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Analyzing the External Environment of the Firm in Strategic Management
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Analyzing the External Environment of the Firm in Strategic Management

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Questions and Answers

What does a SWOT analysis help identify?

  • Technological advancements
  • Economic conditions
  • Political factors
  • Internal strengths and weaknesses (correct)
  • Which of the following is a factor considered in PESTEL analysis?

  • Competition in the industry
  • Porter's Five Forces
  • Supply chain management
  • Sociocultural aspects (correct)
  • What does the General Environment encompass in business strategy?

  • Factors affecting firm strategy from within the organization
  • External factors with significant impact on strategy (correct)
  • Competitor analysis
  • Technological advancements only
  • Which tool is commonly used for predicting trends and events in the business environment?

    <p>PESTEL Analysis</p> Signup and view all the answers

    What is the purpose of environmental scanning in the context of analyzing the external environment of a firm?

    <p>To alert the organization to critical trends and events before competitors recognize them.</p> Signup and view all the answers

    Which process helps firms define and understand their industry as well as identify their rivals' strengths and weaknesses?

    <p>Competitive intelligence</p> Signup and view all the answers

    What aspect is involved in environmental forecasting as part of analyzing the external environment of a firm?

    <p>Developing plausible projections about the direction of environmental change.</p> Signup and view all the answers

    How does scenario analysis differ from environmental forecasting in analyzing the external environment?

    <p>It involves a more in-depth approach by drawing on multiple interests and disciplines.</p> Signup and view all the answers

    What are the major factors considered in a PESTEL analysis?

    <p>Political, Economic, Social, Technological, Environmental, Legal</p> Signup and view all the answers

    In Porter's Five Forces model, which force refers to the intensity of rivalry among competitors in an industry?

    <p>The Intensity of Rivalry Among Competitors in an Industry</p> Signup and view all the answers

    What does the Threat of New Entrants in Porter's Five Forces model refer to?

    <p>The possibility that established firms' profits may be affected by new competitors</p> Signup and view all the answers

    Which factor is not part of the PESTEL analysis framework?

    <p>Competition</p> Signup and view all the answers

    Study Notes

    SWOT Analysis

    • Helps identify Strengths, Weaknesses, Opportunities, and Threats of a firm

    PESTEL Analysis

    • Considers factors such as: • Political • Economic • Social • Technological • Environmental • Legal

    General Environment

    • Encompasses external factors that can affect a firm's business strategy

    Environmental Scanning

    • Identifies opportunities and threats in the external environment of a firm
    • Helps firms anticipate and respond to changes in the environment

    Industry Analysis

    • Helps firms define and understand their industry
    • Identifies rivals' strengths and weaknesses

    Environmental Forecasting

    • Involves predicting trends and events in the business environment
    • Uses tools such as scenario analysis

    Scenario Analysis

    • Differs from environmental forecasting in being a more detailed and specific prediction of future events
    • Uses "what-if" scenarios to anticipate potential outcomes

    Porter's Five Forces Model

    • Refers to the intensity of rivalry among competitors in an industry (Competitive Rivalry)
    • Threat of New Entrants refers to the likelihood of new firms entering the market
    • Forces include: • Competitive Rivalry • Threat of New Entrants • Bargaining Power of Suppliers • Bargaining Power of Buyers • Threat of Substitute Products/Services

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    Description

    Learn how to perform a situation/scenario audit and develop forecasts for business firms operating in unpredictable industries. Explore the importance of understanding and forecasting the business environment to create an environmentally aware organization.

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