Global industry profiling: Machine tool industry

ABSTRACT: As their businesses globalize at increasing rates, managers need frameworks for analyzing industry activities on a worldwide basis. In this paper, a framework for global industry analysis is presented, using the machine tool industry to illustrate how industry overviews, global consumption and production analyses can be used to gain worldwide perspectives on industry behaviors. Breakdowns by company, segment, region and country markets help strategy formulation and resource allocations in the worldwide marketplace. Obtaining the right sorts of information is the key to insightful global analyses. The globalization of industry trade associations and on-line business news services are major sources of worldwide industry developments.

As world trade and investments have become common in increasing numbers of industries, the old tools of industry analysis have become less relevant. As companies have gone global, so the need to examine industry activities on a worldwide basis has become more acute. Various writers have looked at particular aspects of global industries (e.g., Porter, 1986) but the task of profiling global industries has largely been ignored. Contemporary treatments of industry analysis have traditionally stopped at national borders (e.g., Thompson and Strickland, 1999). But as resource allocations are increasingly made on a worldwide basis, companies should have frameworks to highlight the global dimensions of their industries.

The objective of this article is to present a framework for global 4industry analysis. The machine tool industry is used to illustrate the major facets of worldwide industry analysis, and to provide a framework managers can use for strategy crafting activities.

WHAT MANAGEMENT NEEDS FROM GLOBAL INDUSTRY ANALYSES

Managers need global overviews of industries to craft their international resource allocation strategies and to gain insights about market developments and competitor activities. Such overviews should include the following:

* Global Industry Overviews show how industries are structured from a national perspective (which countries are major players), a company perspective (leading firms), and where country and product expertise lie on the global market spectrum.

* Global Consumption Analyses show worldwide patterns of demand in aggregate, and at regional and country levels. Additional insights can be gained by looking at: market sizes and machine tool expenditures per capita; key market profiles; and country sales by major product groupings.

* Global Production Analyses show which countries are major producers and how firms deploy their resources to maximize their global sales impacts. Figure 1 summarizes the strategic significance of these analyses.