Chapter 2

Question 1

general environment

Answer 1

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

Question 2

general environment consists of (6):

Answer 2

technological change
demographic trends
cultural trends
economic climate
legal & political conditions
specific international events

Question 3

technological change creates both:

Answer 3

threat and opportunity

Question 4

demographics

Answer 4

the distribution of individuals in a society in terms of age, sex, marital status, income, ethnicity, etc

Question 5

which population has grown the most over the past few years?

Answer 5

hispanic population

Question 6

cultural trends

Answer 6

the values, beliefs, & norms that guide behavior in a society

Question 7

economic climate

Answer 7

the overall health of the economic systems within which a firm operates

Question 8

business cycle

Answer 8

the pattern of a rise and fall of recession and depression

Question 9

legal & political conditions

Answer 9

the laws and the legal systems’ impact on business

Question 10

a firm’s general environment helps identify _____ and _________ it faces

Answer 10

threats and opportunities

Question 11

Structure- Conduct- Performance (SCP) Model

Answer 11

theoretical framework to describe conditions under which competition in an industry would not develop

Question 12

the SCP model focuses on the ________ firm

Answer 12

individual

Question 13

environmental threat

Answer 13

any individual, group, or organization outside a firm that seeks to reduce the level of that firm’s performance

Question 14

the 5 common environmental threats

Answer 14

new competition
competition among existing competitors
superior or low-cost substitutes
supplier leverage
buyer's influence

Question 15

new competitors

Answer 15

firms recently starting to operate or beginning operations soon

Question 16

3 types of barriers to entry

Answer 16

economies of scale
product differentiation
cost advantages independent of scale

Question 17

economies of scale

Answer 17

when costs fall due to its volume of production

Question 18

product differentiation

Answer 18

incumbent firms possess brand identification and customer loyalty that new competitors may not

Question 19

cost advantages independent of scale (5)

Answer 19

proprietary technology
managerial know-how (knowledge)
favorable access to raw materials
learning-curve cost advantages
government policy

Question 20

4 generic industry structures

Answer 20

fragmented
emerging
mature
declining

Question 21

fragmented industries

Answer 21

where a large number of small/medium-sized firms operate and no small set of firms has dominant market share or creates dominant technologies

Question 22

emerging industries

Answer 22

newly created or newly re-created industries formed by technological innovations
changes in demand
emergence of new customer needs, etc.

Question 23

emerging strategy has the opportunity of

Answer 23

first mover advantage

Question 24

first mover advantage can arise from (3)

Answer 24

technological leadership strategy
preemption of strategically valuable assets
creation of customer-switching costs

Question 25

mature industries

Answer 25

slowing growth in total industry demand
development of experienced repeat customers
slowdown in increases of production capacity
slowdown in intro of new products/services
an increase in the amount of international competition
overall reduction in a firm’s profitability

Question 26

declining industries

Answer 26

has experienced an absolute decline in unit sales over a sustained period of time

Question 27

strategic opportunities of a declining industry

Answer 27

leadership
niche
harvest
divestment