. Expand the Industry Option, and search for firms using your NAICS code.
ii. IBISWorld. Be careful if your 6-digit NAICS code is not the same as the 5-digit NAICS industry.
1. Find the 5-digit-level IBISWorld report that corresponds to your industry.
2. These reports often have discussions about scale economies and barriers to entry for your industry.
1. At ORBIS, you can construct a list of firms by NAICS 2007.
2. You can also select location as U.S. and status as active.
3. Size and growth of your industry in the U.S.
a. What was your industrys size in 2002, 2007, and 2012? Size is measured by both number of em-ployees and value of shipments. You should display these values in a table for the 3 Economic Census years 2002, 2007, and 2012.
b. Calculate the average annual percentage growth rates for both employment and value of shipments for the following periods: 2002-2007, and 2007-2012. See http://www.wikihow.com/Calculate-an-Annual-Percentage- Growth-Rate for an example of how to make this calculation
c. Data Availability:
i. For 2012 data, go to http://www.census.gov/econ/index.html
1. Click on 2012 Economic Census.
2. Click on “whats been released” link
3. Click on the “+” following Sector 31-33: Manufacturing.
4. Click on “Link to AFF” anywhere in the table in the column headed Link to Data.
5. Click on Data Set EC123111: Manufacturing: Industry Series: Detailed Statistics by Industry for the United States: 2012.
ii. For 2007 data, go to http://www.census.gov/econ/index.html
1. Click on 2007 after Search Databases
2. Click on Data Set EC0731SG1: Manufacturing: Summary Series: General Summary: Industry Statistics for Industry Groups and Industries: 2007.
iii. For 2002 data, go to http://www.census.gov/econ/census/data/historical_data.html
1. Click on 31-33 Manufacturing click on Industry Series to find a .pdf report for your industry. Both 2002 and 1997 data may be found in Table 1.
2. Click on Data EC0231SG102: Manufacturing: Summary Series: General Summary: Industry Statistics for Industry Groups and Industries: 2002.
4. Nominal versus real industry growth
d. The growth rates you calculated in the preceding task were nominal changes. You should also de-termine the amount of growth in your industry that is due to price changes and the amount due to changes in physical quantity.
e. The annual percent change in value of shipments is roughly equal to annual percent change in physical quantity plus annual percent change in price. Thus, you can calculate the annual percent change in quantity as annual percent change in value of shipments minus annual percentage change in price. Percentage change in quantity represents real growth, net of inflation.
f. The rate of inflation is simply the percentage change in the producer price index (PPI) between the earlier year and the later year. Calculate an annual percent change in prices using the same procedure as in task 3.
g. Data Availability:
i. Find information on price inflation in your industry by going to the website http://www.bls.gov.
ii. Under the “Subjects” pull-down menu, go to Inflation and Prices and then choose the link for “Producer Price Indices (PPIs).”
iii. Scroll down to find the PPI Databases information.
iv. On the Industry Data Row, click on “One-Screen Data Search” icon or the “Multi-Screen” Icon.
5. U.S. Industry Forecasts
h. The US Bureau of Labor Statistics produces output and employment forecasts for industries at the 4-digit NAICS code level. These forecasts can be found at http://www.bls.gov/emp/empinddetail.htm
i. Since your 6-digit industry represents only a share of the more aggregate industry found on this website, be sure to multiply the two forecasts by the relevant ratio (employment or value of ship-ments) of the six-digit industrys size to the four-digit industrys size. You may find four-digit shipments and employment using the instructions for task 3.
j. What are the real output and employment forecasts for annual compounded growth in your in-dustry? Given the past growth of your industry (from tasks 3 and 4), discuss whether the fore-cast from the Bureau of Labor Statistics makes sense to you. If not, please suggest and imple-ment an alternative method, explaining what you do carefully.
6. U.S. Seller Concentration in the Industry
a. How many firms in total were there in your industry?
b. Use the following site: http://www.census.gov/econ/census/help/sector/data_topics/concentration_ratios.html find the four-firm concentration ratio (CR4) and the Herfindahl-Hirschman index (HHI) for your industry for 2002, and 2007 (the last year data is available). Please note: You do not to compute these in-dexes from individual firm market shares. This site has already done this calculation for you.
c. According to the following tables, would your industry be considered competitive, moderately concentrated, or highly concentrated according to CR4 and according to HHI, respectively? Did this change between 2002 and 2007?
0 < CR4 < 50 50 < CR4 < 75 CR4 > 75
competitive moderately concentrated highly concentrated
0 < HHI < 1500 1500 < HHI < 2500 HHI > 2500
competitive moderately concentrated highly concentrated
7. U.S. Industry Buyers and Industry Input Suppliers