Chapter 02

Chapter 02 - KnowledgeObjectives Explain the importance of...

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12–1 Knowledge Objectives Ø Explain the importance of analyzing and understanding the firm’s external environment. Ø Define and describe the general environment and the industry environment. Ø Discuss the four activities of the external environmental analysis process. Ø Name & describe the general environment’s six segments. Ø Identify the five competitive forces and explain how they determine an industry’s profit potential.
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22–2 The External Environmen Figure 2.1
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32–3 Analysis of the External Environments General environment Ø Focused on the future and includes dimensions in the broader society (broad context) Industry environment Ø Focused on factors and conditions directly influencing a firm’s profitability within an industry Competitor environment Ø Focused on predicting the dynamics of competitors’ actions, responses and intentions
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42–4 Opportunities and Threats Opportunity Ø A condition in the general environment that, if exploited, helps a company achieve strategic competitiveness Threat Ø A condition in the general environment that may hinder a company’s efforts to achieve strategic competitiveness
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52–5 External Environmental Analysis A continuous process which includes Ø Scanning for early signals of potential changes and trends in the general environment Ø Monitoring changes to see if a trend emerges from among those spotted by scanning Ø Forecasting projections of anticipated outcomes based on monitored changes and trends Ø Assessing the timing and significance of changes and trends on the strategic management of the firm
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62–6 Industry Environment Industry Defined Ø A group of firms producing products (that are
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Chapter 02 - KnowledgeObjectives Explain the importance of...

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