Term
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Definition
| The general environment is composed of dimensions in the broader society that influence an industry and the firms within it. |
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Term
| General Environment Segments (6) |
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Definition
Political
Economic
Sociocultural
Technology
Global
Demographic
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Term
| Political / Legal Segment |
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Definition
Antitrust laws
Taxation laws
Deregulation
Labour
Education |
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Term
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Definition
Inflation rates
Interest rates
Trade deficits / surpluses
Budget deficiencies / surpluses
Labour training laws
Business savings rates
GDP |
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Term
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Definition
Women in the workforce
Workforce diversity
Attitudes about the quality of work life
Concerns about environment
Shifts in work and career preferences
Shifts in product preference and service characteristics |
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Term
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Definition
Product innovations
Applications of knowledge
Focus of private and govt supported R&D expenditures
Shifts in preference regarding product and service characteristics |
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Term
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Definition
Important political events
Critical global markets
Newly industrialized countries
Different cultural and institutional attributes
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Term
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Definition
Population size
Age
Geographic distribution
Ethnic mix
Income distribution |
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Term
Industry Environment
Porter's Five Forces |
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Definition
Threat of new entrants
Power of buyers
Power of suppliers
Product substitution
Intensity of Rivalry
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Term
I/O Model
Industrial Organization |
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Definition
| The I/O model specifies that the industry in which a company chooses to compete has a stronger influence on performance than do the choices managers make inside their organization |
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Term
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Definition
| Predicting the dynamics of competitor actions, responses and intentions |
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Term
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Definition
| The Industrial Organization model suggests that above-average returns for any firm are largely determined by characteristics outside the firm |
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Term
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Definition
| This model focuses on industrial attractiveness or structure of the external environment rather than internal characteristics of the firm |
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Term
I/O Model - Step 1
External Environment |
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Definition
| Study the external environment, especially the industry environment |
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Term
I/O Model - Step 2
Attractive Industry
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Definition
| Locate an industry with high potential for above-average returns |
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Term
I/O Model - Step 3
Strategy Formulation |
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Definition
| ID strategy called for by the industry to earn above-average returns |
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Term
I/O Model - Step 4
Assets and Skills |
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Definition
| Develop / acquire assets and skills needed to implement the strategy |
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Term
I/O Model - Step 5
Strategy Implementation
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Definition
| Use the firm's strengths (assets and skills) to implement the strategy |
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Term
I/O Model - Step 6
Superior Returns
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Definition
| Maintain selected strategy in order to outperform industry rivals |
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Term
External Environment analysis
(Four activities) |
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Definition
Scan
Monitor
Forecast
Assess |
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Term
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Definition
| Identify early signals of environmental changes and trends |
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Term
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Definition
| Detect meaning and ongoing observations of environmental changes and trends |
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Term
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Definition
| Develop projections of anticipated outcomes based on monitored changes and trends |
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Term
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Definition
| Determine the timing and importance of environmental changes and trends for firm's strategies and their mgmt |
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Term
Threat of New Entrants
(Barriers to Entry) |
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Definition
- economies of scale
- product differentiation
- capital requirements
- switching costs
- access to distribution channels
- govt policy
- expected retaliation
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Term
Power of Suppliers
Suppliers are likely to be powerful if: |
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Definition
- market dominated by a few firms
- few substitutes
- Buyer not important customer
- Supplier product is important
- product is differentiated
- high switching costs
- supplier poses threat of forward integration
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Term
Power of Buyers
Buyers are likely to be powerful if: |
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Definition
- buyers are large relative to seller's sales
- buyer is significant to supplier's sales
- products are undifferentiated
- few switching costs
- industry earns low profits
- buyer is credible threat of backward integration
- buyer has full information
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Term
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Definition
Products with similar function limit the prices firms can charge
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Term
Rivalry among existing competitors
Cutthroat competiton occurs when: |
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Definition
- numerous or equally balanced competitors
- slow growth industry
- high fixed costs / storage costs
- lack of differentiation
- capacity added in large increments
- Diverse competitors
- high strategic stakes
- high exit barriers
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Term
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Definition
| High exit barriers are economic, strategic and emotional factors which cause companies to remain in an industry even when future profitability is questionable |
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Term
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Definition
| Competitor intelligence is the ethical gathering of needed information and data about competitors' objectives, strategies, assumptions and capabilities |
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