Skip to main contentHomework: External Environment Assignment

Based on the strategic group map in Illustration Capsule 3.2, which pizza chains are Hungry Howie's closest competitors?

Cici's and Sbarro Firms in the same strategic group are the closest rivals.

With which strategic group does California Pizza Kitchen compete the least, according to this map?

Domino's Companies in strategic groups that are far apart on the map hardly compete at all.

The character and complexities of competitive forces are rarely the same from one industry to another and must be thoroughly understood to answer such questions as: "Where are we now?" Michael Porter's Five Forces Competitive Model is the most widely used tool in business today in determining the competitive intensity and therefore attractiveness of a particular industry. This model, as depicted in Figure 3.3, holds that competitive forces affecting industry attractiveness go beyond rivalry among competing sellers and include pressures stemming from four coexisting sources. The five competitive forces affecting industry attractiveness are listed below: New Entrants =

High capital needs; Extremely low switching costs; No proprietary products or services; Little or no profit the first few years; Likelihood of retaliation strong; Consumer preference for well-known brands

The character and complexities of competitive forces are rarely the same from one industry to another and must be thoroughly understood to answer such questions as: "Where are we now?" Michael Porter's Five Forces Competitive Model is the most widely used tool in business today in determining the competitive intensity and therefore attractiveness of a particular industry. This model, as depicted in Figure 3.3, holds that competitive forces affecting industry attractiveness go beyond rivalry among competing sellers and include pressures stemming from four coexisting sources. The five competitive forces affecting industry attractiveness are listed below: Suppliers =

Limited number of manufacturers; Standardized products; High capital requirements; Long-term contracts; Limited differentiation; High switching costs; Low bargaining power

The character and complexities of competitive forces are rarely the same from one industry to another and must be thoroughly understood to answer such questions as: "Where are we now?" Michael Porter's Five Forces Competitive Model is the most widely used tool in business today in determining the competitive intensity and therefore attractiveness of a particular industry. This model, as depicted in Figure 3.3, holds that competitive forces affecting industry attractiveness go beyond rivalry among competing sellers and include pressures stemming from four coexisting sources. The five competitive forces affecting industry attractiveness are listed below: Buyers =

Low switching costs; Some loyalty; Low bargaining power; Price sensitivity

The character and complexities of competitive forces are rarely the same from one industry to another and must be thoroughly understood to answer such questions as: "Where are we now?" Michael Porter's Five Forces Competitive Model is the most widely used tool in business today in determining the competitive intensity and therefore attractiveness of a particular industry. This model, as depicted in Figure 3.3, holds that competitive forces affecting industry attractiveness go beyond rivalry among competing sellers and include pressures stemming from four coexisting sources. The five competitive forces affecting industry attractiveness are listed below: Competition (among Airlines) =

Mature stage business cycle; High fixed costs; Brand identities and amenities differ; Low switching costs

The character and complexities of competitive forces are rarely the same from one industry to another and must be thoroughly understood to answer such questions as: "Where are we now?" Michael Porter's Five Forces Competitive Model is the most widely used tool in business today in determining the competitive intensity and therefore attractiveness of a particular industry. This model, as depicted in Figure 3.3, holds that competitive forces affecting industry attractiveness go beyond rivalry among competing sellers and include pressures stemming from four coexisting sources. The five competitive forces affecting industry attractiveness are listed below: Substitutes =

Medium switching costs

The impact of baby boomers getting older on an industry would be classified in which PESTEL factor?

Socio-cultural Demographic changes in the population are generally categorized within this Socio-cultural factor of the PESTEL.

Why do you think that no pizza chains are positioned in the area above the Pizza Hut's strategic group?

The area above the Pizza Hut group may not be as attractive a market nor present the same profit potential. Some strategic groups are more favorably positioned than others because they confront weaker competitive forces and/or because they are more favorably impacted by industry driving forces. Not all positions on the map are equally attractive, depending upon the prevailing competitive pressures from the industry's five forces which may cause the profit potential of different strategic groups to vary, and industry driving forces may favor some strategic groups and hurt others. The area above the Pizza Hut group may not be as attractive a market nor present the same profit potential.

The kinds of factors that might be reviewed when considering the "Economic" aspect of the PESTEL include

changes in disposable income per capita. Changes in disposable income per capita is an economic—rather than a sociocultural, political, or technological—factor.

Effective use of the PESTEL framework can help us identify

emerging opportunities and threats within an industry. Correctly used, the PESTEL can help us understand emerging opportunities and threats within an industry.