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M1 Strategic Management > M1 Strategic Position Environment > Flashcards

M1 Strategic Position Environment Flashcards

1
Q

List the elements of the PESTEL model

A 
Political
Economic
Social
Technological
Environmental
Legal
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2
Q

Long lists can be generated through PESTEL analysis. How can management avoid being overwhelmed by detail?

A

They should identify KEY DRIVERS FOR CHANGE

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3
Q

With respect to PESTEL analysis what three concepts are useful for identifying key drivers for change?

A

Megatrends
Inflexion Points
Weak Signals

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4
Q

XXX are large-scale social economic political ecological or technological changes that are typically slow to form but which influence many other activities and views.

A

Megatrends

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5
Q

XXX are moments when trends shift in direction.

A

Inflexion points

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6
Q

XXX are advanced signs of future trends and are helpful in identifying inflexion points.

A

Weak signals

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7
Q

What type of analysis allows management to avoid focussing on a single view of environmental factors?

A

Scenario analysis

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8
Q

What are the five basic steps of scenario analysis?

A 
Define scenario scope
Identify key drivers for change
Develop scenario stories
Identify impacts of alternative scenarios
Establish early warning systems
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9
Q

When we talk about defining scenario scope what do we mean by ‘scope’?

A

The subject of the scenario analysis and the time span

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10
Q

When identifying the key drivers for change what are the three relevant criteria?

A

High impact
High uncertainty
High mutual independence

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11
Q

When identifying scenario impacts what two essential actions should the organisation perform for each scenario?

A

Robustness checks

Contingency plans

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12
Q

With respect to scenario analysis establishing early warning systems means identify key XXX

A

Indicators

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13
Q

With respect to the number of scenarios what should be avoided in scenario analysis?

A

Three scenarios - this encourages management to settle for a median solution

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14
Q

An XXX is a group of firms producing products and services that are essentially the same.

A

Industry

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15
Q

An industry is?

A

A group of firms producing products and services that are essentially the same

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16
Q

Industries may also be described as xxx - especially in the public sector.

A

Sectors

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17
Q

A xxx is a group of customers for specific products or services that are essentially the same.

A

Market

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18
Q

A market is?

A

A group of customers for specific products or services that are essentially the same

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19
Q

What is the best known model for industry analysis?

A

Porter’s Five Forces Model

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20
Q

What are the five competitive forces described by the Five Forces Model?

A 
Threat of entry
Threat of substitutes
Power of buyers
Power of suppliers
Extent of industry rivalry
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21
Q

If the five competitive forces are high the industry will be seen as attractive/unattractive to compete in.

A

Unattractive

22
Q

Why would high competition discourage potential entrants into an industry

A

Low profitability

23
Q

Within an industry xxx xxx are organisations with similar products or services aimed at the same customer group

A

Competitive rivals

24
Q

What five factors define the extent of rivalry in an industry?

A 
Competitor balance
Industry growth rate
High fixed costs
High exit barriers
Low differentiation
25
Q

In terms of competitor balance what would present a danger of intensely rivalrous behaviour?

A

Competitors of roughly equal size

26
Q

In terms of competitor balance under what circumstances would we expect to see reduced industry rivalry?

A

Where there are one or two dominant organisations

27
Q

In terms of industry growth rates under what circumstances - and why - would we expect to see higher levels of industry rivalry?

A

Low growth rates - because organisation growth will be at expense of rivals

28
Q

Why would industries with high fixed costs tend to be more rivalrous?

A

High investment requirements mean companies seek to spread costs by increasing volume. This is typically done through cutting prices.

29
Q

Why would high exit barriers tend to increase industry rivalry?

A

In declining industries excess capacity persists and incumbents fight to maintain market share.

30
Q

Why is industry rivalry increased in an industry characterised by low differentiation?

A

There is little to stop customers switching between competitors. Only way to compete is on price.

31
Q

With respect to the ‘threat of entry’ force - what are the five key barriers to entry into an industry?

A 
Scale and experience
Access to supply or distribution channels
Expected retaliation
Legislation or government action
Differentiation
32
Q

xxx are products or services that offer a similar benefit to an industry’s products or services - but have a different nature.

A

Substitutes

33
Q

Substitutes are?

A

Products or services that offer a similar benefit to an industry’s products or services but have a different nature.

34
Q

List three examples of substitutes.

A

Aluminium and steel
Tablets and laptops
Charities and public services

35
Q

When considering the significance of subsititutes as a competitive force what two points should be borne in mind?

A

Price/performance ratio

Extra-industry effects

36
Q

Under what three conditions is buyer power likely to be high?

A

Concentrated buyers
Low switching costs
Buyer competition threat

37
Q

In the Five Forces Model from what should BUYERS be carefully distinguished?

A

Ultimate consumers

38
Q

Under what three conditions is supplier power likely to be high?

A

Concentrated suppliers
High switching costs
Supplier competition threat

39
Q

Five forces analysis allows us to identify four main types of industry structure. What are they?

A

Monopolistic
Oligopolistic
Hypercompetitive
Perfectly competitive

40
Q

In terms of the Five Forces what are the key characteristics of a monopoly?

A 
Low industry rivalry
Low threat of entry
Low supplier power
Low buyer power
Potentially low substitution threat
41
Q

In terms of the Five Forces what are the key characteristics of an oligopolistic industry?

A

Limited industry rivalry
Low supplier power
Low buyer power

42
Q

In terms of the Five Forces what are the key characteristics of a hypercompetitive industry?

A

High industry rivalry

43
Q

In terms of the Five Forces what are the key characteristics of perfect competition?

A

High industry rivalry
High threat of entry
High buyer power

44
Q

When considering the implications of Five Forces analysis what three questions should the analyst ask?

A

Which industries to enter?
What influence can be exerted?
How are competitors differently affected?

45
Q

What are the five stages of the industry life cycle?

A 
Development
Growth
Shake-out
Maturity
Decline
46
Q

Industry lifecycle - what are typical five forces in developmental stage?

A

High differentiation

High innovation

47
Q

Industry lifecycle - what are typical five forces in growth stage?

A

High growth
Weak buyers
Low entry barriers

48
Q

Industry lifecycle - what are typical five forces in shake-out stage?

A

Slower growth

Some exits

49
Q

Industry lifecycle - what are typical five forces in maturity stage?

A

Low growth
Standard products
Higher entry barriers

50
Q

Industry lifecycle - what are typical five forces in decline stage?

A

Many exits

Price competition

M1 Strategic Management (2 decks)

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