Chapter 2

Question 1

What are the six environmental influences involved in the PESTAL framework?

Answer 1

1. Political
2. Economic
3. Social
4. Technological
5. Environmental
6. Legal

Question 2

Political Factors examples

Answer 2

government policies, taxation changes, foreign trade

Question 3

Economic Factors Examples

Answer 3

business cycles, interest rates, unemployment

Question 4

Social Factors Examples

Answer 4

population changes, lifestyle changes

Question 5

Technological Factor Examples

Answer 5

innovations, increased spending on R&D

Question 6

Environmental Factors Examples

Answer 6

environmental protection regulations, global warming

Question 7

Legal Factor Examples

Answer 7

employment laws, competition laws

Question 8

Key Drivers of Change are

Answer 8

environmental factors likely to have a high impact on the success or failure of strategy

Question 9

Scenarios

Answer 9

detailed and plausible views of how the environment of an organization might develop in the future (builds on PESTAL analysis)

Question 10

Whats an industry?

Answer 10

is a group of firms producing products and services that are essentially the same

Question 11

What is a market?

Answer 11

a group of customers for specific products or services that are essentially the same

Question 12

What is a sector?

Answer 12

is a broad industry group especially in the public sector

Question 13

What are Porters five forces? (measures the attractiveness of an industry)

Answer 13

1) the threat of entry
2) the threat of substitutes
3) the bargaining power of buyers
4) the bargaining power of suppliers
5) the extent of rivalry between competitors

Question 14

Issues of the five forces analysis

Answer 14

1) apply at the most appropriate level - not whole industry
2) convergence of industries (mobile phones, camerars, MP3 players)
3) Note the importance of complementary products and services

Question 15

Monopolistic Industries

Answer 15

an industry with one firm and therefore no competitive rivalry

Question 16

Oligopolistic Industries

Answer 16

an industry dominated by a few firms, firms have power over buyers

Question 17

Perfectly Competitive Industries

Answer 17

barriers to entry are low, there are many equal rivals with similar products

Question 18

Hypercompetitive Industries

Answer 18

aggressive competitive interactions, constant disequilibrium and change

Question 19

The 5 stage industry Cycle

Answer 19

1. Development
2. Growth
3. Shakeout
4. Maturity
5. Decline

Question 20

Uses of Strategic Group Analsys

Answer 20

1. Understanding competition
2. Analysis of strategic opportunities
3. Analysis of mobility barriers

Question 21

Strategic Customers

Answer 21

have the most influence over which goods or services are purchased

Question 22

Critical Success Factors

Answer 22

source of competitive advantage. Are factors that are valued by customers

Question 23

Blue Ocean Thinking

Answer 23

blue oceans are new market spaces where competition is minimized

Question 24

Red Ocean

Answer 24

industries that are well defined and rivalry is intense

Question 25

Strategy Canvas

Answer 25

compares competitors according to their performance on key success factors

Question 26

The 5 stage industry Cycle - Development

Answer 26

Low Rivalry: innovation is key

Question 27

The 5 stage industry Cycle - Growth

Answer 27

Low Rivalry: low entry barriers

Question 28

The 5 stage industry Cycle - Shake out

Answer 28

Increasing Rivalry - Managerial and Financial strength key

Question 29

The 5 stage industry Cycle - Maturity

Answer 29

Stronger buyers: Market share and cost key

Question 30

The 5 stage industry Cycle - Decline

Answer 30

Extreme Rivalry - Cost and commitment key

Question 31

Strategic Groups

Answer 31

organisations within an industry or sector with similar strategic characteristics, strategies or competing on similar bases.