Industry and Market Analysis Example

Here is an example of an industry and market assessment for our engineering company: Terra Engineering. Please note that this is a fictional company and the information is meant as a reference and not hard fact.

Remember, you want to find a market. Before you develop your product or service, you need to determine the market. This is very important!

The example starts below:

Industry And Market Assessment

Defining the Industry

Environmental goods and services are goods and services that are used or can potentially be used to measure, prevent, limit or correct environmental damage (both natural or by human activity) to water, air, soil as well as problems related to waste, noise, and ecosystems.

They also include clean or resource efficient technologies that decrease material inputs, reduce energy consumption, recover valuable by-products, reduce emissions and/or minimize waste disposal problems.

The environment industry is classified as an industry composed of establishments operating in a variety of industries that produce environmental goods and services.

The environment industry is an evolving industrial sector comprised of companies and organizations that provide environmental technologies or goods and services which: 

  • Reduce human health risks and ecological damage;
  • Improve eco-efficient and cost effectiveness processes; and
  • Address environmental issues and problems

The environment industry represents a set of tools with environmental applications across all industries, including the primary resource, manufacturing and services sectors, and serving as a catalyst to sustainable development.

The following statistical information was gathered using both The Office of Trade and Economic Analysis and Industry Canada. This information is the most recent available and comes from an Environmental Survey of Business Sectors. 

 The environmental industry has evolved some characteristics and dynamics, which are:

Sustainable Development

 The federal government and its agencies have focused on strengthening the capabilities of the environment industry so that it can efficiently deploy its critically important technologies. This helps to ensure that more Canadians enjoy clear air and water, and safer places to live, while creating jobs through domestic and international sales of environmental solutions.

Domestic Activity

The current environmental market is valued at $25.8 billion. Total domestic supply of environmental goods and services in 2002 was composed of commercial sales of $14.3 billion, business own account production of $2.9 billion, government production of $5.2 billion and imports of $3.5 billion.

As in other leading economy sectors, the trend towards value-added services manifest. In 1998, having grown at an average rate of 14% per year from 1998 to 2002, well above the corresponding GDP growth rate of 4.5% per year.

Current statistics estimates that the manufacturing sub-sector contributed about $5.7 billion to the industry’s total 2001 production. 

Construction activities associated with the provision of environmental goods and services amounted to almost $2.3 billion, accounting for 16% of the value of domestic production.

With 26% of total business sales, the waste sector was the largest sub-component of the environmental industry in 2001, followed by environmental construction at 16%, engineering at 14% and water supply and waste water treatment at 13%.

However, the fastest growing environmental sectors since 1998 have been renewable energy, engineering, water, and analytics.


The environmental industry in 2001, represented over 9,500 firms and public establishments. Firms in this industry range from one-person operations to large, multinational firms with less than 500 employees. In 2001, these establishments accounted for 97% of environmental industry firms, 79% of revenues, 77% of exports and 71% of employment.

However, most firms employ fewer than 50 people. In 2001, environmental firms averaged 26 employees, with a total average revenues of $3.9 billion. 

Business Information

The number of business establishments reporting environmental revenues in 1998 reached 6,294, up 10% from 1998.

Leading Sectors

Important sub-sectors of the industry include environmental engineering, waste management, water supply and purification, and waste water treatment.

North American firms have gained international recognition for their expertise in developing water and wastewater treatment technologies, handling liquid and solid wastes, manufacturing environmental equipment such as shredders, as well as for their environmental engineering and consulting expertise.

Market Drivers In The Environment Industry

Markets are created and driven by demand. The forces driving the demand for environmental products and services continue to undergo change. 

Companies in the industrialized world are increasingly moving towards integrated environmental and economic solutions that contribute to the core business objectives of increased profits, reduced liability, enhanced market share and overall improvement for shareholder value. 

The pressures that lie behind the evolving environmental demand include:

  • Pollution prevention and eco-efficiency
  • Performance in managing complex environmental issues
  • Human health 

Governments are similarly shifting their focus from regulatory-driven pollution management to more voluntary approaches and pollution prevention, as a means to secure agreements from industry to limit releases of toxins and eliminate polluting activities.

This is spurring an increasing emphasis on re-engineering industrial process to reduce the amount of pollution produced at source, rather than at the end of the pipe. 

This creates strong incentives for environmental firms to develop new, more efficient and pollution prevention and conservation technologies.

These cleaner production technologies and services which enable firms to improve their resource use efficiency while eliminating the production and release of toxins are critical to sustainable development. 

In its 2001 estimates for environmental protection spending by industry, The Office of Trade and Economic Analysis noted that investment in integrated pollution prevention processes was 141% higher than in 1998.

Firms realize both the importance of being environmentally responsible, as well as the important cost savings in implementing production processes and technologies that reduce pollution at source.

It is increasingly important for environmental companies doing business internationally to be able to demonstrate that they are environmentally responsible.

Industry Challenges

Pictures and Illustrations Can Add a Level of Professionalism To Your Industry and Market Analysis

The environment industry is subject to ongoing and rapid change in its technology and markets. Environmental firms that wish to be competitive in both the domestic and international marketplace must be aware of these changing conditions and respond accordingly.

North American firms have spurred considerable environmental research and development, especially in niche technologies, as well as many successful start-up companies in emerging clusters in promising niches. 

However, despite strong academic and institutional research support, the magnitude of private and public investment in technology commercialization still falls short of the real global opportunity.

While the industry continues to make a significant contribution to the economy and sustainable development worldwide, some segments of this industry are in transition due to heightened competition, growing consumer sophistication, pricing pressure, market share consolidation, and greater merger and acquisition activity.

Some of the key generic drivers of this industry include:

Health and the Environment 

The links between the environment and health are shaping public opinion. 

International Agreements

Global environmental problems such as ozone depletion, loss of biodiversity, water quality and climate change can only be addressed through international action.

Market Forces

Market demand, demographic growth and the sustainability of natural resources and ecosystems are driving environmental growth and innovation.

Urban Growth 

Population growth and aging infrastructure are driving global demand for integrated solutions.

Industrial Eco-Efficiency

Competitiveness is a function or sustainable resource management and process efficiency.

If You Use Images In Your Industry and Market Analysis Try And Have Them Look Like They Were Taken By The Same Photographer or Illustrator

Industry And Market Growth

While the bulk of the industry’s revenues comes from domestic markets, in recent years, the environmental export market has grown almost twice as fast as the domestic market, a reflection of the environmental industry’s globalization.

North American firms have generated significant export earnings and gained international recognition for technical leadership in:

  • Water and wastewater treatment technologies
  • Liquid and solid waste management
  • Environmental instrumentation, geomatics, and analysis
  • Energy efficiency and renewable energy
  • Engineering and consulting services

As identified above, engineering and consulting services like Terra Engineering are becoming serious contributors to the industry, both domestically and internationally.

Throughout the early stages of the business’ operations, Terra Engineering will focus heavily on the communities in Southern Michigan and Southern Ontario. Once the business establishes a solid client base and builds a reputation for quality service, Terra Engineering will expand into the Northern and Eastern parts of Michigan.

Terra Engineering’s target market includes municipal and regional governments, organizations and businesses within the communities of Southern Michigan and Southern Ontario.

To successfully service the target markets, it is important that Terra Engineering understands the needs of the communities of municipal and regional government, organizations, and businesses.

Therefore, the following information outlines the more pressing environmental issues that exist for this target market.

They are as follows:

  1. Funding and financing community economic development sector require that environmental assessments/screenings must be completed to receive funds. Also, environmentally sound production processes must be in place for financing approval by these organizations.
  2. Many municipal governments may not have qualified environmental person (s) or departments in place to maintain and develop the environmental needs of their communities. Therefore, environmental services are being sought from independent consultants and companies. Usually, these companies are not specialized. 
  3. Independent businesses entering resource industries such as mining, forestry, water treatment, oil, and energy have identified a growing need for environmental consulting services. More specifically, it is not feasible to employ a full-time expert in environmental services and techniques, and therefore, contracts are often completed by private companies.
  4. The cost of waste disposal is increasing for rural communities. The combination of ineffective Federal environmental legislation, poor monitoring, increasingly stringent waste disposal guidelines, and regulations, as well as increased waste disposal costs may lead to unregulated waste disposal on certain rural communities becoming a major issue. 
  5. These communities will need assistance to develop alliances with State and Provincial forces as well as access to Federal services to ensure these communities do not become waste dumping grounds. 

Potential Clients

Terra Engineering has conducted initial research into potential clients in can service once established and from this has developed a list of potential client contacts.

The people identified are personal and professional contacts of both, Mr. Johnson and Mr. Smith who can place Terra Engineering in direct contact with the type of clients the company is seeking.

Once a contract is completed to satisfaction for a client, the likelihood of attaining repeat business from that client is good. It is estimated that over 50% of the clients Terra Engineering successfully services, additional contracts will arise. 

Competitive Environment

Within the mainstream environment industry in Southern Michigan and Southern Ontario, the competitive environment is quite intense, and the number of competitors is fairly large. However, Terra Engineering is proposing to enter an industry which very few companies specialize.

Over the past decade or so, the need for specialized environmental service companies has increased dramatically and only now is the industry showing signs of meeting supply with demand for specialized environmental knowledge. 

Terra Engineering has identified a few specialized companies as its competition. However, like the construction industry, the environmental industry will utilize the existing competition to complete jobs faster, cheaper, and to attain large contracts.

The following companies which currently operate within the specialized environmental assessment services industry are: 

  • Darwin and Associates – Darwin Little
  • Harlow and Associates – Peter Harlow
  • First Engineering – Tom Smithson
  • Smith and Associates – Dan Smith
  • AWAP Engineering – Matthew Martin

As mentioned before, these people and companies may compete with or actually with Terra Engineering on any given project. The approach in dealing with these companies will be to establish good working relationships. Moreover, Terra Engineering will treat them as potential partners or sub-contractors. </p>

Working relationships will be achieved by utilizing a careful and focused approach in demonstrating that alliances with these competitors will become important at some point. 

Each company’s work will be reviewed to determine the type of projects they complete and the quality or the work. Meetings will be sought and held to discuss future opportunities.

This will be an important relationship building exercise and may take some time to generate revenues from these contacts.

Once relationships are established, Terra Engineering will not get too involved with any one company as this may put the company at risk of becoming to dependent on one company.

After conducting some initial research, Terra Engineering has identified a few key competitive advantages it has over it’s competitors.

They include:

  1. The technical knowledge is with the owners of the company;
  2.  Already established alliances with Randolf and Associates and Barnard and Barry Environmental which will allow the company to effectively compete on a wide range of contracts;
  3. Experienced and qualified management team in place; 
  4. Competitive pricing as the company will be utilizing a market entry based pricing strategy;
  5.   V. Central office location to the market (s) to be serviced

Templates, Brochures, and eBooks


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David Strader



Harvard Business School

Editor and Publisher: Jeff Grill

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