An industry is composed of a set of firms that produce similar products or services, sell to similar customers, and use similar methods of production.

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To understand the business environment of a particular firm, you need to analyze both the general environment and the firm's industry and competitive environment. Generally, firms compete with other firms in the same industry. An industry is composed of a set of firms that produce similar products or services, sell to similar customers, and use similar methods of production. Gathering industry information and understanding competitive dynamics among the different companies in your industry is key to successful strategic management.

An Industry Is Composed of a Set of Firms That