Chapter 2

Question 1

Environmental Scanning

Answer 1

surveillance of a firm’s external environment to predict environmental changes and detect changes already under way

Question 2

Environmental monitoring

Answer 2

a firm’s analysis of the external environment that tracks the evolution of environmental trends, sequences of events, or streams of activities.

Question 3

Competitive Intelligence

Answer 3

a firm’s activities of collecting and interpreting data on competitors, defining and understanding the industry, and identifying competitors’ strengths and weaknesses

Question 4

Environmental Forecasting

Answer 4

the development of plausible projections about the direction, scope, speed, and intensity of environmental change.

Question 5

Scenario Analysis

Answer 5

In-depth approach to environmental forecasting that involves experts’ detailed assessments of social trends, economic, politics, technology, or other dimensions of the external environment

Question 6

General Environment

Answer 6

factors external to an industry, and usually beyond a firm’s control, that affect s firm’s strategy

Question 7

Demographic Segment of The General Environment

Answer 7

genetic an observable characteristics of a population, including the levels and growth of age, density, race, sex, ethnicity, education, geographic region and income

Question 8

Sociocultural segment of the general environment

Answer 8

the values, beliefs, and lifestyles of a society

Question 9

Political/legal segment of the general environment

Answer 9

how a society creates and exercises power, including laws, rules, and taxation policies.

Question 10

Technological segment of the general environment

Answer 10

innovation and state of knowledge in industrial arts, engineering, applied sciences, and pure science; and their interaction with society

Question 11

Economic segment of the general environment

Answer 11

characteristics of the economy, including national income and monetary conditions

Question 12

global segment of the general environment

Answer 12

influences from foreign countries, including foreign market opportunities, foreign-based competition, and expanded capital markets

Question 13

industry

Answer 13

a group of firms that produce similar goods or services

Question 14

competitive environment

Answer 14

factors that pertain to an industry and affect a firm’s strategies

Question 15

Porters five-forces model of industry competition

Answer 15

A tool for examining the industry-level competitive environment, especially the ability of firms in that industry to set prices and minimize costs

Question 16

threat of new entrants

Answer 16

the possibility that the profits of established firms in the industry may be eroded by new competitors

Question 17

economies of scale

Answer 17

decreases in cost per unit as absolute output per period increases

Question 18

product differentiation

Answer 18

the degree that a product has strong brand loyalty or customer loyalty

Question 19

switching cost

Answer 19

one-time costs that a buyer/supplier faces when switching from one supplier/buyer to another

Question 20

bargaining power of buyers

Answer 20

the threat that buyers may force down prices, bargain for higher quality or services, and play competitors against each other

Question 21

bargaining power of suppliers

Answer 21

the threat that suppliers may raise prices or reduce the quality of purchased goods and services

Question 22

threat of substitute products or services

Answer 22

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

Question 23

Substitute products or services

Answer 23

products/services from a separate industry that serve the same customer needs as the industry’s product/service (tablet vs laptop)

Question 24

Intensity of rivalry among competitors in an industry

Answer 24

the threat that customers will switch their business to competitors within the industry

Question 25

strategic groups

Answer 25

clusters of firms that share similar strategies