unit 4 revised

Question 1

List some of the elements of the microenvironment. PESTE

Answer 1

Social - societies’ attitudes & cultural values
Technological - new products and materials
Economic - inflation & interest rates
Ecological - air, soil & water
Political - Laws & regulations

Question 2

List the components of the external environmental analysis.

Answer 2

Scan the environment for changes
Observe to understand changes
Forecast the future
Assess changes for the organisation

Question 3

What are the three major areas of the external environment?

Answer 3

Global, macro, and industry or market environments.

Question 4

What is an industry?

Answer 4

A group of organisations that produce products which are close substitutes for one another.

Question 5

List the 4 variables to consider before performing an industry analysis.

Answer 5

Concentration
Economies of scale
Product differentiation
Barriers to entry
Competitors

Question 6

Describe the 5 forces model of Porter. (Threat of new entrants)

Answer 6

Barriers to entry:
Product differentiation
Economies of scale
Capital requirements

Expected retaliation

Question 7

Describe the 5 forces model of Porter. (Bargaining power of suppliers)

Answer 7

Suppliers can exercise power over competing organisations by increasing their prices and/or reducing the quality of their products, thereby reducing the profitability of an organisation that is unable to recover the cost increases in its prices.

Question 8

Describe the 5 forces model of Porter. (Rivalry among existing firms)

Answer 8

Identify competitors, their strengths & weaknesses.
Conduct competitor analysis:
Goals & objectives of competitors
Their capabilities
The strategies

Question 9

Describe the 5 forces model of Porter. (Threat of substitute products)

Answer 9

To withstand the threat of product and service substitution, an organisation can differentiate in areas that customers perceive as creating more value, such as price, quality, after-sales services or speed of delivery.

Question 10

Describe the 5 forces model of Porter. (Bargaining power of buyers)

Answer 10

Buyers can bargain for higher quality, and they have the power to play competitors off against one another in their attempt to see who will give them the best deal.

Question 11

List the factors that will influence the intensity among competitors.

Answer 11

Slow industry growth
High exit barriers
Lack of differentiation

Question 12

List ways to find competitors in an industry.

Answer 12

The organisation’s commitment to industry

Question 13

List some common mistakes in identifying competitors.

Answer 13

Overlooking small competition by looking at the large competition.
Ignoring the threat of potential new entrants or international competitors.

Question 14

List the limitations of Porter’s five forces model.

Answer 14

It only assesses the profitability of an industry
The model can never be applied in isolation.

Question 15

List some examples of industry KSF.

Answer 15

Marketing KSF -
Human skills KSF -
Technology KSF -
Distribution KSF -
Manufacturing KSF -

Question 16

Study the EFE Matrix

Answer 16

Internet, YouTube, etc.