Environmental Scanning

Question 1

These are qualities that enable us to accomplish the organization’s mission.

Answer 1

STRENGTHS

Question 2

He has assumed that the competitive environment within an industry depends on five forces.

Answer 2

DRUCKER PORTER

Question 3

It refers to the competitive struggle for market share between firms in an industry.

Answer 3

RIVALRY

Question 4

This refers to the products having the ability of satisfying customers’ needs effectively.

Answer 4

SUBSTITUTE

Question 5

It is an advantage that accrues to affirm when It does something that the rivals cannot do or owns something that the rival firms desire.

Answer 5

COMPETITIVE

Question 6

Refers to possession and utilization of information about occasions, patterns, trends, and relationships within an organization’s internal and external environment.

Answer 6

Environmental Scanning

Question 7

What is the purpose of the environmental scanning?

Answer 7

Identification of opportunities and threats affecting the business for making strategic business decisions.

Question 8

It is the first step of environmental scanning.

Answer 8

Internal Analysis

Question 9

Internal analysis includes:

Answer 9

✓ Employee interaction with other employees
✓ Employee interaction with management
✓ Manager interaction with other managers
✓ Management interaction with shareholders
✓ Access to natural resources
✓ Brand awareness
✓ Organizational structure
✓ Main staff
✓ Operational potential

Question 10

Three correlated environment should be studied and analyzed as follows:

Answer 10

✓ Immediate/industry environment
✓ National environment
✓ Broader socio-economic environment/macro-environment

Question 11

By definition, ___ and ___ are considered to be internal factors over which you have some measure of control.

Answer 11

Strengths and Weaknesses

Question 12

___ and ___ are considered to be external factors over which you have essentially no control.

Answer 12

Opportunities and Threats

Question 13

It is the most renowned tool for audit and analysis of the overall strategic position of the business and its environment.

Answer 13

SWOT Analysis

Question 14

Its key purpose is to identify the strategies that will create a firm specific business model that will best align an organization’s resources and capabilities to the requirements of the environment in which the firm operates.

Answer 14

SWOT Analysis

Question 15

___ are the qualities that enable us to accomplish the organization’s mission. These are the basis on which continued success can be made and continued/sustained.

Answer 15

Strengths

Question 16

___ are the qualities that prevent us from accomplishing our mission and achieving our full potential. These ___ deteriorate influences on the organizational success and growth.

Answer 16

Weaknesses

Question 17

___ are presented by the environment within which our organization operates. These arise when an organization can take benefit of conditions in its environment to plan and execute strategies that enable it to become more profitable.

Answer 17

Opportunities

Question 18

___ arise when conditions in external environment jeopardize the reliability and profitability of the organization’s business.

Answer 18

Threats

Question 19

Advantages of SWOT Analysis
SWOT Analysis helps in strategic planning in following manner:

Answer 19

1. It is a source of information for strategic planning.
2. Builds organization’s strengths.
3. Reverse its weaknesses.
4. Maximize its response to opportunities.
5. Overcome organization’s threats.
6. It helps in identifying core competencies of the firm.
7. It helps in setting of objectives for strategic planning.
8. It helps in knowing past, present and future so that by using past and current data, future plans can be chalked out.

Question 20

The Limitations of SWOT Analysis

There are certain limitations of SWOT Analysis which are not in control of management. These include-

Answer 20

1. Price increase;
2. Inputs/raw materials;
3. Government legislation;
4. Economic environment; and
5. Searching a new market for the product which is not having overseas market due to import restrictions; etc.

Question 21

Internal limitations may include-

Answer 21

1. Insufficient research and development facilities;
2. Faulty products due to poor quality control;
3. Poor industrial relations; and
4. Lack of skilled and efficient labour; etc.

Question 22

It is a driver of an organization’s strategy and effects on how firms actor react in their sectors.

Answer 22

Competitor Analysis

Question 23

True of False

The organization does a competitor analysis to measure/assess its standing amongst the competitors.

Answer 23

True

Question 24

True or False

It [competitor analysis] begins with identifying present as well as potential competitors.

Answer 24

True

Question 25

True or False

It [competitor analysis] portrays an essential appendage to conduct an industry analysis.

Answer 25

True

Question 26

True or False

A well-thought competitor analysis permits an organization to concentrate on those organizations with which it will be in direct competition, and it is especially important when an organization faces a few potential competitors.

Answer 26

True

Question 27

The main objectives of doing competitor analysis can be summarized as follows:

Answer 27

✓ To study the market;
✓ To predict and forecast organization’s demand and supply;
✓ To formulate strategy;
✓ To increase the market share;
✓ To study the market trend and pattern;
✓ To develop strategy for organizational growth;
✓ When the organization is planning for the diversification and expansion plan;
✓ To study for the coming trends in the industry;
✓ Understanding the current strategy strengths and weaknesses of a competitor can suggest opportunities and threats that will merit a response;
✓ Insight in to future competitor strategies may help in predicting upcoming threats and opportunities.

Question 28

The Porter’s Five Forces Model of Competition

Answer 28

1. Threat of new potential entrants
2. Threat of substitute products/services
3. Bargaining power of supplier
4. Bargaining power of buyers
5. Rivalry among current competitors

Question 29

Potential competitors refer to the firms which are not currently competing in the industry but have the potential to do so if given a choice. Entry of new players increases the industry capacity, begins a competition for market share and lowers the current costs. The threat of entry by potential competitors is partially a function of extent of barriers to entry.

Answer 29

Risk of entry by potential competitors

Question 30

The various barriers to entry are:

Answer 30

✓ Economies of scale
✓ Brand loyalty
✓ Government Regulation
✓ Customer Switching Costs
✓ Absolute Cost Advantage
✓ Ease in distribution

Question 31

Rivalry refers to the competitive struggle for market share between firms in an industry. Extreme rivalry among established firms poses a strong threat to profitability.

Answer 31

Rivalry among current competitors

Question 32

The strength of rivalry among established firms within an industry is a function of following factors:

Answer 32

✓ Extent of exit barriers
✓ Amount of fixed cost
✓ Competitive structure of industry
✓ Presence of global customers
✓ Absence of switching costs
✓ Growth Rate of industry
✓ Demand conditions

Question 33

Buyers refer to the customers who finally consume the product or the firms who distribute the industry’s product to the final consumers. ___ refer to the potential of buyers to bargain down the prices charged by the firms in the industry or to increase the firms cost in the industry by demanding better quality and service of product. Strong buyers can extract profits out of an industry by lowering the prices and increasing the costs. They purchase in large quantities. They have full information about the product and the market. They emphasize upon quality products. They pose credible threat of backward integration. In this way, they are regarded as a threat.

Answer 33

Bargaining Power of Buyers

Question 34

Suppliers refer to the firms that provide inputs to the industry. ___ refer to the potential of the suppliers to increase the prices of inputs( labour, raw materials, services, etc.) or the costs of industry in other ways. Strong suppliers can extract profits out of an industry by increasing costs of firms in the industry. Suppliers’ products have a few substitutes. Strong suppliers’ products are unique. They have high switching cost. Their product is an important in put to buyer’s product. They pose credible threat of forward integration. Buyers are not significant to strong suppliers. In this way, they are regarded as a threat.

Answer 34

Bargaining Power of Suppliers

Question 35

___ refer to the products having ability of satisfying customers’ needs effectively. Substitutes pose a ceiling (upper limit) on the potential returns of an industry by putting a setting a limit on the price that firms can charge for their product in an industry.Lesser the number of close substitutes a product has,greater is the opportunity for the firms in industry to raise their product prices and earn greater profits (other things being equal).

Answer 35

Threat of Substitute Products

Question 36

The term can be defined to mean “anything that a firm does especially well when compared with rival firms”.

Answer 36

Competitive Advantage

Question 37

A firm can have a source of competitive advantage for only a certain period because the rival firms imitate and copy the successful firms’ strategies leading to the original firm losing its source of competitive advantage over the longer term. Hence, it is imperative for firms to develop and nurture sustained competitive advantage.This can be done by:

Answer 37

✓ Continually adapting to the changing external business landscape and matching internal strengths and capabilities by channelling resources and competencies in a fluid manner.
✓ By formulating, implementing, and evaluating strategies in an effective manner which make use of the factors described above.