Industry Analysis Essay Example | Topics and Well Written Essays - 750 words - 4

Industry Analysis - Essay Example The fundamental ruleof the industry is based on sharing the risk than the transfer of the same (Hassan & Lewis,  2007). The banks in the industry act as the financial intermediary that is investment banking hence transacting mortgages. In mortgage transactions, the banks purchase the items from the sellers and re-sell them in the market at a profit instead of lending the money to the buyer to make purchases. It is a fallacy to purport that when an industry performs nicely in one period continues at the same pace in future. It is uncertain because the business world very competitive. Each industry tries to gain a competitive position by producing high-quality products and services and tailoring them to their customers (Agawam, 2010). This is done courtesy of customer loyalty. Additionally, industries strive to effectively and sufficiently utilize the resources available to generate revenue and consequently profits. For an industry to have a stay in the industry, it must be in a position to generate high profits to cater for the payment of shareholders through dividends and payment of other stakeholders like employees, the government, suppliers and creditors. The business environment is dynamic and the following are the factors that can cause the industry not to perform well in future. Firstly, it can be observed by financial analysts that the costs of providing the products and services vary from one fiscal year to another. Holding other items of the income statement constant, an increase in such costs will lead to a decline the profits of the industry. The industry can, therefore, be forced to borrow funds externally to finance its business, and this increases the financial risk to the industry. The industry has got a vast geographical area of operation and this call for theforeign exchange of currency for its transactions. Unfavorable movement in the exchange rates (increase in exchange rates) will adversely affect the operations