“Core industry attributes” refers to the most fundamental and essential characteristics of an industry, which determine its business model, profit drive and competition rules. To judge the core attributes, usually look at three points:
1. Value creation: essentially what needs to meet (such as catering to solve hunger, education to solve knowledge transmission).
2. Factors of production: what does it mainly depend on (for example, manufacturing relies on capital equipment, and software companies rely on technical talents).
3. Economic characteristics: key economic indicators, such as:
· Medicine relies on research and development patents, with high gross profit, high risk and long cycle.
· Retail relies on scale and turnover, low gross profit, high turnover, low profit and high sales.
· Finance relies on risk pricing and leverage, which is cyclical and regulated.
· The science and technology Internet relies on network effects and data, and the winner eats all, and high returns after high growth.
Understanding the “core attributes” of an industry can help you judge:
· The logic of making money: rely on scale, brand, technology or resources?
· Key risks: is it cyclical fluctuations, technological iteration or policy changes?
· Analysis focus: the manufacturing industry looks at the production capacity and cost, and the consumption looks at the brand and channels.
If you have a specific industry you want to know, I can analyze its core attributes for you.
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