Complete List of Terms and Definitions for Capstone Ch.3- Evaluating a Company's External Environment

Terms Definitions
PESTLE forces is a tool for assessing external environment beyond the industry in the macro-environment
Buyer SWITCHING COSTS for substitutes are low is a factor of Bargaining Power of Buyers is stronger
When there are ONLY A FEW SUPPLIERS of a specific input (airplane suppliers) Power of Suppliers is Stronger
Competitive capabilities are KSF
Changes in who buys the product and how they use it is a Common driving force
Need for economies of scale are Industry Dominant Economic Features
Special Product Attributes is a KSF
Declining demand or slow market growth causes Rivalry to be Stronger
When substitutes have COMPARABLE OR BETTER QUALITY AND PERFORMANCE competition from substitutes are stronger
Expertise in a particular technology is a Type of Industry KSF
Learning and experience effects are Industry Dominant Economic Feature
When incumbents are UNWILLING OR UNABLE TO CONTEST A NEWCOMER'S ENTRY efforts Threat of Entry is Stronger
Brand building skills are Type of Industry KSF
Strong network of wholesale distributors is a Type of Industry KSF
Buyer DEMAND IS WEAK or declining is a factor of Bargaining Power of Buyers is stronger
"Does the industry outlook offer good prospects for profitability?" is part of Assessing a company's industry and competitive environment
On what basis do buyers choose between brands? Question to ask in identifying industry KSFs
Degree of vertical integration are Industry Dominant Economic Features
Scale economies or experience curve benefits is a Type of Industry KSF
The NUMBER OF BUYERS is small is a factor of Bargaining Power of Buyers is stronger
Restricted access to distribution channels are Barriers to Entry
Competing sellers regularly launch fresh actions to boost market standing causes Rivalry to be Stronger
Scope of competitive rivalry are Industry Dominant Economic Features
Determine what _____ _____ are needed to prepare for impact of driving forces strategy changes
Components of the immediate industry and competitive environment are - suppliers
- substitute products
- buyers
- new entrants
- rival firms
Profiling key rivals involves gathering competitive intelligence about -thinking and leadership styles of top executives
- Identifying trends in the timing of new product launches and marketing promotions
- Considering which rivals have the motivation and capability to make major strategy changes
Number of rivals increases causes Rivalry to be Stronger
Changes in long-term industry growth rate is a Common driving force
"What are the Key factors of competitive success?" is part of Assessing a company's industry and competitive environment
"What forces are driving industry change?" is part of Assessing a company's industry and competitive environment
Porter's 5 forces is a tool for assessing external environment in an industry
When some suppliers threaten to INTEGRATE FORWARD Power of Suppliers is Stronger
What resources are needed to compete successfully? Question to ask in identifying industry KSFs
Necessary resources, competencies, and capabilities are KSFs
When End-users have LOW SWITCHING COSTS competition from substitutes are stronger
Entry or exit of major firms is a Common driving force
The components of the Macroenvironment are - General Economic Conditions
- Legislation and regulations
- Population demographics
- Societal values and lifestyles
- technology
When supplier provides a DIFFERENTIATED INPUT that enhances the quality or performance of seller's products Power of Suppliers is Stronger
Specific intangible assests are KSF
In assessing whether an industry and competitive environment is attractive or unattractive for earning good profits, analyze -The industrys growth potential
- The intensisty of competition
- Whether the impacts of the driving forces are positive or negative
- The company's competitive postition in the industry relative to rivals
- How well the company performs the industry's KSFs
Driving forces are powerful EXTERNAL influences acting to reshape the industry landscape and alter competitive conditions
When the POOL OF ENTRY CANDIDATES IS LARGE (Landscaping) Threat of Entry is Stronger
Restrictive regulatory policies are Barriers to Entry
When industry members incur HIGH SWITCHING COSTS Power of Suppliers is Stronger
Importance of economies of scale are Barriers to Entry
When ENTRY BARRIERS ARE LOW Threat of Entry is Stronger
An industry's competitive environment tends to be attractive from a profit-making standpoint when -rivalry is oderate
- entry barriers are high and no firm is likely to enter
- Good substitutes do not exist
- Suppliers and customers are in a weak bargaining position
The nature of competitive forces differs across industries
High capacity utilization is a Type of Industry KSF
Product innovation is a Common driving force
Experience/learning curve disadvantages are Barriers to Entry
Number of Rivals are Industry Dominant Economic Features
When answering the question "Where are we now?", there are 2 situational considerations: - company's external industry and competitive environment
- Company's own market position and competitiveness (competencies, capabilities, resource strengths and weaknesses, cost position, culture, and strength of leadership
Pace of technological change are Industry Dominant Economic Features
he products or services offered by rivals are standardized or weakly differentiated causes Rivalry to be Stronger
Changes in the reshaping of the industry competititve conditions likely take place withing next 1-3 years
In assessing the impact of driving forces on industry attractiveness, ask the following - Are the driving forces causing demand for product to increase or decrease?
- Are the driving forces acting to make competition more or less intense?
- Will the driving forces lead to higher or lower industry profitability?
Industry conditions tempt rivals use price cuts or other competitive weapons to boost volume causes Rivalry to be Stronger
Tools for assessing attractiveness in an industry - Hall's Competitiveness Model
- Weights by scores and sum
When SUBSTITUTES ARE ATTRACTIVELY PRICED competition from substitutes are stronger
"What are the nature and strength of competitive forces?" is part of Assessing a company's industry and competitive environment
Competitive forces go beyond rivalry and include four coexisting forces
What shortcomings are almost certain to put a company at a competitive advantage? Question to ask in identifying industry KSFs
One or more industry rivals becomes dissatisfied with their market standing causes Rivalry to be Stronger
No more than ___- ____ factors qualify as real drivers of change 3-4
"What market positions do industry rivals occupy?" is part of Assessing a company's industry and competitive environment
Tariffs and international trade restrictions are Barriers to Entry
Outsiders have recently acquired weak firms in the industry and are trying to turn them into major market contenders causes Rivalry to be Stronger
"What are the industry's business and economic traits?" is part of Assessing a company's industry and competitive environment
What can be learned from Strategic Group maps - Driving forces and competitive pressures often favor some strategic groups and hurt others
- Competitive Pressures may cause the profit potential of different strategic groups to vary
Strong brand preferences and high degress of customer loyalty are Barriers to Entry
High captial requirements are Barriers to Entry
Technological change is a Common driving force
"What strategic moves are rivals likely to make next?" is part of Assessing a company's industry and competitive environment
When there are MANY GOOD SUBSTITUES that are readily available competition from substitutes are stronger
Buyers threaten to INTEGRATE BACKWARDS is a factor of Bargaining Power of Buyers is stronger
Increasing globalization of the industry is a Common driving force
PESTLE forces include - Political
- Economic
- Socio-cultural
- Technological
- Legal
- Environmental
When needed INPUTS ARE SHORT IN SUPPLY Power of Suppliers is Stronger
What are the tools for assessing External Environment -Porter's 5 forces
- PESTLE forces
BUYERS ARE WELL-INFORMED about seller's products, prices, and costs is a factor of Bargaining Power of Buyers is stronger
Buyer costs to switch brands are low causes Rivalry to be Stronger
An industry's competitive environment tends to be unattractive from a profit-making standpoint when -rivalry is stong
- entry barriers are low and competitors are likely to enter
- good substitutes exist
- suppliers and customers are in strong bargaining postitions
Convenient retail locations are Type of Industry KSF
Key Success Factors (KSFs) are competitive factors most affecting ever industry member's ability to prosper
Market Size and Growth are Industry Dominant Economic Features
BUYERS ARE LARGE an can demand concessions is a factor of Bargaining Power of Buyers is stronger
When industry GROWTH IS RAPID AND PROFIT POTENTIAL IS HIGH Threat of Entry is Stronger