Chapter 3 recap Flashcards
(40 cards)
A firms macroenvironment consists of a wide range of political, economicm sociocultural, technological, ecological, and legal factors that can affect industry and firm performance
PESTEL
_____ factors describe the influence that governmental bodies can have on firms
political
_____ factors are to be considered are growth rates, interest rates, the employment level, price stability (infalation and deflation) , and currency exchange rates
economic
captures a society’s cultures, norms, and values
sociocultural
captures the application of knowledge to create new processes and products
technological
factors concern a firm’s regard for environmental issues such as the natural environment, climate change, and sustainable economic growth
ecological
capture the official outcomes of the political processes that manifest themselves in laws, mandates, regulations, and court decisoins
legal factors
a firms performance is more close related to its managers than to
external circumstances surrounding it (industry effects)
firm and industry effects, however, are interdependent because
they’re both relevant in determining firm performance
The profit potential of an industry is a function of the
five forces that shape competition
the five forces that shape compeition consist of
threat of entry, power of suppliers, power of buyers, threat of substitutes, and rivalry among existing competitors
The stronger a competitive force…
the greater the threat it represents
the weaker the competitive force….
the greater the opportunity it presents
a firm can shape an industry’s structure in..
its favor through its strategy
The competitive structure of an industry is largel captured by the
number and size of competitors in an industry
a perfectly competitive industry is characterized by many small firms,,,,
a commodity product, low entry barriers, and no pricing power for individual firms
a monopolistic industry is characterized by many firms, a
differentiated product, medium entry barriers, and some degree of pricing power
a monopoly exists when there is onlt one large
firm supplying the market
co-opetition (cooperating among competitors) can create a
postiive-sum game, resulting in a larger pie for everyone involved
complements increase demand for the primary product,
enhancing the profit potential for the indsutry and the firma
attractive industries for co-opertition are characterized by high entry barriers,
low exit barriers, low buyer and supplier power, a low threat of subsitutes and the availability of complements
the more profitable an industry, the more attractive it becomes to competitors who must consider the
who, when, how, what, and where of entry
the five choices consitute more than parts of a single decision point:
their consideration forms a strategic process unfolding over time. each choice involves multiple decisions including many dimensions
includes questions about the full range of stakeholders
who
