The debate is over, we are truly one global economy.
So where's the global game board?
Wouldn't marketing and strategic planning be easier if there was a global industry game board - a listing of all significant industries, with an industry analysis for each? And shouldn't companies be analyzed at the line-of-business level using the same industry taxonomy?
Most everyone answers "yes" to these questions because the answers are so clear.
But then things gets cloudy with the added question, "Do you think such a global industry game board exists?"
The reason for the cloudiness is the unclear definition of the word "industry."
Today, the term "industry" is used so loosely it can be applied to anything: from frozen pizza manufacturing (a true industry) to all of food manufacturing (an industry sector); from wholesale funds transfer services to all of financial services; from laptop computer manufacturing to all IT hardware manufacturing.
The working definition for the term "industry" used in the construction of the Industry Building Blocks Classification System [TM] is:
When talking with people not familiar with Porter's methodologies, an industry (which is the relevant scope for business unit strategic planning) is best defined as:
"One or more companies (and / or sole proprietors, partnerships, governments, government agencies, non-profits, consortiums, etc.) which provide one or more external customers (individuals, companies, governments, etc.) one or more products (and / or services) which are clear substitutes, and which require similar activities to produce the product or provide the service. (For example, sugar and the sugar substitutes represent strategically different industries." - Alan S. Michaels
The lack of line-of-business industry information is shocking to some.
The top two reasons why information vendors do not provide true global industry information are:
1. Information vendors that acquire and reformat company information are in a completely different line of business. These vendors typically assign companies into industry groups and then market this "industry sector" data as "industry" data. These information providers typically divide the global economy into somewhere between 20 and 600 industry sectors.
2. Information vendors that are dependent on government-based industry classification systems (such as NAICS, SIC, etc.) have a narrow geographic scope and, for whatever reason, they do not use Porter's five forces analysis for defining industries. These information providers typically divide the global economy into somewhere between 300 and 1,100 industry groups; and they too market this information as "industry" data.
So even though there are hundreds of information companies which say they provide "industry" information, the list of firms that actually provide true five forces "industry" information for the global economy is very short. Can you name even one company?
Business professionals for the past 30 years have been reading Porter's books; and MBA schools around the world routinely teach Porter's five forces industry analysis methodology. When these people want industry information, do they have to engage a consulting firm each time? Shouldn't there be a service to just look up global industry information?
Using a global industry game board for marketing and strategic planning, should be as common as using a GPS device when traveling. With a global game board, global segmentation and industry selection becomes so much easier and quicker. A global game board provides a much better opportunity to target the right: product segments, customer segments, channel segments, buyer decision makers, and vendors. It also provides an instant guide for looking up potential industries to enter, as well as potential business partners and acquisition candidates.
The Industry Building Blocks Classification System provides five forces industry information on the top 16,000 global industries.
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Understanding the Global Economy, A Few Guidelines
GDP = Gross Domestic Product. GDP is (only) a measure of the "final good and services produced in a given time period (for example, one year) within a given physical border (typically, a country). For example, the United States GDP for 2013 will likely be around $16 trillion dollars; and Global GDP is approximately $73 trillion dollars.
With globalization, increased trade and more and more of the global economy moving into the virtual world, what happens physically in each country is becoming less important, as well as harder to accurately measure. For example, with most large IT and consulting companies developing software and providing consulting services by using global teams, do you think the "where" question can be answered accurately - and does it matter?
Analyzing country-GDP is becoming less important every day. Analyzing industries on a global basis, however, is becoming more important every day because industries are the fundamental arena in which competition takes place.
Finally, without a common approach for defining all "industries" - and without industry definition clarity - metrics of any type will have little meaning.