Industries · Toolkit
How industries work: the toolkit
The six tools that let you understand any industry fast: value chains and profit pools, unit economics, supply chains, cost structures and margins, business models, and a 10-minute industry scan to run before any interview.
Key takeaways
- An industry's value chain lists every step from raw material to the final customer.
- Unit economics asks one question: does one unit (one order, one customer, one store, one seat, one flight) make money after its own costs, and how many units are needed to cover everything else?
- A supply chain moves materials from suppliers to customers. Its job is to meet demand on time at the lowest total cost, which includes transport, inventory and the cost of running out.
- Industries differ in where each dollar of sales goes (materials, people, research or machines), so a margin that is healthy in one industry can be a warning sign in another.
- A business model answers two questions: who pays, and for what. The same product can be sold in very different ways, and each way has its own numbers to watch.
- Draw the value chain of any industry and find where the profit concentrates
- Choose the natural unit of a business and calculate contribution, breakeven, CAC, LTV and payback
- Explain lead times, inventory, working capital, the bullwhip effect and total landed cost
- Judge whether a margin is good by comparing it with the right industry benchmark
- Name the main business models and the metric that matters most in each
- Run a 10-minute industry scan using free annual reports and earnings calls
Lessons
Value chains and profit pools
Who does what from raw material to customer, and which steps keep the profit, with a worked profit pool.
Unit economics in any business
Per order, per store, per flight, per seat and per room: contribution, breakeven, CAC, LTV and payback, worked in five industries.
Supply chains explained
Sourcing, making, moving and storing goods: lead times, inventory, working capital, service levels, the bullwhip effect, resilience and nearshoring, with a total landed cost example.
Cost structures, margins and capital intensity across industries
Typical gross and operating margins and capital needs by industry, from free NYU Stern data, and how to use a benchmark in a case.
Business models: who pays, and for what
Subscription, marketplace, advertising, licensing, franchising, razor and blade, freemium, B2B and B2C, asset-light and asset-heavy, each with a real example and the metric that matters.
Getting industry-aware fast: the 10-minute industry scan
A ten-question template to run before any interview, and how to use annual reports and earnings calls for free, with a worked scan of cement.
Worked cases in this module
- A car ownership profit pool
- 1. Per store: a bubble tea shop in Singapore
- 2. Per flight: a short-haul flight in Europe
- 3. Per seat and per customer: software sold by subscription
- 4. Per order: an online grocer in Brazil
- 5. Per room night: a hotel in Dubai
- Total landed cost: Vietnam or Mexico?
- Is a 3 percent margin good?
- A marketplace and a freemium app
- A 10-minute scan: cement
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Key terms