chapter 3

Question 1

PESTEL Framework

Answer 1

categorises and analyses an important set of internal and external factors (politic, economic, sociocultural, technology, ecological, legal)

Question 2

PESTEL: economic factors

Answer 2

firms external environment mostly macroenviroment

economy wide phenomena

Question 3

PESTEL: economic factors

levels of employment

Answer 3

the growth rate measures the change in the amount of goods and services produced by a nation’s economy

Question 4

PESTEL: economic factors

interest rates

Answer 4

interest rates are the amount creditors are paid for use of their money and the amount that debtors pay for the use (adjusted for inflation)
-> low interest rates costumers will buy more -> easy and cheap to borrow money-> then spend money stimulates environment

Question 5

PESTEL: economic factors

price stabilty

Answer 5

lack of change in price levels of goods and services

Question 6

PESTEL: sociolculture factors

Answer 6

capture a society’s culture norm and values

Question 6

PESTEL: sociolculture factors

Answer 6

capture a society’s culture norm and values

Question 7

PESTEL: technological factors

Answer 7

capture the application of knowledge to create new processes and products

Question 8

PESTEL: ecological factors

Answer 8

involve broad environmental issues such as the natural environment, global warming

Question 9

PESTEL: legal factors

Answer 9

laws regulations etc

Question 10

Industry effect

Answer 10

describes underlying economic structure of the industry. dertmind by entry and exit barriers, number and size of company, types of products and services offered

Question 11

firm effect

Answer 11

attribute firm performance directly to the actions of strategic leaders

Question 12

industry

Answer 12

a group of firms facing the same set of suppliers and buyers

Question 13

industrial analysis

Answer 13

provides more rigorous basis not only to identify an industry profit potential but also derive implications for one firms strategic position in the industry

Question 14

strategic positioning

Answer 14

ability to create value for the costumer while continuing the costs
-> competitive advantage when gap as wide as possible between V-C

Question 15

5 forces model

Answer 15

a framework that identifies five forces that determine the profit potential of an industry and shape firms competitive strategy

Question 16

Competition in the 5 forces model: threat of entry/ entry barriers

Answer 16

describes the risk of potential competitors entering the industry
entry barrier. how easily and firm can enter the industry-> economies of scale, network effects (value of product or service increases for individual user with the number of total users
switching cost: moving from one supplier to the next
capital requirements: ´price of entry ticket´

Question 17

5 forces model: the power of suppliers

Answer 17

powerful suppliers can raise price

Question 18

5 forces model: power of buyer

Answer 18

relates to the pressure an industry costumer can put not the producers margin by demanding lower price or higher quality

Question 19

5 forces model: threat of substitutes

Answer 19

the idea that producers or services available outside the given industry will come close to meeting the needs of current costumers. high threat reduces industry profit potential by limiting the price of the industry’s competitors can charge for their products and services

Question 20

5 forces model: rivalry among existing competitors

Answer 20

describes the intensity with which company within the industry jockey for the market share and profitability
Competitive industry structure: refers to elements and features common to all industries.

Question 21

Fragment industry

Answer 21

consists of many small firms and tends to generate low profit

Question 22

entry choices

Answer 22

1. WHo? identify players
2. When? Entering timing stage of industry life cycle
3. how? leverage existing assets, establish niches
4. what? what type of entry; scale, commitment, product, or service
5. Where? space of entry; product positioning.

Question 23

Strategic group

Answer 23

the set of companies that pursue similar strategy within a specific industry

Question 24

strategic model

Answer 24

a framework that explains differences in firm performance within the sam indursy

Question 25

mobility barriers

Answer 25

are industry specific factory that seperate one group from the other

Question 26

implications for strategic leader

Answer 26

fours steps:

1. define the relevant industry
2. identify the key players in each of the five forces and try to group them into categories
3. determine the underlying drivers of each force
4. assess the overall industry structure

Question 27

co-opetition

Answer 27

is cooperation by competitors to achieve strategic objective