External Chapter2
The Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis
Hitt, Ireland, and Hoskisson
3partsofexternalenvironment
Competitor environment (focus on competitors)
General environment (focus on future)
Industry environment (focus on industry profitability)
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OpportunitiesandThreats
Opportunity
A condition in the general environment that, if exploited, helps a company achieve strategic competitiveness A condition in the general environment that may hinder a companys efforts to achieve strategic competitiveness
Threat
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Externalenvironmentalanalysisprocess
Scanning Monitoring Forecasting Assessing
Identify early signals of environmental changes and trends Detect meaning through ongoing observations of environmental changes and trends Project anticipated outcomes based on monitored changes and trends Determine the timing and importance of environmental changes and trends for firms strategies and their management
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Theexternalenvironment
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Figure 2.1
Fiveforcesofcompetitionmodel
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Strategicgroups
Industries populated are with different strategic groups A strategic group is a collection of firms that follow similar strategies along similar dimensions Competitive rivalry is greater within a strategic group than it is between strategic groups
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Competitoranalysis
A competitor analysis
Informs the firm about the objectives, strategies, assumptions, and capabilities of competitors Examines complementors that sustain a competitors strategy and major networks or alliances in which competitors participate Attempts to identify and carefully monitor major actions taken by firms with performance below the industry norm
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CompetitorAnalysisComponents
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Competitiveintelligence
Different techniques are used to create competitor intelligence: the set of data, information, and knowledge that allows the firm to better understand its competitors and thereby predict their likely strategic and tactical actions Firms should use only legal and ethical practices to gather intelligence The Internet enhances firms capabilities to gather insights about competitors and their strategic intentions
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