Chapter 2

Question 0

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

Answer 0

Environmental monitoring

Question 1

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

Answer 1

Environmental scanning

Question 2

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

Answer 2

Competitive intelligence

Question 3

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

Answer 3

Environmental forecasting

Question 4

An in-depth approach to environmental forecasting that involves experts’ detailed assessments of societal trends, economies, politics, technology, or other dimensions of the external environment.

Answer 4

Scenario analysis

Question 5

A framework for analyzing a company’s internal and external environment and that stands for strengths, weaknesses, opportunities, and threats.

Answer 5

SWOT analysis

Question 6

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

Answer 6

General environment

Question 7

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

Answer 7

Demographic segment of the general environment

Question 8

The values, beliefs, and lifestyles of a society.

Answer 8

Sociocultural segment of the general environment

Question 9

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

Answer 9

Political/legal segment of the general environment

Question 10

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

Answer 10

Technological segment of the general environment

Question 11

Characteristics of the economy, including national income and monetary conditions.

Answer 11

Economic segment of the general environment

Question 12

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

Answer 12

Global segment of the general environment

Question 13

A group of firms that produce similar goods or services.

Answer 13

Industry

Question 14

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

Answer 14

Competitive environment

Question 15

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

Answer 15

Porter’s five-forces model of industry competition

Question 16

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

Answer 16

Threat of new entrants

Question 17

Decreases in cost per unit as absolute output per period increases.

Answer 17

Economies of scale

Question 18

The degree that a product has a strong brand loyalty or customer loyalty.

Answer 18

Product differentiation

Question 19

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

Answer 19

Switching cost

Question 20

The threat that buyers may force down prices, bargain for higher quality or more services, and lay competitors against each other.

Answer 20

Bargaining power of buyers

Question 21

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

Answer 21

Bargaining power of suppliers

Question 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.

Answer 22

Threat of substitute products and services

Question 23

Products and services outside the industry that serve the same customer needs as the industry’s products and services.

Answer 23

Substitute products and services

Question 24

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

Answer 24

Intensity of rivalry among competitors in an industry

Question 25

A global network of linked computers that use a common transmission format, exchange information and store data.

Answer 25

Internet

Question 26

A situation in which multiple players interact, and winners win only by taking from other players.

Answer 26

Zero-sum game

Question 27

Products or services that have an impact on the value of a firm’s products or services.

Answer 27

Complements

Question 28

Clusters of firms that share similar strategies.

Answer 28

Strategic groups