When conducting an industry analysis, it is imperative to do the research required to understand competitors, markets, customers, barriers, future outlooks, potential competitive advantages and many other industry aspects.

The first question I would consider here as imperative is, is the industry stagnant or declining. If an industry can't keep pace with the country's economic growth, has outdated technologies, is seeing a decline in customer basis, or is running out on natural resources (to name a few), the industry is seeing a decline and thus would not be a financially beneficial industry to enter into with a new business. A similar case shows for stagnation. A stagnant industry can see less then 2-3% growth annually which could be a short or long-term issue. Stagnation often involves substantial unemployment and under-employment, as well as an economy generally performing below its potential which represent only some of the reasons not to enter a stagnant industry.

I think the analysis of how many competitors are in an industry is also imperative. Competitive forms of industry warfare can happen through advertising, incentives, new product launches, and price wars all of which affect the profitability of a firm. If an industry is out of balance with too many companies, then the industry could see stagnation as mentioned above.

Lastly, I would consider the sensitivity of buyers to changing prices. As customers hold purchasing power over a company's products, a company could experience environmental, economic or political burdens that cause a company to increase prices. Buyers may use this as an exit strategy and look for alternative products. This can have far greater affects on small businesses, especially those with customers who account for a large volume of a company's production.

If using Porter's 5-forces model, one can analyze the rivalry among existing firms, threat of new entrants, the threat of substitutes, the bargaining power of buyers, and the bargaining power of suppliers. This can show how a firm in an industry can cope with the above threats. The model however assumes that all players in the industry, including buyers and suppliers, are threats to profits (Young, S. D., et al., 2019).

References:

Young, S. D., Cohen, J., & Bens, D. A. (2019).Corporate Financial Reporting and analysis(4th ed.). Wiley.