Flashcards
Strategic Mngement- External Environment
Cards in this deck (6)
- 1A COMPANY'S MACRO-ENVIRONMENT... General economic conditions. Legislation and Regulations. Population demographics. Societal Values and lifestyles. Technology.A COMPANY'S MICRO-ENVIRONMENT...
Suppliers.
Buyers.
Substitute products.
New entrants.
Rival firms. - 2PESTLE FRAMEWORK... Political-- ..government policies, tax, foreign trade & government stability. Economic-- Business cycle, foreign exchange rates, GNP trends, inflation & unemployment. Social-- Demographics, cultural trends, income & distribution. Technological-- New technology discovery, automation & rate of obsoleteness. Legal-- Employment law, liability, safety standards & consumer law. Environmental-- Environmental protection, energy consumption & geographic location. *Not all environmental factors will affect all firms.INDUSTRY@S DOMINANT ECONOMIC TRAITS...
Market Size and Growth.
No. of Rivals.
Scope of competitive Rivalry.
Buyer needs and requirements.
Degree of Product Differentiation.
Product innovation.
Supply/Demand conditions.
Pace of technological change.
Economies of Scale. - 3PORTERS' 5 FORCES... Simple but powerful tool for understanding where power lies in a business situation. Helps you understand the strength of your current competitive position & strength of the position you are moving to. You can take fair advantage of a situation of strength, improve a situations weakness & avoid taking wrong steps,
- 4DRIVING FORCE ANALYSIS... Forces outside the firm that trigger a change in the strategy. Driving forces are the main underlying causes of changing industry and competitive conditions. Analysis has 2 steps; Identifying what the forces are & assessing the impact they will have on the industry.MOST COMMON DRIVING FORCES...
The Internet and new e-commerce oppurtunitiies and threats it breeds in the industry.
Increasing globalization of the industry.
Product innovation.
Changes in long-run industry growth rate.
Changes in who buys the products and how they use it.
Technological change.
Entry & exit of major firms.
Changes in cost & efficiency.
Regulatory influences and government policy changes.
Changes in societal attitudes, concerns and lifestyles. - 5STRATEGIC GROUP MAPPING... Technique for looking at your position in your sector, field or market. Reveals different competitive positions of industry rivals. Cluster of firms within an industry with similar competitive approaches & market positions. Number of groups within an industry depends upon dimensions used to define the groups.. HUNT 1972 coined the term while conducting an analysis in the appliance industry.KEY SUCCESS FACTORS...
Things that most affect an industry members ability to prosper in the marketplace.
All the outcomes that spell the difference between profit & loss and competitive success & failure.
All firms in industry must play close attention to them.
The rules that shape whether a company will be financially and competitively successful. - 6KSF's CONCERNS... Specific strategy elements. Product attributes. Resources. Competencies. Competitive capabilities that a company needs to be competitively successful.INDUSTRY ATTRACTIVENESS...
You need a clear understanding of the attractiveness of your industry and your company’s position within that industry.
Assessing whether an industry's competitive environment is attractive or unattractive for earning good profits.
A firm situated in an unattractive industry can still earn good profits.
Factors to consider-- Industry market size & growth potential.
Degree of risk & uncertainty.
Severity of problems facing an industry.
Does firm have sufficient resources to defend against unattractive industry forces.