Unit 3

Everything outside a firm's control that influences its decisions and performance. Think of it as the outer layer surrounding any specific business.

The overall socio-economic system a company operates within. It impacts all companies similarly.

The specific industry a company belongs to. It involves direct competition and interactions.

Favorable external factors that can help a firm achieve success. Think of them as opportunities for growth.

External factors that hinder a firm's operations or pose risks to its performance. Think of them as problems to overcome.

The purpose is to identify variables impacting a firm's operations from two perspectives: The general political, economic, and social system and the specific location's features.

A framework that explains why some countries are more competitive than others and why certain industries within countries excel. It considers factors like the nation's resources, infrastructure, and business culture.

Understanding how the country and the specific industry within it influences a firm's competitive advantage. It helps analyze if a company can compete better by being in specific locations.

The specific industry in which a firm competes, such as the automotive industry or the technology industry.

The specific characteristics of a firm's location, such as its proximity to suppliers, customers, and other businesses.

A geographic concentration of businesses, institutions, and related economic activities.

The benefit a firm gains from its location within an industrial district.

Increased productivity resulting from easier access to resources and expertise within an industrial district.

Enhanced innovation stemming from proximity to research institutions and collaboration within an industrial district.

The ability to identify and respond to new customer needs and technology trends more quickly.

A group of companies that use similar operating processes or raw materials to produce related products. This focuses on the supply side of a market.

A group of companies that produce products that customers see as interchangeable, catering to similar needs. This looks at the demand side.

A business that focuses on a specific set of customer groups and functions it wants to serve within a broader industry.

The full range of companies that offer similar products or services to the same group of customers. This looks at the demand side of a market.

A series of companies within a specific industry, using a common technology to serve all customer groups and functions.

The environment a firm needs to analyze and understand. It includes competitors, customers, and suppliers.

The concept of market is more useful for analyzing competition because it focuses on customer needs and competitors.

Suppliers, when included in the competitive environment analysis, provide a complete view of a firm's external landscape.

The strength of competition among existing companies in an industry. It measures how aggressively these companies fight for market share.

Industry analysis that helps understand the attractiveness of a sector by studying how firms compete, like a chess game with different strategies.

A tool to analyze industry attractiveness by identifying five forces that shape competition: rivalry, new entrants, substitutes, suppliers, and buyers.

Companies with similar products or services competing for the same customers, such as fast-food chains.

The potential for new companies to enter an industry, affecting existing players' competition.

Products or services that can fulfill the same need as those offered in an industry, threatening market share.

The bargaining power of suppliers over companies in an industry, influencing input costs and potential competition.

The bargaining power of buyers over companies in an industry, impacting pricing and market dynamics.

An industry where the rate of change and intensity is rapid and dynamic. It becomes complex and unpredictable due to evolving competitors and shifting structures.

The process of identifying segments within an industry where competition plays out in a specific way. Think of it as breaking down a big industry into smaller, focused areas.

Groups of firms in an industry that employ similar strategic approaches, like product line, pricing, or customer service. Think of them as 'gangs' with similar tactics.

A visual representation of strategic groups within an industry, where each group is plotted based on two key dimensions. Think of it as a map showing where each competitor stands.

The analysis of strategic groups can help identify and understand the dynamics of competition between direct rivals more effectively than using a broad industry-level approach. Think of it as understanding a fight within a specific neighborhood, rather than the whole city.

Demand-side variables in industry segmentation include characteristics of products (quality, price) or customers (location, lifestyle). This helps understand who buys what.

Traditional segmentation uses demand variables like product features and customer characteristics. Think of it as classifying customers based on what they buy or who they are.

The degree to which a company can influence the terms of a transaction, often due to its strong position within the market.

This factor refers to the concentration of companies in a specific industry. If there are many competitors, the bargaining power of suppliers or buyers is reduced.

This factor examines the importance of the products or services a customer purchases to its overall costs. If the purchase represents a large portion of a customer's expenses, their bargaining power is higher.

This factor assesses the ability of a supplier to differentiate its products or services from its competitors. If the products are unique or highly specialized, the supplier has greater bargaining power.

This factor analyzes the ability of a company to move up or down the supply chain. If a buyer can produce its own inputs or a supplier can sell directly to consumers, their bargaining power is increased.

This factor examines the impact of the product or service on the buyer´s quality of products or services. If the purchased item is critical for the buyer´s production process, the supplier holds more bargaining power.

The model doesn't account for changes in the competitive landscape, which could impact the industry's attractiveness. This limitation should be considered when using the model.

The model primarily focuses on the industry structure, which is only one factor in determining a firm's performance. There are other important factors, such as the firm's resources and capabilities.