Chapter 2

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

Answer 2

environmental monitoring

Question 3

a projection based on measurable facts, events, or objects. It is something that will happen.

Answer 3

hard trend

Question 4

something that might happen and for which the probability that it might happen can be estimated

Answer 4

soft trend

Question 5

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

Answer 5

competitive intelligence

Question 6

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

Answer 6

environmental forecasting

Question 7

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

Answer 7

scenario analysis

Question 8

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

Answer 8

SWOT analysis

Question 9

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

Answer 9

general environment

Question 10

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

Answer 10

demographic segment of the general environment

Question 11

of the general environment the values, beliefs, and lifestyles of a society.

Answer 11

sociocultural segment

Question 12

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

Answer 12

political/legal segment of the general environment

Question 13

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

Answer 13

technological segment of the general environment

Question 14

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

Answer 14

economic segment of the general environment

Question 15

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

Answer 15

global segment of the general environment

Question 16

practice wherein the Internet is used to tap a broad range of individuals and groups to generate ideas and solve problems

Answer 16

crowdsourcing

Question 17

a group of firms that produce similar goods or services.

Answer 17

industry

Question 18

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

Answer 18

competitive environment

Question 19

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

Answer 19

porter’s five-forces model of industry competition

Question 20

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

Answer 20

threat of new entrants

Question 21

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

Answer 21

economies of scale

Question 22

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

Answer 22

product differentiation

Question 23

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

Answer 23

switching cost

Question 24

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

Answer 24

bargaining power of buyers

Question 25

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

Answer 25

bargaining power of suppliers

Question 26

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 26

threat of substitute products and services

Question 27

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

Answer 27

substitute products and services

Question 28

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

Answer 28

intensity of rivalry among competitors in an industry

Question 29

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

Answer 29

internet

Question 30

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

Answer 30

zero-sum game

Question 31

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

Answer 31

complements

Question 32

clusters of firms that share similar strategies.

Answer 32

strategic groups