Chapter 2 Flashcards
(27 cards)
Three parts of the external environment
- general
- industry
- competitor
General Environment
dimensions in the broader society that influence an industry and the firms within it
Industry Environment
set of factors that directly influence a firm and its competitive actions and response
Competitor Environment
focuses on each company against which a firm directly competitive actions and response
Competitor Environment
focuses on each company agains which a firm directly operates
7 Segments of the General External Environment
- physical
- sociocultural
- global
- technological
- political/legal
- demographic
- economic
A firm’s external environment creates _________
opportunities and threats
Demographic Segment
commonly analyzed on a global basis because of their potential effects across countries; population size, age structure, geographic distribution, ethnic mix, income distribution
Economic Segment
the nature and direction of the economy in which a firm competes or may compete; inflation rates, interest rates, trade deficit/surplus, budget deficit/surplus, personal savings rate
Political/Legal Segment
how organizations and governments mutually try to influence each other, and how firms try to understand these influences; antitrust laws, taxation laws, deregulation philosophies, labor training laws
Sociocultural Segment
concerned with a society’s attitudes and cultural values; women in the workforce, workforce, diversity attitudes, shifts in career preferences
Technological Segment
technological changes occur through new products, processes and materials; product innovations, new communication technologies, applications of knowledge
Global Segment
markets and consumers are more global; important political events, critical global markets
Physical Environment Segment
concerned with trends oriented to sustaining the world’s physical environment; energy consumption, practices used to develop energy sources, renewable energy
External Environmental Analysis
- Scanning
- Monitoring
- Forecasting
- Assessing
Scanning
study of all segments in the general environment: through scanning, firms identify early signals of potential changes in the general environment and detect changes that are underway
Monitoring
analysis observe environmental changes to see if an important trend is emerging from among those spotted through scanning
Forecasting
feasibility projections developed for what might happen and how quickly as a result of the changes and trends deter through scanning and monitoring
Assessing
determining the timing and significance of the effects of environmental trends that have been identified specifying the implications of the understanding gathered previously
Industry Environmental Analysis
- strategic competitiveness
2. ability to earn above-average returns
Five Forces Model
- threat of new entrants
- bargaining power of suppliers
- bargaining power of buyers
- threat of substitute products
- industry rivalry
Sixth Force
complementary goods & services
5 Forces and an Unattractive Industry
- low barriers
- suppliers have strong position
- buyers have strong position
- strong threats from substitute products
- intense rivalry
5 Forces and an Attractive Industry
- high barriers
- suppliers have weak positions
- buyers have weak positions
- few threats from substitutes
- moderate rivalry
