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MGMT 466 - Ch2
The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis
29
Management
Undergraduate 4
09/22/2009

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Term
general environment
Definition
the __ is composed of dimensions in the broader society that influence an industry and the firms within it. there are six segments
Term
1. demographic 2. economic 3. political/legal 4. sociocultural 5. technological 6. global
Definition
six segments of the external environment (review table 2.1)
Term
industry environment
Definition
the __ is the set of factors that directly influences a firm and its competitive actions and competitive responses
Term
opportunity
Definition
__ is a condition in the general environment, if exploited, helps a company achieve strategic competitiveness (competitive possibilities)
Term
threat
Definition
__ is a condition in the general environment that may hinder a company's efforts to achieve strategic competitiveness (competitive constraints)
Term
1. scanning 2. monitoring 3. forecasting 4. assessing
Definition
4 components of external environment analysis
Term
scanning
Definition
__ is identifying early signals of environmental changes and trends (external environment anal)
Term
monitoring
Definition
__ is detecting meaning through ongoing observations of environmental changes and trends (external environment anal)
Term
forecasting
Definition
__ is developing projections of anticipated outcomes based on monitored changes and trends (external environment anal)
Term
assessing
Definition
__ is determining the timing and importance of environmental changes and trends for firms' strategies and their management (external environment anal)
Term
economic environment
Definition
__ refers to the nature and direction of the economy in which a firm competes or may compete (6 segments)
Term
demographic segment
Definition
__ is concerned with a population's size, age structure, geographic distribution, ethnic mix, and income distribution (6 segments)
Term
political/legal segment
Definition
__ is the arena in which organizations and interest groups compete for attention, resources, and a voice in overseeing the body of laws and regulations guiding the interaction among nations. this segment represents how firms influence government and vice versa. (6 segments)
Term
sociocultural segment
Definition
__ is concerned with a society's attitudes and cultural values (6 segments)
Term
technological segment
Definition
__ includes the institutions and activities involved with creating new knowledge and translating that knowledge into new outputs, products, processes, and materials (6 segments)
Term
global segment
Definition
__ includes relevant new global markets, existing markets that are changing, important international political events, and critical cultural and institutional characteristics of global markets
Term
industry
Definition
a __ is a group of firms producing products that are close substitutes
Term
1. threat of new entrants 2. bargaining power of suppliers 3. bargaining power of buyers 4. threat of substitute products 5. rivalry among competing firms
Definition
5 forces
Term
threat of new entrants
Definition
additional production capacity brought by new entrants. unless the demand for a g&s is increasing, additional capacity holds consumers' costs down, resulting in less revenue and lower returns for competing firms. barriers to entry, expected retaliation
Term
1. economies of scale 2. product differentiation 3. capital requirements 4. switching costs 5. access to distribution channels 6. cost disadvantages independent of scale 7. government policy
Definition
7 types of barriers to entry (threat of new entrants)
Term
expected retaliation
Definition
firms seeking to enter an industry also anticipate reactions of firms in the industry. (threat of new entrants)
Term
bargaining power of suppliers
Definition
a supplier group is powerful when 1. it is dominated by a few large companies and is more concentrated than the industry it supplies 2. satisfactory substitutes are unavailable 3. indistry firms are not a significant customer for the supplier group 4. suppliers' goods are critical to buyers' marketplace success 5. the effectiveness of suppliers' products has created high switching costs for industry firms 6. it poses a credible threat of forward integration into buyers' industry
Term
bargaining power of buyers
Definition
customers are powerful when: 1. they purchase a large portion of an industry's total output 2. the sales of the product being purchased account for a significant portion of the seller's annual revenues 3. they could switch to another product at little or no cost4. the industry's products are undifferentiated or standardized, and the buyers pose a credible threat of backward integration
Term
threat of substitute products
Definition
substitute products are goods or service from outside a given industry that perform similar or the same functions as a product that the industry produces. (nutrasweet vs sugar)
Term
intensity of rivalry among competitors
Definition
because an industry's firms are mutually dependent, actions taken by one company usually invite competitive responses. numerous or equally balanced competitors, slow industry growth, high FC or high storage costs, lack of differentiation or low switching costs, high strategic stakes, high exit barriers
Term
strategic group
Definition
a __ is a set of firms that emphasize similar strategic dimensions and use a similar strategy. the competition between these firms is greater than with other firms.
Term
competitor analysis
Definition
1. what drives competitors (shown by org's future objectives) 2. what the competitor is doing and can do (revealed in org's current strategy) 3. what the competitor believes about the industry (shown in org's assumptions) 4. what the competitor's capabilities are (shown by org's strengths and weaknesses)
Term
competitor intelligence
Definition
__ is the set of data and information the firm gathers to better understand and better anticipate competitors' objectives, strategies, assumptions, and capabilities. the firm should also gather intelligence regarding public policies in countries around the world
Term
complementors
Definition
__ are the network of companies that sell complementary g&s or are compatible with the focal firm's own product or service. these firms may also be suppliers and buyers who have a strong "network" relationship with the focal firm.
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