chapter 3 Flashcards
(28 cards)
PESTEL Framework
categorises and analyses an important set of internal and external factors (politic, economic, sociocultural, technology, ecological, legal)
PESTEL: economic factors
firms external environment mostly macroenviroment
economy wide phenomena
PESTEL: economic factors
levels of employment
the growth rate measures the change in the amount of goods and services produced by a nation’s economy
PESTEL: economic factors
interest rates
interest rates are the amount creditors are paid for use of their money and the amount that debtors pay for the use (adjusted for inflation)
-> low interest rates costumers will buy more -> easy and cheap to borrow money-> then spend money stimulates environment
PESTEL: economic factors
price stabilty
lack of change in price levels of goods and services
PESTEL: sociolculture factors
capture a society’s culture norm and values
PESTEL: sociolculture factors
capture a society’s culture norm and values
PESTEL: technological factors
capture the application of knowledge to create new processes and products
PESTEL: ecological factors
involve broad environmental issues such as the natural environment, global warming
PESTEL: legal factors
laws regulations etc
Industry effect
describes underlying economic structure of the industry. dertmind by entry and exit barriers, number and size of company, types of products and services offered
firm effect
attribute firm performance directly to the actions of strategic leaders
industry
a group of firms facing the same set of suppliers and buyers
industrial analysis
provides more rigorous basis not only to identify an industry profit potential but also derive implications for one firms strategic position in the industry
strategic positioning
ability to create value for the costumer while continuing the costs
-> competitive advantage when gap as wide as possible between V-C
5 forces model
a framework that identifies five forces that determine the profit potential of an industry and shape firms competitive strategy
Competition in the 5 forces model: threat of entry/ entry barriers
describes the risk of potential competitors entering the industry
entry barrier. how easily and firm can enter the industry-> economies of scale, network effects (value of product or service increases for individual user with the number of total users
switching cost: moving from one supplier to the next
capital requirements: ´price of entry ticket´
5 forces model: the power of suppliers
powerful suppliers can raise price
5 forces model: power of buyer
relates to the pressure an industry costumer can put not the producers margin by demanding lower price or higher quality
5 forces model: threat of substitutes
the idea that producers or services available outside the given industry will come close to meeting the needs of current costumers. high threat reduces industry profit potential by limiting the price of the industry’s competitors can charge for their products and services
5 forces model: rivalry among existing competitors
describes the intensity with which company within the industry jockey for the market share and profitability
Competitive industry structure: refers to elements and features common to all industries.
Fragment industry
consists of many small firms and tends to generate low profit
entry choices
- WHo? identify players
- When? Entering timing stage of industry life cycle
- how? leverage existing assets, establish niches
- what? what type of entry; scale, commitment, product, or service
- Where? space of entry; product positioning.
Strategic group
the set of companies that pursue similar strategy within a specific industry
