How to read an industry in five questions

12 October 2026 · 1 min read · Pokharna Research

Before analysing a company, understand the industry it sits in. Five questions give most of the structure.

1. Who pays, and why? Identify the customer, how many there are, and how easily they can switch. Concentrated or price-sensitive customers have more bargaining power.
2. What does it cost to serve them? List the main inputs (raw materials, labour, energy, capital) and which of them the industry cannot control.
3. How easy is it to enter? Heavy capital needs, licences, brands, distribution reach and technology can all protect existing players. Where entry is easy, high profits tend to attract competitors.
4. How do players compete? On price, quality, reach, speed or service? Industries that compete only on price rarely sustain high returns.
5. What drives the cycle? Identify demand drivers (income, credit, policy, seasons) and supply drivers (capacity additions, imports).

Putting it together

Write one sentence for each answer. If you cannot, that is the gap to research next. The result is a map of where profit sits and what could move it, which then makes company-level numbers easier to interpret.

Limits

An industry map is a starting point, not a forecast. Industry data from different sources can differ in scope and timing, so note the source and date for every figure.

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