External Environment Flashcards

1
Q

What is the external environment?

A

The factors beyond the control of the firm that influence its choice of direction and action, organizational structure, and internal processes

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2
Q

What is the firm’s environment comprised of?

A

Remote environment
Industry environment
Operating environment

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3
Q

What does the operating environment entail?

A
  1. competitors
    2.creditors
  2. customers
  3. labour
  4. suppliers
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4
Q

What does the industry environment entail?

A
  1. entry barriers
  2. supplier power
  3. buyer power
  4. substitute availability
  5. competitive rivalry
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5
Q

What does the environment entail?

A
  1. economic
  2. social
  3. political
  4. technological
  5. ecological
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6
Q

What is the remote environment?

A

Economic, social, political, technological, and ecological factors that originate beyond, and usually irrespective of, any single firm’s operating situation

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7
Q

What are some economic factors in the remote environment?

A
  1. Prime interest rates
  2. Inflation rates
  3. Trends in the growth of the gross national product
  4. Unemployment rates
  5. Globalization of the economy
  6. Outsourcing
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8
Q

What are some social factors in the remote environment?

A

Beliefs & Values
Attitudes & Opinions
Lifestyles

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9
Q

Where are social factors developed from?

A
  1. Cultural conditioning
  2. Ecological conditioning
  3. Demographic makeup
  4. Religion
  5. Education
  6. Ethnic conditioning.
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10
Q

What are three profound social changes of the remote environment?

A
  1. Entry of large numbers of women into the labor market
  2. Accelerating interest of consumers and employees in quality-of-life issues
  3. Shift in the age distribution of the population
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11
Q

What are some political factors in the remote environment?

A
  1. Fair-trade Decisions
  2. Antitrust Laws
  3. Tax Programs
  4. Minimum Wage Legislation
  5. Pollution and Pricing Policies
  6. Administrative jawboning
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12
Q

What are the two governmental functions that political activities has a signifcant impact on?

A
  1. Supplier function
  2. Customer function
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13
Q

What is technological forecasting?

A

The quasi-science of anticipating environmental and competitive changes and estimating their importance to an organization’s operations

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14
Q

What is eco-efficiency?

A

Company actions that produce more useful goods and services while continuously reducing resource consumption and pollution

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15
Q

Who propelled the industry environment?

A

Michel E Porter

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16
Q

How can the industry environment be defined?

A

The general conditions for competition that influence all businesses that provide similar products and services

17
Q

How do competitive forces shape strategy?

A
  1. The essence of policy formulation is coping with competition.
  2. Intense competition in an industry is neither coincidence nor bad luck.
  3. Competition in an industry is rooted in its underlying economics, and competitive forces exist that go well beyond the established combatants in a particular industry.
  4. The corporate policy analysts’ goal is to find a position in the industry
    where his or her company can best defend itself against these forces or can influence them in its favor
18
Q

What are some common barriers of entry in the industry environment?

A
  1. Economies of Scale
  2. Product Differentiation
  3. Capital Requirements
  4. Cost Disadvantages Independent of Size
  5. Access to Distribution Channels
  6. Government Policy
19
Q

What makes a supplier group powerful?

A
  1. It is dominated by a few companies and is more concentrated than the industry it sells to
  2. Its product is unique or at least differentiated, or if it has built-up switching costs
  3. It is not obliged to contend with other products for sale to the industry
  4. It poses a credible threat of integrating forward into the industry’s business
  5. The industry is not an important customer of the supplier group
20
Q

What makes a buyer group powerful?

A
  1. It is concentrated or purchased in large volumes
  2. The products it purchases from the industry are standard
  3. The products it purchases from the industry form a component of its product and represent a significant fraction of its cost
    It earns low profits
  4. The industry’s product is unimportant to the quality of the buyers’ products or services
  5. The industry’s product does not save the buyer money
  6. The buyers pose a credible threat of integrating backwards
21
Q

Intense rivalry in the industry environment occurs when?

A
  1. Competitors are numerous or are roughly equal
  2. Industry growth is slow, precipitating fights for market share that involve expansion
  3. The product or service lacks differentiation or switching costs
  4. Fixed costs are high or the product is perishable, creating strong temptation to cut prices
  5. Capacity normally is augmented in large increments
  6. Exit barriers are high
  7. Rivals are diverse in policy, origin, and personality
22
Q

What are some key questions to ask in internal analysis and competitive analysis

A
  1. What are the boundaries of the industry?
  2. What is the structure of the industry?
  3. Which firms are our competitors?
  4. What are the major determinants of competition?
23
Q

What is an industry?

A

An industry is a collection of firms that offer similar products or services

24
Q

What are structural attributes

A

Structural attributes are the enduring characteristics that give an industry its distinctive character

25
Q

What is concentration?

A

Concentration refers to the extent to which industry sales are dominated by only a few firms

26
Q

What are the barriers to entry?

A

Barriers to entry are the obstacles that a firm must overcome to enter an industry.

27
Q

The difficulty in defining industry boundaries stems from three sources, what are they?

A
  1. The evolution of industries over time creates new opportunities and threats
  2. Industry evolution creates industries within industries
  3. Industries are becoming global in scope
28
Q

What depict the fundamental structure trends that underlie an industry?

A

Power curves

29
Q

What is the operating environment?

A

Factors in the immediate competitive situation that affect a firm’s success in acquiring needed resources

30
Q

What is another name for operating environment?

A

competitive or task environment

31
Q

The operating environment Includes competitor positions and customer profiling based on which factors?

A

Geographic
Demographic
Psychographic
Buyer Behavior

32
Q

Access to personnel is affected by 4 factors, what are they?

A

Firm’s reputation as an employer
Local employment rates
Availability of people with the needed skills
Its relationship with labor unions.