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MGT455 Strategic Management CH4
Environmental Scanning and Industry Analysis
42
Management
Undergraduate 4
09/28/2011

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Term
Environmental Scanning
Definition
looking at info from the internal/external environments
Term
Natural Environment
Definition
(climate, physical resources, wildlife)
Term
Societal Environment (4)
Definition
-Economic Forces
-Technological Forces
-Political-Legal
-Sociocultural
Term
Task Environment
Definition
Elements/groups that directly affect corp or are affected by a corp (govt, community, supplier, etc.)
Term
Industry Analysis
Definition
in-depth examination of key factors within a corp's task environment
Term
externalities
Definition
costs not included in a business firm's accounting systems, but felt by others. (pollution)
Term
STEEP Analysis
Definition
Sociocultural, Technological, Economic, Ecological, and Political-Legal environmental forces.
Term
Repatriation of profits
Definition
transfer of profits from a foreign subsidiary to a corporation's headquarters
Term
Most-favored Nation
Definition
States that a country cannot grant a trading partner lower customs duties without granting them to all other WTO members
Term
(8) current Sociocultural trends
Definition
-Increasing Environmental awareness
-Growing health consciousness
-Expanding seniors market
-Impact of Gen. Y boomlet
-Declining mass market (want for products tailored to specific needs ei: shampoo)
-Changing pace and location of life
-Changing household composition
Increasing diversity of workforce and markets
Term
Multination Corporation (MNC)
Definition
company with significan assets/activities in multiple countries
Term
Trigger Point
Definition
When demand for a particular product or service is ready to boom
Term
Origin of Competitive Advantage
Definition
Lies in ability to identify and respond to environmental change well in advance of competition
Term
Strategic Myopia
Definition
Willingness to reject unfamiliar as well as negative information
Term
Issues Priority Matrix
Definition
1)Identify likely trends that are strategic environmental issues (if occur, affect industry/world)
2)Assess probably of them actually occurring (low, medium, high)
3) Attempt to ascertain the likely impact of each trend on corporation
Term
External Strategic Factors
Definition
Key fundamental trends that are judged to have both a medium to high probability of occurrence and m-h prob. of impact on corporation.
Term
Industry Analysis Competitive Forces (6)
Definition
-Threat of New Entrants
-Rivalry Among Existing Firms
-Threat of Substitute Products/Services
-Bargaining Power of Buyers
-Bargaining Power of Suppliers
-Relative power of other stakeholders
Term
New Entrants bring...
Definition
new capacity, a desire to gain market share, and substantial resources
Term
Entry Barriers (7)
Definition
-Economies of Scale (Scale economies in production/sales of microprocessors gave intel a significant cost adv. over any new rival)
-Product Differentiation (Recognized brands create higher barrier)
-Capital Requirements (need for large initial investments to compete)
-Switching Costs (reluctancy to switch products/services)
-Access to Distribution Channels (difficulty finding shelf space)
-Cost disadvantages independent of size ("standard" products hold largest mkt share)
-Government Policy (limit entry through licensing reqs and restricted access to raw materials)
Term
Entry Barriers (7)
Definition
-Economies of Scale (Scale economies in production/sales of microprocessors gave intel a significant cost adv. over any new rival)
-Product Differentiation (Recognized brands create higher barrier)
-Capital Requirements (need for large initial investments to compete)
-Switching Costs (reluctancy to switch products/services)
-Access to Distribution Channels (difficulty finding shelf space)
-Cost disadvantages independent of size ("standard" products hold largest mkt share)
-Government Policy (limit entry through licensing reqs and restricted access to raw materials)
Term
Factors for competition (7)
Definition
-Number of Competitors
-Rate of Industry Growth
-Product or service characteristics
-Amount of fixed costs
-Capacity
-Height of exit barriers
-Diversity of Rivals
Term
Substitute Product
Definition
product that appears to be different but can satisfy the same need as another product. (Coffee and Tea, Bottled water and Coke)
-when switching costs are low, substitutes have strong effect
Term
Powerful buyer bargaining power characteristics
Definition
-Buyer purchases large proportion of product/service
-Buyer has potential to integrate backward by producing product themselves
-Alt. suppliers are plentiful because of a standardized product (gas stations)
-Changing suppliers cost very little
-Purchased product represents high percentage of buyer's cost=incentive to shop around for lower price
-Buyer earns low profits, so must be sensitive to costs
-Product purchased is unimportant to final quality/price of buyer's product (wiring)
Term
Powerful Supplier bargaining power chars
Definition
-Supplier industry is dominated by a few companies (petro)
-Product is unique
-Substitutes are not readily available (electricity)
-Suppliers are able to integrate forward and compete directly with customers
-Purchasing industry only buys small portions and is unimportant to supplier
Term
Complementor
Definition
Company or Industry whose product works well with a firm's product and without which the product would lose much of its value
Term
Fragmented Industry
Definition
No firm has large market share, all have small share (cleaning services)
Term
Consolidated Industry
Definition
Dominated by few large firms struggling to differentiate from others (petro)
Term
Global Industries
Definition
Operate worldwide, make only small adjustments for country-specific circumstances.
Term
Strategic Group
Definition
Business Units/firms that pursue similar strategies with similar resources.
-some strat-groups in an industry are more profitable than others. (McD's, BK, Arby's)
Term
Strategic Types
Definition
a category of firms based on a common strategic orientation and a combination of structure, culture, and processes consistent with that strategy
Term
Defenders
Definition
Limited product line that focus on improving efficiency of their existing operations
Term
Prospectors
Definition
Fairly broad product lines focus on product innovation and market opportunities
Term
Analyzers
Definition
Corps that operate in at least two different product-market areas, one stable and one variable. in stable-efficiency emphasized, in variable-innovation
Term
Reactors
Definition
Lack a consistent strategy-structure-culture relationship.
Term
Hypercompetition
Definition
playrs create a condition of constant equilibrium and change.
-short product life cycles
-new tech
-frequent new entrants
Term
Key Success Factors
Definition
Variables that can significantly affect the overall competitive positions of companies within any particular industry
Term
Competitive Intelligence
Definition
Formal program of gathering information on a company's competitors
Term
Extrapolation
Definition
extension of present trends into the future
Term
Delphi Technique
Definition
separated experts independently assess the likelihoods of specified events
Term
Statistical Modeling
Definition
quantitative technique that attempts to discover causal or at lease explanatory factors that link two or more time series together (regression analysis)
Term
Scenario Writing
Definition
written description of future state, in terms of key variables and issues. Used to envision what customers might want in future.
Term
EFAS
Definition
External Factors Analysis Summary
-Way to organize external factors into the generally accepted categories of opportunities and threats and analyze how they are handled
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