Shared Flashcard Set

Details

Strategic Management
Chapter 3 - External Environment
31
Business
Undergraduate 4
05/29/2012

Additional Business Flashcards

 


 

Cards

Term
General Environment
Definition
The general environment is composed of dimensions in the broader society that influence an industry and the firms within it.
Term
General Environment Segments (6)
Definition

Political

Economic

Sociocultural

Technology

Global

Demographic

 

Term
Political / Legal Segment
Definition

Antitrust laws

Taxation laws

Deregulation

Labour

Education

Term
Economic Segment
Definition

Inflation rates

Interest rates

Trade deficits /  surpluses

Budget deficiencies / surpluses

Labour training laws

Business savings rates

GDP

Term
Sociocultural Segment
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

Term
Technology Segment
Definition

Product innovations

Applications of knowledge

Focus of private and govt supported R&D expenditures

Shifts in preference regarding product and service characteristics

Term
Global Segment
Definition

Important political events

Critical global markets

Newly industrialized countries

Different cultural and institutional attributes

 

Term
Demographic Segment
Definition

Population size

Age

Geographic distribution

Ethnic mix

Income distribution

Term

Industry Environment

 

Porter's Five Forces

Definition

 

Threat of new entrants

Power of buyers

Power of suppliers

Product substitution

Intensity of Rivalry

 

 

Term

I/O Model


Industrial Organization

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
Term
Competitor Analysis
Definition
Predicting the dynamics of competitor actions, responses and intentions
Term
I/O Model
Definition
The Industrial Organization model suggests that above-average returns for any firm are largely determined by characteristics outside the firm
Term
I/O Model
Definition
This model focuses on industrial attractiveness or structure of the external environment rather than internal characteristics of the firm
Term

I/O Model - Step 1

External Environment

Definition
Study the external environment, especially the industry environment
Term

I/O Model - Step 2


Attractive Industry

Definition
Locate an industry with high potential for above-average returns
Term

I/O Model - Step 3


Strategy Formulation

Definition
ID strategy called for by the industry to earn above-average returns
Term

I/O Model - Step 4


Assets and Skills

Definition
Develop / acquire assets and skills needed to implement the strategy
Term

I/O Model - Step 5


Strategy Implementation

Definition
Use the firm's strengths (assets and skills) to implement the strategy
Term

I/O Model - Step 6


Superior Returns

Definition
Maintain selected strategy in order to outperform industry rivals
Term

External Environment analysis

(Four activities)

Definition

Scan

Monitor

Forecast

Assess

Term
Scan
Definition
Identify early signals of environmental changes and trends
Term
Monitor
Definition
Detect meaning and ongoing observations of environmental changes and trends
Term
Forecast
Definition
Develop projections of anticipated outcomes based on monitored changes and trends
Term
Assess
Definition
Determine the timing and importance of environmental changes and trends for firm's strategies and their mgmt
Term

Threat of New Entrants

(Barriers to Entry)

Definition
  • economies of scale
  • product differentiation
  • capital requirements
  • switching costs
  • access to distribution channels
  • govt policy
  • expected retaliation
Term

Power of Suppliers

Suppliers are likely to be powerful if:

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

 

Term

Power of Buyers

Buyers are likely to be powerful if:

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
Term
Threat of Substitute
Definition

Products with similar function limit the prices firms can charge

 

Term

Rivalry among existing competitors

Cutthroat competiton occurs when:

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
Term
High Exit Barriers
Definition
High exit barriers are economic, strategic and emotional factors which cause companies to remain in an industry even when future profitability is questionable
Term
Competitor Environment
Definition
Competitor intelligence is the ethical gathering of needed information and data about competitors' objectives, strategies, assumptions and capabilities
Supporting users have an ad free experience!