Chapter 4 - The external environment Flashcards
Analysing the Operational Environment
What are the basic steps in a common business model for organizations?
- Source raw material or knowledge. 2. Create value with the raw material or knowledge. 3. Deliver the product or service to a customer.
Analysing the Operational Environment
What factors enable a successful supply chain model?
Planning (strategic end goal) and Commercial reality (profitability and funding security).
Analysing the Operational Environment
Name the three categories of risks faced by businesses daily.
- Environmental influences, 2. Technological influences, 3. Human influences.
Analysing the Operational Environment
What is “strategic fit” in the context of business environments?
It’s the alignment between an organization’s internal resources, capabilities, and activities with the demands of the external environment.
Analysing the Operational Environment
Define the “internal environment” of an organization.
Everything within the organization that managers have greater control over.
Analysing the Operational Environment
What is the “micro environment” and what does it include?
It consists of competitors, markets, customers, and suppliers. Managers can’t control it but can influence it.
Analysing the Operational Environment
Describe the “macro environment.”
It is the general environment outside of an organization that includes factors beyond managerial control or influence.
Strategic Analysis Tools
What is PESTEL analysis?
A framework to analyze Political, Economic, Sociocultural, Technological, Environmental, and Legal factors to anticipate future opportunities and threats.
Strategic Analysis Tools
What are two key factors managers analyze in the “far” environment?
Changeability (likelihood of change) and Predictability (anticipation of changes).
Strategic Analysis Tools
What are the three types of forecasting?
- Single point forecasting, 2. Range forecasting, 3. Alternative futures forecasting
Strategic Analysis Tools
What is scenario planning?
The process of creating possible future scenarios to help managers develop strategic responses to different potential outcomes.
Industry and Competition
Name the five forces in Porter’s Five Forces model.
- Threat of new entrants, 2. Threat of substitutes, 3. Bargaining power of buyers, 4. Bargaining power of suppliers, 5. Competition and rivalry
Industry and Competition
What is the impact of a monopoly on competition?
It reduces competition as the industry is dominated by one firm.
Industry and Competition
List the stages of an industry’s life cycle.
- Introduction, 2. Growth, 3. Maturity, 4. Decline.
Industry and Competition
How does hyper competition affect a market?
It leads to intense price cuts and discounting, making it difficult to maintain a competitive advantage for long.
Analysing the operational
environment
What is market segmentation?
Market segmentation is the process of dividing a market into subgroups of customers with similar needs for targeted marketing. Examples include B2B vs. B2C, or segments based on age, lifestyle, and purchase patterns.
Analysing the operational
environment
What are strategic groups?
Strategic groups are clusters of organizations within an industry with similar strategies or characteristics, such as supermarkets, convenience stores, and corner shops in retail.
Analysing the operational
environment
Name three key dimensions of consumer and business markets according to Johnson et al.
1) Characteristics of people/organization, 2) Purchase or use patterns, and 3) User’s needs and preferences.
Behavioural forces and game theory
What is game theory in strategic planning?
Game theory involves predicting competitor reactions by putting oneself in their position, considering how they may interpret strategic moves as signals, or adjust their strategy in response.
Behavioural forces and game theory
List three key behavioural forces influencing strategic decisions.
1) The human psyche (ethics and morals), 2) Reliance on technology (trust in automated decisions), and 3) The impact of the media (demand for immediate responses).
