ch. 4: external environment

power curves industry structure

___________ __________ depict the fundamental structural trends that underlie an industry. this is a new tool that helps strategic managers assess ____________ _____________ - the enduring characteristics that give an industry its distinctive character.

social factors demographic

___________ ___________ present in the external environment are beliefs and values, attitudes and opinions, and lifestyles. they are developed from cultural conditioning, ecological conditioning, ________________ makeup, religion, education, and ethnic conditioning.

intense rivalry slow

____________ ___________ occurs when competitors are numerous or are roughly equal. intense rivalry also occurs when industry growth is __________, precipitating fights for market share that involve expansion.

political factors, political supplier, customer

______________ ____________ would be how there are ____________ constraints on firms through: fair-trade decisions, antitrust laws, tax programs, minimum wage legislation, pollution and pricing policies, and administrative jawboning political activity has a significant impact on two governmental functions that influence the remote environment of firms: ______________ function and ______________ function.

technological factors technological forecasting

______________ ____________: more robotics in manufacturing, autonomous cars, drones, increased interconnectivity and high security in apps, innovative medical practices, etc. ______________ _______________ helps protect and improve the profitability of firms in growing industries.

competitor position ~firm's reputation as an employer ~local employment rates ~availability of people with the needed skills ~its relationships with labor unions.

______________ _____________ would be too look at and examine market share, breadth of product lines, effectiveness of sales distributions, price competitiveness, advertising, level of experience, etc. access to personnel (HR) is affected by 4 factors: what are they?

technological forecasting ecological factors, ecology

________________ _____________ is the quasi-science of anticipating environmental and competitive changes and estimating their importance to an organization's operations. in regards to ________________ ___________, ___________ refers to the relationships among human beings and other living things and the air, soil, and water that supports them.

operating environment competitive, task

________________ ______________ includes factors in the immediate competitive situation that affect a firm's success in acquiring needed resources. it is also called the _________________ or _________ environment.

concentration barriers to entry

_________________ refers to the extent to which industry sales are dominated by only a few firms. ____________ ____ __________ are the obstacles that a firm must overcome to enter an industry.

large volumes standard

a BUYER GROUP is powerful if: ~it is concentrated or purchases in __________ ____________ (can dictate a higher price). ~the products it purchases from the industry are _______________ (undifferentiated).

external environment remote environment, industry environment, and the operating environment comprise the firm's external environment.

the ___________ _____________ involves factors beyond the control of the firm that influence its choice of direction and action, organizational structure, and internal processes. the firm's external environment is comprised of three components. what are they?

five forces link

the cornerstone of Porter's work first appeared in the Harvard Business Review, in which he explains the _______ ___________ that shape competition in an industry. Porter's well-defined analytic framework helps strategic managers to _________ remote factors to their effects on a firm's operating environment.

evolution, within, global

the difficulty in defining industry boundaries stems from three sources: 1. the _____________ of industries over time creates new opportunities and threats. 2. industry evolution creates industries __________ industries. 3. industries are becoming __________ in scope.

large high diverse

~capacity normally is augmented in _________ increments. ~exit barriers are _________. ~rivals are ___________ in strategy, origin, and personality.

external elements uncertain

~emphasis on environment factors: differing ___________ ______________ affect different strategies at different times with varying lengths. only certainty is that the effect of the remote and operating environments will be ____________ until a strategy is implemented.

bad luck economics

~intense competition in an industry is neither coincidence or ______ _________. ~competition in an industry is rooted in its underlying ______________, and competitive forces exist that go well beyond the established combatants in a particular industry.

integrating forward important

~it poses a credible threat of _______________ ___________ into the industry's business (ex: more forward in supply chain to retailing). ~the industry is not an ________________ customer of the supplier group (don't care since the supplier has more power).

unique contend

~its product is _________ or at least differentiated, or if it has built-up switching costs. ~it is not obliged to ___________ with other products for sale to the industry (not much competition).

defend, influence five forces that drive industry competition are: competitive rivalry, supplier power, buyer power, threat of substitution, and threat of new entry.

~the corporate strategists' goal is to find a position in the industry where his or her company can best ___________ itself against these forces or can ______________ them in its favor. what are Porter's five forces that drive industry competition?

unimportant money backward

~the industry's product is ______________ to the quality of the buyers' products or services (the quality doesn't impact what you're selling). ~the industry's product doesn't save the buyer ____________. ~the buyer poses a credible threat of integrating ______________.

component low profits

~the products it purchases from the industry form a _________________ of its product and represent a significant fraction of its cost. ~it earns __________ __________ (incentivized to lower their costs).

eco-efficiency Michael E. Porter

_____-__________ involves company actions that product more useful goods and services while continuously reducing resource consumption and pollution. Harvard professor ______________ ____ ___________ propelled the concept of industry environment into the foreground of strategic thought and business planning.

leadership

absence of strong resources and psychological commitment to a proactive strategy effectively bars a firm from assuming a __________________ role in its environment.

industry structural attributes

an _____________ is a collection of firms that offer similar products or services. ________________ ______________ are the enduring characteristics that give an industry its distinctive character.

economic, social, political, technological, and ecological factors. economic factors *outsourcing = companies getting labor for cheap in China and Vietnam; getting somebody else to do something for you.

as review, what are the five factors included within the remote environment? _______________ ___________ include prime interest rates, inflation rates (CPI), trends in the growth of the gross national product, unemployment rates, globalization of the economy, and outsourcing.

substitute products reduce

by placing a ceiling on the price it can charge, _________________ ___________ or services limit the potential of an industry. substitutes not only limit profits in normal times but also _____________ the bonanza an industry can reap in boom times.

pollution biodiversity

ecological factors: ~threats to our life-supporting ecology caused principally by human activities in an industrial society are commonly referred to as ______________. ~loss of habitat and _______________. ~environmental legislation. ~eco-efficiency.

economies of scale, product differentiation, capital requirements, cost disadvantages independent of size, access to distribution channels, and government policy. concentrated

in regards to threat of entry, what are some common barriers to entry? a SUPPLIER GROUP is powerful if: ~it is dominated by a few companies and is more ___________________ than the industry it sells to.

lacks perishable

intense rivalry also occurs when: ~the product or service __________ differentiation or switching costs. ~fixed costs are high or the product is _______________, creating strong temptation to cut prices.

minimize environment

many managers, particularly in less powerful firms, ______________ long-term planning. instead, they allow managers to adapt to new pressures from the _________________.

improving high profits *example: substitutes for insulation in a house; substitutes for entertainment.

substitute products that deserve the most attention strategically are those that are: subject to trends _____________ their price-performance trade-off with the industry's product or produced by industries earning _________ ___________ (have leverage/ability to lower price to increase market share while still making money).

alerts predicting

technological forecasting ___________ strategic managers to impending challenges and promising opportunities. the key to beneficial forecasting of technological advancement lies in accurately _____________ future technological capabilities and their probable impacts.

industry environment competition

the __________ _____________ involves the general conditions for competition that influence all businesses that provide SIMILAR products and services. how competitive forces shape strategy: ~the essence of strategy formulation is coping with ________________.

remote environment *exhibit 1.4 gives great visual representation of the three components of the external environment.

the ___________ _______________ includes economic, social, political, technological, and ecological factors that originate beyond, and usually irrespective of, any single firm's operating situation. *review exhibit 4.1 in class notes!!

competitor positions, customer profiling suppliers, creditors, HRM (human resource management)

the operating environment includes ______________ ___________ and ______________ ___________ based on the following factors: geographic, demographic, psychographic, and buyer behavior. it also includes ____________, ____________, and _________.

women quality of life age distribution *cutting across the above three issues is concern for individual health.

three profound social changes: entry of large numbers of ___________ into labor market. accelerating interest of consumers and employees in ______________ ____ ________ issues. shift in the ________ ______________ of the population.

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?

when conducting industry analysis and competitive analysis, what are four key questions to ask?