[SOLVED]Using information from the ABI Inform and

Automobile, healthcare, consumer goods, financial services tend to perform well in medium to
long term while telecommunication performs poorly (Eresearch, 2017). Checking on
opportunities and threat of these industries can help to explain the variance in their performance.
Performance of automobile is based on the ability of many people to afford cars. Besides that, it
is also based on ability to develop affordable cars. With high demand for a long time, there is an
expectation that industry will perform as a whole. Competition is another factor to consider, high
competition in automobile bring about cost reduction thus giving many people able to own cars.
Many companies in automobile industries are making smaller cars and cost effective one. Such
cars attract young buyers who can afford them with average income. That is the main reason why
car sales in North America and Europe have been increasing over the last ten years. Despite that,
the challenge of automobile industries lay in the emerging market since the sales in such Areas
has always been decreasing. The main cause of that might be shrinking economy or few rich and
many poor. The health sector is the second performing industry after consumer discretionary.
The performance of healthcare industry can be attributed to aging baby boomers as well as
improvement of the biotech industry since the 1990s. Besides that, the opportunity of healthcare
industry seems to be lasting since it is basically that people will still need medication in future
(Borzykowsk, 2015). Besides that, the fact that diseases such as cancer are becoming disastrous
and medication is expensive, the industry still seems to have more opportunities in calamities.
Improvement of the healthcare industry has also initiated the improvement of related industries
such as healthcare insurance (Borzykowsk, 2015). The financial service industry is another one
that has long term performance. Without 2008 recession, the financial industry would have
greatly improved by now. Every day financial services facilitate essential transaction among

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INDUSTRY ANALYSIS

people, business, and government. They also, offer mortgages and loan services. The growth of
mobile banking technology has also made financial services provider be essential the economy.
Besides that, financial sector tends to perform well when the interest rates are low. Low-interest
rate means that many people and businesses can easily access credit at a lower cost. From 2008
recession, the interest rate was nearly 0 in the USA but it was increased slightly from 2015.
Derivatives were once considered the best hedging financial product but after 2008 recession,
they received much to blame (Ross, 2015).therefore, there is future uncertainty about the product
regulation hence in case anything goes bad, there might be high losses. Besides that, the fact that
interest rate in the USA is expected to go up with time, the returns from financial sector might go
down. A consumer good is the best performing industry as at 2017. When there is a decline in
fuel prices the consumer good industry performs automatically. Transportation cost and
production cost are highly influenced by the cost of fuel. Whenever fuel is lowly priced, the
production cost goes down hence making the prices to be competitive. Besides that, when
economy growths and employment rate increases, people living standards and ability to purchase
improves. Since 2009, USA economy has been improving as new jobs have been created due to
low-interest rates. That is the main reason why in the medium term to the long term consumer
goods industry has performed (McKenzie, 2017). Telecommunication industry poorly performs
in long term basis. The main reason why telecommunication performs poorly on long term basis
is based on nature of the industry and technology. The technology in telecommunication industry
keeps changing occasionally and swiftly. Besides that, there is high competition thus diluting the
returns. Besides that, telecommunication industry has a high rate of expenses increasing. The
reason is that the infrastructure needs to be changed occasionally to meet the new demands.

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INDUSTRY ANALYSIS

Despite being non-financial sector telecommunication industry has the highest debt-to-equity
ratio. The reason for high DE ratio can be that investors are scared away by the unpredictability
of the industry thus they opt for more loans to finance their investments (Sorensen, 2017).
Healthcare industry is generally more profitable than telecommunication. The main reason for
this is that people will always get sick and they will need medication. For telecommunication,
the taste and interest of people keep on changing as technology improves. Besides that, the
market is extremely saturated hence when some are making profits others are making massive
losses. For example, prior to 2006, people used to buy music but today people can easily access
music online freely. Prior to 2000, the cases of cancer were less than the cases today. Therefore,
more medication is needed today than in 2000. More so, those people who were young adult are
now old. Old age comes with medical complication thus will need healthcare support
occasionally. Clearly, healthcare industry will always have business while telecommunication
will be struggling to keep pace with fast changing technology
I will recommend Healthcare industry for our project. The Healthcare industry has potential to
grow anywhere I the world since proper medication is always needed. Proper medication in the
society is important. Therefore, offering a business plan that not only seeks to make profits but
first seek to improve the services is important. Healthcare industry is important and when
managed accurately, both investors and patients will feel satisfied.

References

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INDUSTRY ANALYSIS

Eresearch. (2017). Sectors & Industries - Performance - Fidelity. Eresearch.fidelity.com. Retrieved 13
September 2017, from
https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/si_performance.jhtml?tab=siperformanc
e
Borzykowsk, B. (2015). These are the best stocks from now to October. CNBC. Retrieved 13
September 2017, from https://www.cnbc.com/2015/06/02/health-care-stocks-a-great-long-term-
market-bet.html
Ross, S. (2015). What is the long-term sector outlook for financial services?. Investopedia.
Retrieved 13 September 2017, from http://www.investopedia.com/ask/answers/030215/what-
longterm-sector-outlook-financial-services.asp
Sorensen, B. (2017). Telecommunication Services Sector Rating: Underperform. Schwab
Brokerage. Retrieved 13 September 2017, from
http://www.schwab.com/public/schwab/nn/articles/Telecommunications-sector

A medium to long term industry is one that develops overtime. Industries such as the automobile,
technology, and healthcare take years to achieve significant growth. This growth can often only be
achieved through larger capital or labor investments. These industries may require capital investments
such as high-tech machinery or advanced technology to create your products and rely heavily on
suppliers to provide quality materials. This is very true of the automobile and technological industries,
which require large amounts of money to support the creation of the products being sold. Similarly, some
industries, such as healthcare, require labor costs, or human capitol (Khanna, 2013). This includes hiring
people with advanced degrees, which has a higher costs salary.
On the reverse, some industries are better in the short-term and can take less than a year to obtain larger
profits. While the profit is significant in the short-term, this does not mean it will be more profitable in the
long-term. Industries that fall into this category would include consumer goods and financial services.
Unlike the other industries, these don’t have significant costs in the beginning.
I do think some industries are inherently more profitable than others. I think the forces mentioned by
Porter (N.d) could be applied to industries, showing the impacts on profit. Industries that are overfilled
with companies may not be best for new entrants, due to competition. Products that can be easily
replaced or products where the supply is greater than the demand can impact the profit. Being reliant on
a supplier can increase costs and thereby decrease profit. Biery (2016) mentions that financial and health
services can be more profitable than other industries because it is selling a service, not a product, which
reduces upfront costs. The long term growth of the healthcare sector can further be seen within Fidelity,
which shows over 137% increase over 10 years. Consumer goods, such as grocery stores, have smaller
profit margins because there is more competition. Grocery stores want to maintain and gain customers,
which requires reducing prices on their items to beat out competition.
In choosing an industry for my team’s strategy project, I would look towards the healthcare industry
because this is an industry that is continuously evolving overtime. This is an industry that will do better in
the long-term and because of the aging population, it is an industry that will continue to be one of the
most relevant and important industries. People rely on the evolution of healthcare.
Biery, M. E. (2016). The Most Profitable Industries in 2016. Retrieved
from https://www.forbes.com/sites/sageworks/2016/08/06/the-most-profitable-industries-in-
2016/#217bf8582557
KHANNA, T., & PALEPU, K. (2013). Emerging Markets: Look Before You Leap. IESE Insight, (17), 44-51
Porter's Five Forces (industryanalysis). https://www.boundless.com/management/textbooks/boundless-
management-textbook/strategic-management-12/external-inputs-to-strategy-87/porter-s-five-forces-420-
1822/
Sectors and Industry
Performance. https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/si_performance.jhtml?tab
=siperformance

The healthcare industry tends to be better performing in the long term.  Large initial investments in the
healthcare industry tend to take a longer period, but with stable and growing demand typically sees
positive returns.  This is a highly fragmented market that is reliant on demographics and politics of a given
region. The US has seen stagnant and declining performance in healthcare industry due in large part to
the uncertainty of policies from the new administration.  However, the industry is poised for long term
success in the US specifically due to its aging population that should increase demand for services in the
next decade.
The financial sector is heavily reliant on the economic well-being of its consumers. They tend to do well at
the beginning of high economic indicators but can decline in the later stages of business cycles.  The
aging population could see an uneven strain on the financial industry in the insurance sector as policy
claims could increase disproportionately to newer client input.
While reviewing February 2017 industry financial assessments, it was evident the country’s economic
conditions had effects on all sectors. Demand drivers in each of the sectors had a common thread, from
employment and interest rates, demographics, consumer wealth and the domestic economy. The US has
seen stagnant or declining growth across all sectors.  However, in Latin America, there was marked
steady improvements throughout all sectors. Are some sectors inherently more profitable than others?  I
believe it depends on the domestic economy and their potential growth areas.  In reviewing the US
Department of Commerce, Bureau of Economic Analysis the top performing private sectors was the
Financial industry at $2,466.1 billion followed by the healthcare industry at $2,437.0 billion. 
A highly concentrated sector, the automobile industry is postured for a major shakeup.  Many countries
around the globe are committing to a carbon-free future and pushing towards electric and autonomous
vehicles. At the cross-section of the automobile and technology sectors converge in a potential disruption
in the global economy.  Virtually every country in the world signed and agreed to The Paris Agreement;
signaling a global commitment to combating climate change. Approximately 27% of US Greenhouse
Gases are emitted from the transportation sector. I believe this will expand the global automobile market
investments over the next several decades.
 
https://www.bea.gov/industry/factsheet/factsheet.cfm
https://www.fidelity.com/sector-investing/compare-sectors
https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions
https://globaledge.msu.edu/global-insights/by/industry