Chapter 2 Flashcards
(27 cards)
general environment
consists of broad trends in the context within which a firm operates that can have an impact on a firm’s operates that can have an impact on a firm’s strategic choices
general environment consists of (6):
technological change demographic trends cultural trends economic climate legal & political conditions specific international events
technological change creates both:
threat and opportunity
demographics
the distribution of individuals in a society in terms of age, sex, marital status, income, ethnicity, etc
which population has grown the most over the past few years?
hispanic population
cultural trends
the values, beliefs, & norms that guide behavior in a society
economic climate
the overall health of the economic systems within which a firm operates
business cycle
the pattern of a rise and fall of recession and depression
legal & political conditions
the laws and the legal systems’ impact on business
a firm’s general environment helps identify _____ and _________ it faces
threats and opportunities
Structure- Conduct- Performance (SCP) Model
theoretical framework to describe conditions under which competition in an industry would not develop
the SCP model focuses on the ________ firm
individual
environmental threat
any individual, group, or organization outside a firm that seeks to reduce the level of that firm’s performance
the 5 common environmental threats
new competition competition among existing competitors superior or low-cost substitutes supplier leverage buyer's influence
new competitors
firms recently starting to operate or beginning operations soon
3 types of barriers to entry
economies of scale
product differentiation
cost advantages independent of scale
economies of scale
when costs fall due to its volume of production
product differentiation
incumbent firms possess brand identification and customer loyalty that new competitors may not
cost advantages independent of scale (5)
proprietary technology managerial know-how (knowledge) favorable access to raw materials learning-curve cost advantages government policy
4 generic industry structures
fragmented
emerging
mature
declining
fragmented industries
where a large number of small/medium-sized firms operate and no small set of firms has dominant market share or creates dominant technologies
emerging industries
newly created or newly re-created industries formed by technological innovations
changes in demand
emergence of new customer needs, etc.
emerging strategy has the opportunity of
first mover advantage
first mover advantage can arise from (3)
technological leadership strategy
preemption of strategically valuable assets
creation of customer-switching costs
