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21 Cards in this Set
- Front
- Back
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External Scanning
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Surveillance of a firm’s external environment:
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why external scan
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Predict environmental changes to come
Detect changes already under way |
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External Monitoring allows us to track
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Environmental trends
Sequence of events Streams of activities |
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Environmental Forecasting allows us to make
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Plausible projections about
Direction of environmental change Scope of environmental change Speed of environmental change Intensity of environmental change |
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Managers need to analyze and be aware of a firms
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The general environment
The firm’s industry and competitive advantage |
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SWOT analysis
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Strengths
Weaknesses Opportunities Threats |
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Segments of the general environment include:
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Demographic
Sociocultural Legal/Political Technological Economic Global |
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General environmental trends and events are challenges because
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Little ability to predict them
Even less ability to control them Can vary across industries |
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Demographic Segment examples
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Aging population
Rising affluence Changes in ethnic composition Geographic distribution of population Greater disparities in income levels |
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Sociocultural Segment examples
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More women in the workforce
Increase in temporary workers Greater concern for fitness Greater concern for environment Postponement of family formation |
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Political/Legal Segment examples
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Tort reform
Americans with Disabilities Act (ADA) Repeal of Glass-Steagall Act in 1999 Deregulation of utility and other industries Increases in federally mandated minimum wages Taxation at local, state, federal levels Legislation on corporate governance reforms (Sarbanes-Oxley Act) |
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Technological Segment examples
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Genetic engineering
Emergence of Internet technology Computer-aided design/computer-aided manufacturing systems (CAD/CAM) Research in synthetic and exotic materials Pollution/global warming Miniaturization of computing technologies Wireless communication Nanotechnology |
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Economic Segment examples
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Interest rates
Unemployment Consumer Price index Trends in GDP Changes in stock market valuations |
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Global Segment examples
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Increasing global trade
Currency exchange rates Emergence of the Indian and Chinese economies Trade agreements among regional blocs (NAFTA, EU, ASEAN) Creation of WTO (decreasing tariffs/free trade in services) |
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Segments of the competitive environment include:
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Competitors
Customers Suppliers |
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How do Buyers threaten an industry
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Force down prices
Bargain for higher quality or more services Play competitors against each other |
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A buyer group is powerful when
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It is concentrated or purchases large volumes relative to seller sales
The products it purchases from the industry are standard or undifferentiated The buyer faces few switching costs It earns low profits The buyers pose a credible threat of backward integration The industry’s product is unimportant to the quality of the buyer’s products or services |
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Suppliers can exert power by
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threatening to raise prices or reduce the quality of purchased goods and services
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A supplier group will be powerful when
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The supplier group is dominated by a few companies and is more concentrated than the industry it sells to
The supplier group is not obliged to contend with substitute products for sale to the industry The industry is not an important customer of the supplier group |
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A supplier group will be powerful when (cont)
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The supplier’s product is an important input to the buyer’s business
The supplier group’s products are differentiated or it has built up switching costs for the buyer The supplier group poses a credible threat of forward integration |
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Substitutes limit the potential returns of an industry
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Placing a Ceiling on the prices that firms in that industry can profitably charge
affecting Price/performance ratio |
