Analyzing the External Environment

Question 1

the ability to sense what is coming before the fog clears

Answer 1

2.1. Perceptual acuity

Question 2

– surveillance of a firm’s external environment to predict environmental changes and detect changes already under way

Answer 2

2.2.1. Environmental scanning

Question 3

a firm’s analysis of the external environment that tracks the evolution of the environmental trends, sequences of events, or streams of activities

Answer 3

2.2.2. Environmental monitoring

Question 4

– a firm’s activities of collecting and interpreting data on competitors, defining and understanding the industry, and identifying competitors’ strengths and weaknesses

Answer 4

2.2.3. Competitive intelligence

Question 5

the development of plausible projections about the direction, scope, speed, and intensity of environmental change

Answer 5

2.2.4. Environmental forecasting

Question 6

– an in-depth approach to environmental forecasting that involves experts’ detailed assessments of societal trends, economics, politics, technology, or other dimensions of the external environment

Answer 6

2.3. Scenario analysis

Question 7

a framework for analyzing a company’s internal and external environments and that stands for strengths, weaknesses, opportunities, and threats

Answer 7

2.4. SWOT Analysis

Question 8

– factors external to an industry, and usually beyond a firm’s control, that affect a firm’s strategy

Answer 8

2.5. General environment

Question 9

genetic and observable characteristics of a population, including the levels and growth of age, density, sex, race, ethnicity, education, geographic region, and income

Answer 9

2.5.1. Demographic segment of the general environment

Question 10

the values, beliefs, and lifestyles of a society.

Answer 10

2.5.2. Sociocultural segment of the general environment

Question 11

how a society creates and exercises power, including rule, laws, and taxation policies

Answer 11

2.5.3. Political/legal segment of the general environment

Question 12

innovation and state of knowledge in industrial arts, engineering, applied sciences, and pure science; and their interaction with society.

Answer 12

2.5.4. Technological segment of the general environment

Question 13

– characteristics of the economy, including national income and monetary conditions.

Answer 13

2.5.5. Economic segment of the general environment

Question 14

influences from foreign countries, including foreign market opportunities, foreign based competition, and expanded capital markets.

Answer 14

2.5.6. Global segment of the general environment

Question 15

the process of examining large data sets of uncover hidden patterns, market trends, and customer preferences.

Answer 15

2.5.7. Data analytics

Question 16

a group of firms that produce similar goods or services

Answer 16

2.6.1. Industry

Question 17

factors that pertain to an industry and affect a firm’s strategies

Answer 17

2.6.2. Competitive environment

Question 18

– a tool for examining the industry-level competitive environment, especially the ability of firms in that industry to set prices and minimize costs.

Answer 18

2.6.3. Porter’s five forces model of industry competition

Question 19

the possibility that the profits of established firms in the industry may be eroded by new competitors.

Answer 19

2.6.4. Threat of new entrants

Question 20

decrease in cost per unit as absolute output per period increases.

Answer 20

2.6.5. Economies of scale

Question 21

the degree to which a product has strong brand loyalty or customer loyalty

Answer 21

2.6.6. Product differentiation

Question 22

one-time costs that buyer/supplier faces when switching from one supplier/buyer to another.

Answer 22

2.6.7. Switching costs

Question 23

the threat that buyers may force down prices, bargain for higher quality or more services, and play competitors against each other.

Answer 23

2.6.8. Bargaining power of buyers

Question 24

– the threat that suppliers may raise prices or reduce the quality or purchased goods and services.

Answer 24

2.6.9. Bargaining power of suppliers

Question 25

the threat of limiting the potential returns of an industry by placing a ceiling on the prices that firms tin that industry can profitably charge without losing too many customers to substitute product.

Answer 25

2.6.10. Threat of substitute product and services

Question 26

products and services outside the industry that serve the same customer needs as the industry’s products and services.

Answer 26

2.6.11. Substitute products and services

Question 27

the threat that customers will switch their business to competitors within the industry.

Answer 27

2.6.12. Intensity of rivalry among competitors in an industry

Question 28

a situation in which multiple players interact, and winners win only by taking from other players.

Answer 28

2.6.13. Zero-sum game

Question 29

– products or services that have an impact on the value of a firm’s products or services.

Answer 29

2.6.14. Complements

Question 30

clusters of firms that share similar strategies.

Answer 30

2.6.15. Strategic groups