industry and competitive environments
external environment
resources and organizational capabilities
internal environment
macro-environment
encompasses the broad environmental context in which a firm is situated and is comprised of six principal components
PESTEL analysis
can be used to assess the strategic relevance of the six principal components of the macroenvironment
State of Competition
Where are we now? The dynamics of competition are not the same from on industry to another.
The Five-forces Model of Competition
Is the most powerful and widely used tool for assessing the strength of the competitive forces that affect an industry's attractiveness.
Cutthroat (Brutal)
Competitors engage in protracted price wars or habitually employ other aggressive tactics that are mutually destructive to profitability.
Fierce(Strong)
The battle for market share is so vigorous that the profit margins of most industry members are squeezed to bare-bones levels
Moderate(Normal)
The maneuvering among industry members, while lively and healthy, still allows most industry members to earn acceptable profits
Weak
Most industry members are satisfied with their sales growth and market share and rarely undertake offensives against their competitors.
Driving forces
are the major underlying causes of change in industry and competitive conditions. Some driving forces originate in the outer ring of the company's macro-environment but most originate in the company's more immediate industry and competitive environment.
Strategic group mapping
is a technique for displaying the different market or competitive positions that rival firms occupy in the industry.
A strategic group
is a cluster of industry rivals that have similar competitive approaches and market positions
• Key Success Factors (KSFs)
are those competitive factors that most affect the ability of all firms in an industry to prosper.
Specific product attributes Necessary resources, competencies, and capabilities Specific intangible assets Competitive capabilities
Of the following questions, which would not be used to assess a company's industry and competitive environment?
What forces are driving industry change?
What kinds of competitive forces are industry members facing, and how strong is each force?
Which financial objectives should be used to measure company performance?
Do industry characteristics offer sellers opportunities for growth and attractive profits?
Which financial objectives should be used to measure company performance?
A PESTEL analysis can be used to assess the strategic relevance of the components of a company's
competitive
environment.
internal environment.
macro-environment.
industry environment.
macro-environment.
Assessing a rival's assumptions entails which of the following?
considering assumptions about the industry in which the rival competes
considering its assumptions about itself
reviewing available information issued by the rival
revising the definition of "assumption" to make it broader
considering assumptions about the industry in which the rival competes
considering its assumptions about itself
reviewing available information issued by the rival
Buyers with strong bargaining power can limit the industry profitability by
demanding price concessions.
demanding better payment terms.
demanding additional features and services.
demanding high volume of product.
demanding price concessions.
demanding better payment terms.
demanding additional features and services.
When consumers view the products of two companies as _____________, the companies engage in competition.
substitutes
Which of the following strategic questions can be used to assess a company's industry and competitive environment?
What strategic moves are rivals likely to make next?
Does the industry outlook offer good prospects for profitability?
What are the key factors of competitive success?
What strategic moves should the company make to reduce overhead in the short term?
What strategic moves are rivals likely to make next?
Does the industry outlook offer good prospects for profitability?
What are the key factors of competitive success?
For a factor to be considered "relevant" to the macro-environment, it should be important enough to shape management's decisions regarding which of the following?
Adopting new technology
Long-term direction
Business model
Objectives
Long-term direction
Business model
Objectives
To sift through information and construct strategic profiles of rivals, some firms form a competitive ________ unit.
intelligence
Buyer bargaining power is strong when
buyers place high importance on brand reputation.
buyers make purchases in small quantities.
demand is weak.
the cost of switching to a competing brand is high.
demand is weak.
The competitive force of substitute products is strong when
substitutes are attractively priced.
acceptable substitutes are not available.
substitutes are
more highly priced relative to the performance they deliver.
end users face high costs when switching to substitutes.
substitutes are attractively priced.
Which of the following are factors in a company's
macro-environment?
.
technological factors
internal employee relations
economic conditions
regulatory factors
technological factors
economic conditions
regulatory factors
As the collective impact of the five competitive forces increases, the combined profitability of industry participants
grows substantially.
decreases.
stabilizes.
begins to equalize across a sector.
decreases.
Which of the following are strongly influenced by driving forces?
the route of transportation vehicles
the number of employees in a firm
the industry landscape
the competitive conditions
the industry landscape
the competitive conditions
Technological change, marketing innovation, and innovation in manufacturing processes are all types of industry driving _______
forces
The collective strength of the five forces can help determine
if companies in the industry can reasonably expect to earn decent profits.
the strengths and weaknesses of each company in the industry.
a broad view of the industry's macro-environment.
what specific strategy each industry participant should pursue.
if companies in the industry can reasonably expect to earn decent profits.
The best technique for identifying the market position of industry rivals is a
driving forces analysis.
strategic group map.
SWOT analysis.
five-forces analysis.
strategic group map
The first step in drawing a strategic group map is
draw circles around each strategic group that are proportional to the group's share of industry revenues.
plot firms on a two-variable map based on the strategic variables.
assign firms occupying the same map location to a common strategic group.
identify the variables based on strategic approaches used in the industry.
identify the variables based on strategic approaches used in the industry.
The most powerful industry change agents are called
five forces.
key success factors.
driving forces.
dominant economic characteristics.
driving forces.
According to Michael Porter, which of the following are likely indicators of a rival's strategic moves?
the rival's market share footprint
the rival's assumptions
the rival's objectives
the rival's capabilities
the rival's assumptions
the rival's objectives
the rival's capabilities
Which of the following are examples of industry driving forces?
changes in who buys the product and how they use it
product innovation
changes in currency valuation around the globe
increasing globalization
changes in who buys the product and how they use it
product innovation
increasing globalization
Which of following is NOT a likely key success factors?
strategy elements
competitive capabilities
rivals' assumptions
product attributes
rivals' assumptions
Which of the following factors can determine if a company has strong prospects for attractive profits?
the company's position compared to that of rivals
the number of employees per dollar of overhead
whether competition will grow stronger or weaker
the industry's growth potential
the company's position compared to that of rivals
whether competition will grow stronger or weaker
the industry's growth potential
A ______ is a cluster of industry rivals that have similar competitive approaches and market positions.
distribution channel
macro-environment
strategic group
market share indicator
strategic group
Which of the following are guidelines that should be followed in creating a strategic group map?
The sizes of the map circles should be proportional to the combined sales of firms in each strategic group.
Creating multiple maps should be considered if there are more than two good competitive variables.
The variables used as map axes should always be quantitative and continuous.
The two variables selected for the map axes should not be highly correlated.
The sizes of the map circles should be proportional to the combined sales of firms in each strategic group.
Creating multiple maps should be considered if there are more than two good competitive variables.
The two variables selected for the map axes should not be highly correlated.
When a company has good information about the strategic direction of key competitors, the company can do which of the following?
prepare defensive countermoves
exploit opportunities provided by the competitors' actions
craft an effective strategy of its own
file preemptive lawsuits against competitors
prepare defensive countermoves
exploit opportunities provided by the competitors' actions
craft an effective strategy of its own
The strategy elements that most affect industry members' ability to prosper in the marketplace are known as
key success factors.
driving forces.
dominant economic characteristics.
the "five forces."
key success factors.
Which of the following statements are true about evaluating an industry for profit potential?
A particular industry will be equally attractive or unattractive to all industry participants.
Some potential entrants to an industry may consider it attractive while others do not.
A company needs to analyze prevailing driving forces to determine if they will affect profitability favorably.
An industry's growth potential is an important factor in its profitability.
Some potential entrants to an industry may consider it attractive while others do not.
A company needs to analyze prevailing driving forces to determine if they will affect profitability favorably.
An industry's growth potential is an important factor in its profitability.
The best technique for identifying the market position of industry rivals is a
five-forces analysis.
SWOT analysis.
strategic group map.
driving forces
analysis.
...