Environmental Forecasting The development of plausible projections about the direction,
scope, speed, and intensity of environmental change.
Scenario Analysis Is an in-depth approach to environmental forecasting that involves
experts detailed assessments
3. The Bargaining Power of the Supplier: Can the suppliers force the firm to have lower
1. If a firm has only a few groups of suppliers: Suppliers selling to fragmented
industries influence prices, quality, and terms.
Supplier has more power
G. Relationship among elements and the general environment:
There is a relationship among all the elements that connects all A-F; i.e. Age affects computer
training, elderly housing, benefits packages, retirement age, and many more.
III. The Competitive E
B. Industry analysis a dynamic perspective: Not in your book.
The Five-Forces Analysis In order for industry analysis to be valuable, a company must
collect and evaluate a wide variety of information.
1. Managers must not always avoid low profit industrie
2. The Bargaining Power of the Buyer: Can the buyers force the firm to have lower profit?
(Strategy spotlight 2.7: tuition increase)
1. If a firm has a single buyer: If a large percentage of a suppliers sales are purchased
by a single buyer, the importanc
II. The General Environment: Focuses on factors that have dramatic affect on the firms
strategy. These are factors external to an industry, and usually beyond a firms control, which
affect a firms strategy.
C. Political / l
4. The Threat of the Substitute Products and Services:
The probability that firms product would be replaced by other products.
Substitutes limit the potential returns of an industry by placing a ceiling on the prices
that firms in that industry can prof
B. The Sociocultural Segment: Includes the values and beliefs and lifestyle. Social roles in
culture that change.
1. More women at work, more business clothes, cooking
2. More temp workers
3. Better life style (dual income)
4. Health and fitness
5. The Intensity of Rivalry Among Competitors in an Industry: How competitive is the
firms industry? Industry is more competitive:
1. When there are many firms: When there are many firms in an industry, the likelihood
of mavericks is great. Some firms bel
E. The Economic Segment: Characteristics of the economy, including national income and
monetary conditions. How does the economy affect all businesses? What are the economic-key
1. Interest rates: corporates power of borrowing / investing If i