Chapter 2 Flashcards
Environmental Scanning
surveillance of a firm’s external environment to predict environmental changes and detect changes already under way
Environmental monitoring
a firm’s analysis of the external environment that tracks the evolution of environmental trends, sequences of events, or streams of activities.
Competitive Intelligence
a firm’s activities of collecting and interpreting data on competitors, defining and understanding the industry, and identifying competitors’ strengths and weaknesses
Environmental Forecasting
the development of plausible projections about the direction, scope, speed, and intensity of environmental change.
Scenario Analysis
In-depth approach to environmental forecasting that involves experts’ detailed assessments of social trends, economic, politics, technology, or other dimensions of the external environment
General Environment
factors external to an industry, and usually beyond a firm’s control, that affect s firm’s strategy
Demographic Segment of The General Environment
genetic an observable characteristics of a population, including the levels and growth of age, density, race, sex, ethnicity, education, geographic region and income
Sociocultural segment of the general environment
the values, beliefs, and lifestyles of a society
Political/legal segment of the general environment
how a society creates and exercises power, including laws, rules, and taxation policies.
Technological segment of the general environment
innovation and state of knowledge in industrial arts, engineering, applied sciences, and pure science; and their interaction with society
Economic segment of the general environment
characteristics of the economy, including national income and monetary conditions
global segment of the general environment
influences from foreign countries, including foreign market opportunities, foreign-based competition, and expanded capital markets
industry
a group of firms that produce similar goods or services
competitive environment
factors that pertain to an industry and affect a firm’s strategies
Porters five-forces model of industry competition
A tool for examining the industry-level competitive environment, especially the ability of firms in that industry to set prices and minimize costs
threat of new entrants
the possibility that the profits of established firms in the industry may be eroded by new competitors
economies of scale
decreases in cost per unit as absolute output per period increases
product differentiation
the degree that a product has strong brand loyalty or customer loyalty
switching cost
one-time costs that a buyer/supplier faces when switching from one supplier/buyer to another
bargaining power of buyers
the threat that buyers may force down prices, bargain for higher quality or services, and play competitors against each other
bargaining power of suppliers
the threat that suppliers may raise prices or reduce the quality of purchased goods and services
threat of substitute products or services
the threat of limiting the potential returns of an industry by placing a ceiling on the prices that firms in that industry can profitably charge without losing too many customers to substitute products
Substitute products or services
products/services from a separate industry that serve the same customer needs as the industry’s product/service (tablet vs laptop)
Intensity of rivalry among competitors in an industry
the threat that customers will switch their business to competitors within the industry
