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Question 1

What are the five stages of the strategy process?

Answer 1

stage 1: stage of visions and objective building
stage 2: stage of strategic analysis
stage 3: stage of strategy formulation
stage 4: stage of strategy implementation
stage 5: evaluation

Question 2

What is the market based view?

Answer 2

1- Thinking strategically about a firm’s external environment
2- Forming a strategic vision of where the firm needs to head
3- Identifying promising strategic options for the firm
4- Selecting the best strategy and business model for the firm

Question 3

What is the resource based views?

Answer 3

1- Thinking strategically about a firm’s internal environment
2-Forming a strategic vision of where the firm needs to head
3- Identifying promising strategic options for the firm
4- Selecting the best strategy and business model for the firm

Question 4

What is the macro environment?

Answer 4

• Is the broad environmental context in which a firm ́s industry is situated.
• Includes strategically relevant components over which the firm has no direct control.
• General economic conditions.
• Immediate industry and competitive environment.

Question 5

What are the seven components of the macro environment?

Answer 5

PEST: Political, legal and regulatory factors;, economic conditions; social forces; technological factors.
Natural environment, global forces, demographics.

Question 6

What are political, legal, and regulatory factors?

Answer 6

Political policies and processes, as well as the regulations and laws with which companies must comply. ex: labor laws, antitrust laws…

Question 7

What are economic conditions?

Answer 7

Rates of economic growth, unemployment, inflation, interest, trade deficits or surpluses, savings, per capita domestic products, and conditions in the markets for stocks and bonds affecting consumer confidence and discretionary income.

Question 8

What are social forces?

Answer 8

Societal values, attitudes, cultural factors, and lifestyles that impact on businesses. Social forces vary by locale and change over time.

Question 9

What are technological factors?

Answer 9

The pace of technological change and technical developments that have the potential for wide-ranging effects on society, such as genetic engineering, the rise of the Internet, changes in communication technologies, and knowledge and controlling the use of technology.

Question 10

What is natural environment?

Answer 10

Ecological and environmental forces such as weather, climate, climate change, and associated factors like water shortages.

Question 11

What are global forces?

Answer 11

Conditions and changes in global markets, including political events and policies toward international trade, sociocultural practises and the institutional environment in which global markets operate.

Question 12

What are demographics?

Answer 12

The size, growth rate, and age distribution of different sectors of the population. It includes the geographic distribution of the population, the distribution of income across the population, and trends in these factors.

Question 13

What are the five competitive forces?

Answer 13

• Competition from rival sellers
• competition from potential new entrants
• competition from substitute products producers
• supplier bargaining power
• customer bargaining power

Question 14

When is rivalry strong among competing sellers?

Answer 14

Rivalry is strong when:
- Buyer demand is growing slowly and sellers find themselves with excess capacity
- buyers’ switching costs are low.
- products of the industry are commodities or else weakly differentiated.
- firms in the industry have high fixed or storage costs.
- competitors are numerous or of roughly equal size and strength.
- rivals have emotional stakes in business or face high exit barriers.

Question 15

About potential new entrants, when are entry threats stronger?

Answer 15

• entry barriers are low.
• industry members are unwilling or unable to strongly contest the entry of newcomers.
• there are many potential entrants.
• existing industry members are looking to expand their market reach by entering new product segments or new geographic areas.
• buyer demand is growing rapidly and newcomers can expect to earn attractive profits without inviting a strong reaction from incumbents.
• industry outlook seems stable, encouraging entry.

Question 16

Regarding firms in other industries offering substitute products, when is competitive pressure from substitute products stronger?

Answer 16

• good substitutes are really available at attractive prices.
• substitutes have comparable or better performance features.
• buyers have low switching costs.

Question 17

Regarding firms in other industries offering substitute products, what are the signs that competition from substitutes is strong?

Answer 17

• sales of substitutes are growing faster than sales inside the industry.
• producers of substitutes expand their capacity.
• profits of the producers of substitutes are growing.

Question 18

Regarding suppliers, when is supplier bargaining power stronger?

Answer 18

• supplier products/services are in short supply, differentiated, and critical to production processes.
• industry members have high switching costs.
• no good substitutes available.
• suppliers are not dependent on the industry for a large portion of their revenues.
• the supplier industry is concentrated and dominated by a few large companies (low competition).
• Possibilities for backward-integration are limited.

Question 19

Regarding buyers, when is bargaining power stronger?

Answer 19

• buyer’s switching costs are low.
• products are standardised or undifferentiated.
• buyers are large and few in number relative to number of industry sellers.
• buyer demand is weak in relation to industry supply.
• buyers are well informed about quality, prices and costs of sellers.
• buyers have ability to integrate backwards into the business of the seller.
• buyers have the ability to postpone purchase.
• buyers are price-sensitive

Question 20

Why are buyers price-sensitive?

Answer 20

• earn low profits or income.
• products represent a significant fraction of their purchase.
• product quality has limited consequences.

Question 21

What are complementors?

Answer 21

Complementors are the producers of complementary products.

Question 22

Which are the drivers of industry change?

Answer 22

1. Changes in the long-term industry growth rate.
2. Increasing globalization.
3. Changes in target group and usage
4. Technological change
5. Emerging new internet capabilities and applications
6. Product and marketing innovation
7. Entry or exit of major firms
8. Diffusion of technical know-how across companies and countries.
9. Improvements in efficiency in adjacent markets.
10. Reductions in uncertainty and business risk
11. Regulatory influences and government policy changes
12. Changing societal concerns, attitudes, and lifestyles.

Question 23

Who are complementors?

Answer 23

Complementors are the producers of complementary products.
Analysis of complementors might yield important insights.
Cooperative interactions might be realized with complementors to maximize value.
They might also pose threat in the future so must be closely observed .

Question 24

What is scenario analysis?

Answer 24

Scenario analysis is a tool to consider different alternative scenarios and their consequences.
Accessing possible changes in the industry conditions.

Question 25

What is a strategic group?

Answer 25

Is a cluster of industry rivals that have similar competitive approaches and market positions:
- have comparable product-line breadth
- sell in the same price/quality range
- emphasise the same distribution channels
- use the same product attributes to buyers
- depend on identical technological approaches
- offer similar services and technical assistance.

Question 26

How do we construct a strategic group map?

Answer 26

1. Identify the competitive characteristics that differentiate firms in the industry.
2. Plot the firms on a two-variable map using pairs of differentiating competitive characteristics.
3. Assign firms occupying about the same map location to the same strategic group.
4. Draw circles around each strategic group, making the circles proportional to the size of the group ́s share of total industry sales revenues.

Question 27

What are inferences from group map?

Answer 27

Not all map positions are equally attractive:
1. Prevailing competitive pressures in the industry and drivers of change favor some strategic groups and hurt others.
2. Profit prospects vary from strategic group to strategic group.