LS LT 1 - Chapter 3 Essays

1. Rivalry among competing firms 2. Potential entry of new competitors 3. Potential development of substitute products 4. Bargaining power of suppliers 5. Bargaining power of consumers

According to Michael Porter, what are the five competitive forces that create vital opportunities and threats for organizations? Which force do you feel is most important in the computer industry today? Why?

Agree. Firms need an effective competitive intelligence (CI) program. The three basic missions of a CI program are 1) to provide a general understanding of an industry and its competitors, 2) to identify areas in which competitors are vulnerable and to assess the impact strategic actions would have on competitors and 3) to identify potential moves a competitor might make that would endanger a firm's position in the market. An effective CI program allows all areas of a firm to access consistent and verifiable information in making decisions. Marriott and Motorola, two U.S. companies that do a particularly good job of gathering competitive intelligence, agree that all the information you could wish for can be collected without resorting to unethical tactics.

Agree or disagree with and discuss the following statement: "Corporate intelligence is not corporate espionage because 95 percent of the information a company needs to make strategic decisions is available and accessible to the public."

The I/O approach to competitive advantage advocates that external factors are more important than internal factors in a firm achieving competitive advantage. Proponents of the I/O view contend that organizational performance will be primarily determined by industry forces, rather than the firm's internal functional decisions made. Effective integration of both external and internal factors is the key to securing and keeping a competitive advantage.

Discuss the I/O approach in relation to competitive advantage.

By identifying future occurrences that could have a major effect on the firm and by making reasonable assumptions about those factors, strategists can carry the strategic-management process forward. Assumptions are needed only for future trends and events that are most likely to have a significant effect on the company's business. Assumptions can serve as checkpoints on the validity of strategies. If future occurrences deviate significantly from assumptions, strategists know that corrective actions may be needed. Without reasonable assumptions, the strategy-formulation process could not proceed effectively. Firms that have the best information generally make the most accurate assumptions, which can lead to major competitive advantages.

Discuss the following statement: "Planning would be impossible without assumptions."

To perform an external audit, a company first must gather competitive intelligence and information about economic, social, cultural, demographic, environmental, political, governmental, legal and technological trends. Once information is gathered, it should be assimilated and evaluated. A meeting or series of meetings of managers is needed to collectively identify the most important opportunities and threats facing the firm. These key external factors should be listed on flip charts or a blackboard. A prioritized list of these factors could be obtained by requesting that all managers to rank the factors identified, from 1 for the most important opportunity/threat to 20 for the least important opportunity/threat.

Discuss the process of performing an external audit.

The Internet is changing the very nature of opportunities and threats by altering the life cycles of products, increasing the speed of distribution, creating new products and services, erasing limitations of traditional geographic markets and changing the historical trade-off between production standardization and flexibility. It is also altering economies of scale, changing entry barriers and redefining the relationship between industries and various suppliers, creditors, customers and competitors. An emerging consensus holds that technology management is one of the key responsibilities of strategists.

Explain how the Internet is changing businesses around the world.

1. Shift to a service economy in the USA 2. Availability of credit 3. Level of disposable income 4. Propensity of people to spend 5. Interest rates 6. Inflation rates 7. Gross domestic product trends 8. Consumption patterns 9. Unemployment trends 10. Value of the dollar in world markets 11. Import/export factors 12. Demand shifts for different goods and services 13. Income differences by region and consumer groups 14. Price fluctuations 15. Foreign countries' economic conditions 16. Monetary and fiscal policies 17. Stock market trends 18. Tax rate variation by country and state 19. European Economic Community (EEC) policies 20. Organization of Petroleum Exporting Countries (OPEC) policies

Identify five key economic variables that could represent major opportunities or threats to a bank in your town or city.

) list key external factors as identified in the external-audit process with a total of from 15 to 20 factors, including both opportunities and threats that affect the firm and its industry; 2) assign to each factor a weight that ranges from 0.0 (not important) to 1.0 (very important) - the sum of all weights assigned to the factors must equal 1.0; 3) assign a 1 to 4 rating to each key external factor to indicate how effectively the firm's current strategies respond to the factor, where 4 = the response is superior, 3 = the response is above average, 2 = the response is average, and 1 = the response is poor; 4) multiply each factor's weight by its rating to determine a weighted score; and 5) sum the weighted scores for each variable to determine the total weighted score for the organization.

List five steps that comprise an effective framework for conducting an EFE Matrix. Explain the details involved in performing any one of the steps.

Look at: 1. Economic 2. Social/Cultural 3. Political/legal 4. Technological 5. Competitive Example: 1. Tuition hike, wage increase 2. Opening to foreigners 3. Duterte Administration 4. Data Science Age 5. DLSU, UP offering courses

List three opportunities and three threats that could represent key factors facing your college or university.

1) economic forces, 2) social, cultural, demographic and environmental forces, 3) political, governmental and legal forces, 4) technological forces and 5) competitive forces. Examples of each are as follows: 1) level of disposable income, 2) immigration and emigration rates, 3) voter participation rates, 4) technological advancements, and 5) potential moves a competitor could make.

What are the five major types of external forces that should be examined as part of an external audit? Give an example of each type of force.

The Competitive Profile Matrix (CPM) identifies a firm's major competitors and its particular strengths and weaknesses in relation to a sample firm's strategic position. The weights and total weighted scores in both a CPM and EFE have the same meaning. However, critical success factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths and weaknesses. Differences between the CPM and EFE include: 1) The critical success factors in a CPM are broader. 2) The critical success factors in a CPM are not grouped into opportunities and threats as they are in an EFE. 3) In a CPM, the ratings and total weighted scores for rival firms can be compared to the sample firm.

What is a CPM and how is it different from a EFE Matrix?