S4: Industry & Competitive analysis Flashcards
1
Q
What is the external environment?
A
all the outside factors that affect the business that are beyond the firm’s control
2
Q
Why is the external environment important?
A
- identify market opportunities and threats
- able to choose which strategic actions help achieve above-average returns
3
Q
What is an industry?
A
a group of firms producing products that are close substitutes for each other
4
Q
Why is the industry environment analysis important?
A
- helps understand key competitive forces that shape the competition
- identify key success factors
- predict future industrial profitability
- find strategy
5
Q
What are the forces in Porter’s Five Forces model?
A
- Competitors: degree of rivalry
- Suppliers: bargaining position
- Buyers: bargaining position
- Potential entrants: threat of new entry
- Substitutes: threat from substitute products/services
6
Q
What are some factors that increase rivalry? (6)
A
- numerous or equally balanced competitors
- slow industry growth
- high fixed costs or high storage costs
- lack of differentiation or low switching costs
- high strategic barriers
- high exit barriers
7
Q
How to reduce a substitute product’s attractiveness? (3)
A
- improve your products’ quality
- improve your service after sale
- improve products’ location
8
Q
What are 3 additional forces to Porter’s 5 forces?
A
- Complementary organizations (businesses that offer products that complement your activities -> ex: hardware and software)
- Social forces (legal/regulatory environment + social trends that affect your business)
- New strategies (new ways of creating/selling products that your competitors are introducing)
