Chapter 2 Flashcards
Immediate Industry and Competitive Environment
1) Company
2) Suppliers
3) Substitute products
4) Rival firms
5) Buyers
6) New entrants
Macro-Environment
1) General economic conditions
2) Global forces
3) Social forces
4) Technological Factors
5) Political/regulatory/legal factors
6) The natural environment
7) Demographics
External strategic analysis
Political
Economic
Social
Technological
The industry environment
1) Suppliers
2) Consumers
3) Competitors
Industry analysis
1) General characteristics such as growth and size
2 Industry structure such as competitive forces
3) Industry dynamics such as trends and changes
4) Competitive position of rivals such as relative strength and likely moves
5) Key success factors
Size and growth
1) What is the current market size in units or sales?
2) What is the past, current and expected rate of growth for the market/industry
3) Different sectors/regions of a market grow at different rates
4) Growth varies with the industry’s life cycle stage: emergence, rapid growth, growth, maturity and decline
5) Growth does not guarantee profitability
Industry structure
The basic premise that underlies industry analysis is that the level of industry profitability is neither random nor entirely the result of industry-specific influences, it is determined by the industry’s underlying economic characteristics
Porter’s Five Forces of Competition
1) Suppliers
2) Buyers
3) Substitutes
4) Potential entrants
5) Industry competitors
Industry analysis can be used to:
1) Explain differences in profitability between industries and changes in the profitability of a given industry over time.
2) Assist managers in positioning the firm advantageously
3) Predict possible changes in competition and profitability in the near future
4) Identify opportunities for changing industry structures and alleviating competitive pressures.
