External Analysis

Question 1

Industrial organization (I/O model)-> external prespective

Answer 1

1. The external environment
2. An attractive industry
3. Strategy formation
4. Assets and skills
5. Strategy implementation
6. Superior returns

Question 2

Resource Based View (RBV) -> internal perspective

Answer 2

1. Resources
2. Capability
3. Competitive advantage
4. An attractive industry
5. Strategy formulation and implementation
6. Superior returns

Question 3

General environment (7s)

Answer 3

a. Demographic segment: population size, age structure, geographic and income distribution, etc.
b. Economic segment: inflation, savings and interest rates, GDP, trade and budget deficits, etc.
c. Political/legal segment: antitrust, tax and labor laws, deregulation, etc.
d. Socio-cultural segment: women and diversity in the workforce, environmental concerns, products, service and career preferences, etc.
e. Technological segment: innovations, private vs. Government R&D, knowledge applications, etc.
f. Global segment: cultural and institutional attributes, political events, global markets, etc
g. Physical segment (environmental): ecological system

Question 4

Industry Environment(5f)

Answer 4

a. Threat of nes entrants
b. Bargaining power of suppliers
c. Bargaining power of buyers
d. Threat of substitutes
e. Intense rivalry among competitors

Question 5

3. Competitor Environment
   a. Analyze 4 aspects

Answer 5

i. What drives competitors (future objectives)
ii. What the competitor is doing and can do (current strategy)
iii. What the competitor believes about the industry (assumptions)
iv. What the competitor’s capabilities are (strengths and weaknesses)

Question 6

3. Competitor Environment
   b. Importance of legal and ethical intelligence collection

Answer 6

i. Future objectives- our goals compared, attitude toward risk
ii. Current strategy- how are we competing, does our strategy support changes in the competitive industry
iii. Assumption- do we assume a volatile future?, what assumptions others have
iv. Capabilities- our str and weak, how do we rate compared to others

Question 7

Components of the method to analyse the external environment:

Answer 7

• Scanning: identifying early signals of environmental changes and trends
• Monitoring: detecting meaning through ongoing observations of environmental changes and trends
• Forecasting: developing projections of anticipated outcomes based on monitored changes and trends
• Assessing: determining the timing and importance of environmental changes and trends for firm’s strategies and their management