Sector Analysis Essay Example | Topics and Well Written Essays - 1500 words

Sector Analysis - Essay ExampleThis is a dangerous sign, and many companies take heed to continuously update and innovate their business models in order to achieve success in terms of profitability and growth. Sector analysis is one of the upstart innovations that are being used by corporations and managers. It is a spin-off from Financialization. Financialization can be described as a process whereby financial markets and organizations dictate the sparing policy of a country. In other words, Financialization is process where financial elites dictate the business policies formulation by the government. (Froud et al. 2006) Sector matrix defines the activity horizon of a company. As a result, it is sometimes also called activity matrix. Sector matrix is nothing notwithstanding a representation of overall finances or revenues of a company coming into the business from its various areas of operations. The matrix is based on modern business and financial thinking. The old way of think ing just about the put out was to consider it the function of technology and product. The supply can only be increased if there are significant improvements in the production technology. This apprehension soon become obsolete and the new way of thinking was developed which stated that mansion as a whole should be considered on the butt of its business model and various sources of income. A business usually makes money from diverse sources of profits and, hence, all of these sources should be taken into account before the supply and demand function of a business can be determined. Similarly, the old thinking about the demand was about winning the nameplate competition. It was all about modify or differentiating the brand from other competing brands in order to generate demand and make sales. However, the new way of thinking demand is about capturing the expenditure that consumers fleet on substitutes and encouraging a complement product in order to increase the overall revenue of the firm. (Bowman & Singh 1993) The differentiating factors of the sector matrix and supply chain exertion are that related products or complements are demanded together, therefore, a firm can achieve great success and double its sales if it starts producing complementary products. It is also believed that the firm operates in a boundary or in a particular sector. For example, a firm producing motor elevator cars can produce car lubricants or wheels, but it will not immediately start a healthcare business. Hence, business models have boundaries. Similarly, a firm will try to enter into new businesses to open up its profits and in doing so there are chances that it may attract competition that may follow a similar matrix as this firm. However, it must(prenominal) be remembered that no existing firm exists in a particular matrix before the entry of this firm. The sector matrix can be explained more aptly by using cardinal examples from different industries. The first example is taken from the Car Manufacturing Business and the second example is from Healthcare Business. The reason for choosing these two sectors is to determine the applicability of the model in service and goods sector. This approach will check whether or not the model can be used for both goods and service sectors or whether or not this model is applicable for only one sector. (Brigham & Ehrhardt 2010) Example 1 Figure1 Sector Matrix of Car Assembly arising (Froud et al. 2006) The above diagram shows that a car manufacturer exists in the upper left corner. This is unrewarding business because the industry is saturate and there are tolerable cars in the market that many people tend to buy used cars. This leads to demand substitution and demand for the firms products goes down. This has resulted in declining revenue for car