Cycle: The first step in industry analysis is to determine the cycle it is in, or the stage of maturity of the industry. As it gives you a better picture of what you can expect from it.
Nascent Stage: At the first stage, the industry is new and it can take some time for it to properly establish itself. In these early days, it may actually make losses or profits. At this time there may also not be many companies in the industry so it becomes very important to do a detailed study.
Growth Stage: Once the industry has established itself it enters a growth stage. As the industry grows, many new companies enter the industry. At this stage, investors can get high reward at low risk since demand outstrips supply.
Maturity Stage: After the halcyon days of growth, an industry matures and stabilizes. Rewards are low and so too is the risk. Growth is moderate. Though sales may increase, they do so at a slower rate than before. Products are more standardized and less innovative and there are several competitors.
Source: Rediff
