The External Environment

Question 1

Define opportunities

Answer 1

External conditions potentially beneficial to the firm; has a positive connotation

Question 2

Define threats

Answer 2

External conditions potentially harmful to the firm; has a negative connotation

Question 3

Why are opportunities and threats sometimes ambiguous?

Answer 3

Conditions can be opportunities for some and threats for others, depending on the firm’s strategy and behavior.

Question 4

List dimensions in the broader society that influence industries and the firms within it

Answer 4

1. Economic
2. Sociocultural
3. Global (trade barriers, foreign markets)
4. Technological (AI, digitization)
5. Political/Legal
6. Demographic

Question 5

Describe the Environmental Hierarchy

Answer 5

1. Industries exist within the general environment
2. Strategic groups exist within industries
3. The general environment, industries, and strategic groups all influence one another
4. They also influence and are influenced by firms and their managers

Question 6

Name the forces as they impact an attractive or unattractive industry

Answer 6

1. Suppliers and buyers have weak (strong) positions
2. High (low) entry barriers
3. Moderate (intense) rivalry among competitors
4. Few (many) threats from substitute products

Question 7

Define strategic groups

Answer 7

Firms using similar strategies, perhaps to appeal to similar customers bases.

Question 8

Is competition within strategic groups stronger or weaker than competition among firms in different strategic groups?

Answer 8

Stronger/greater

Question 9

Identifying strategic groups can simplify competitor analysis (True / False)

Answer 9

True

Question 10

Name examples of strategic dimensions

Answer 10

1. Product Quality
2. Product categories
3. Pricing policies
4. Technological leadership
5. Distribution channels
6. Customer service`