Environmental Scanning and Industry Analysis: Module 2
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Environmental Scanning and Industry Analysis: Module 2

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Questions and Answers

What aspect of the organization do economic conditions like interest rates, inflation, and unemployment primarily impact?

  • Financial performance (correct)
  • Political stability
  • Ecological issues
  • Technological operations

    • In Michael Porter's approach to industry analysis, what does the intensity of competition within an industry depend on?

  • Political regulations
  • Technological advances
  • Basic competitive forces (correct)
  • Threat of New Entrants

    • What do new entrants bring to an industry that makes them threats to established corporations?

  • Interest in political stability
  • Desire to gain market share and substantial resources (correct)
  • Lack of resources
  • Reduced market share

    • Which element of the task environment involves evaluating the impact of environmental issues such as climate change and natural disasters?

    <p>Ecological factors</p> Signup and view all the answers

    Which individual is considered an authority on competitive strategy?

    <p>Michael Porter</p> Signup and view all the answers

    What is the primary focus of a corporation's scanning of the environment in terms of analyzing relevant elements?

    <p>Intensity of competition</p> Signup and view all the answers

    What type of barrier is characterized by declines in the unit costs of a product as the absolute volume per period increases?

    <p>Economies of scope</p> Signup and view all the answers

    Which barrier involves financial resources needed for infrastructure, machinery, R&D, and advertising?

    <p>Capital requirements</p> Signup and view all the answers

    What makes it hard for entrants to overcome existing company brand identification and customer loyalties?

    <p>Product differentiation</p> Signup and view all the answers

    Which factor refers to one-time costs faced by buyers when switching from an existing supplier's product to a new entrant?

    <p>Switching costs</p> Signup and view all the answers

    What could prevent entry to an industry by controlling factors like licensing requirements and access to raw materials?

    <p>Government policy</p> Signup and view all the answers

    Which of the following barriers involves cost advantages that a potential entrant cannot replicate?

    <p>Cost disadvantages independent of size</p> Signup and view all the answers

    What is the main focus of environmental scanning?

    <p>Evaluating external and internal information for key stakeholders</p> Signup and view all the answers

    Which of the following is NOT included in the natural environment?

    <p>Political forces</p> Signup and view all the answers

    What does a STEEP analysis focus on when scanning the societal environment?

    <p>Sociocultural, Technological, Economic, Ecological, and Political-legal forces</p> Signup and view all the answers

    Which environmental force influences our behavior and purchasing decisions?

    <p>Sociocultural forces</p> Signup and view all the answers

    What is the main difference between the societal environment and the task environment in industry analysis?

    <p>Societal environment involves elements directly affecting the corporation; task environment includes general societal forces.</p> Signup and view all the answers

    What does industry analysis involve a detailed examination of?

    <p>Key factors within a corporation's task environment</p> Signup and view all the answers

    What is a substitute product?

    <p>A product that appears different but can satisfy the same need as another product</p> Signup and view all the answers

    In what situation is Buyer Power considered high/strong?

    <p>Buyer switching costs are high</p> Signup and view all the answers

    What can increase the Bargaining Power of Buyers?

    <p>High threat of backward integration by buyers</p> Signup and view all the answers

    What do strategic groups consist of?

    <p>Firms pursuing similar strategies with similar resources</p> Signup and view all the answers

    What defines a strategic type of firm?

    <p>Having a common strategic orientation and unique structure</p> Signup and view all the answers

    How do Defenders differ from Prospectors?

    <p>Defenders have a limited product line while Prospectors focus on efficiency</p> Signup and view all the answers

    What characterizes the product lines of analyzers?

    <p>Focus on market opportunities and product innovation</p> Signup and view all the answers

    What is a key feature that distinguishes analyzers from reactors?

    <p>Operating in two different product-market areas</p> Signup and view all the answers

    What defines hypercompetition in an industry?

    <p>Constant disequilibrium and change due to player movements</p> Signup and view all the answers

    How does market stability get threatened in hypercompetitive environments?

    <p>Frequent entry by unexpected outsiders and short product life cycles</p> Signup and view all the answers

    What does Richard D’Aveni suggest happens to environments in hypercompetitive situations?

    <p>Escalate towards higher uncertainty and dynamism</p> Signup and view all the answers

    What does the term 'reactors' signify in the context of the text?

    <p>Companies lacking a consistent strategy-structure-culture relationship</p> Signup and view all the answers

    Study Notes

    Substitute Products

    • A substitute product is a product that appears to be different but can satisfy the same need as another product.

    Bargaining Power of Buyers

    • Buyer power is high if: • Buyers are more concentrated than sellers • Buyer switching costs are low • Threat of backward integration is high • Buyer is price sensitive • Buyer is well-educated • Buyer purchases product in high volume • Undifferentiated product • Substitutes are available

    Bargaining Power of Suppliers

    • Refers to the pressure suppliers can exert on businesses by raising prices, lowering quality, or reducing availability of their products.

    Relative Power of Other Stakeholders

    • Refers to the pressure exerted by other groups or entities, depending on which factor has the greatest influence.

    Strategic Groups

    • A set of business units or firms that “pursue similar strategies with similar resources.
    • Categorizing firms in any one industry into a set of strategic groups is very useful for understanding the competitive environment.

    Strategic Types

    • A category of firms based on a common strategic orientation and a combination of structure, culture, and processes consistent with that strategy.
    • Examples: • Defenders: focused on improving the efficiency of their existing operations. • Prospectors: focused on product innovation and market opportunities.

    Environmental Scanning

    • Monitoring, evaluation, and dissemination of information from the external and internal environments to key people within the corporation.

    Industry Analysis

    • An in-depth examination of key factors within a corporation’s task environment.

    Task Environment

    • Includes those elements or groups that directly affect a corporation and, in turn, are affected by it.

    STEEP Analysis

    • Sociocultural: social forces that influence attitudes, interests, opinions, and behavior.
    • Technological: advances in technology that may affect the organization’s operations, products, or services.
    • Economic: economic conditions that may impact the organization’s financial performance.
    • Ecological: environmental issues that may impact the organization.
    • Political-legal: government policies, regulations, and political stability that may impact the organization.

    Hypercompetition

    • An industry situation characterized by constant disequilibrium and change due to factors such as: • Short product life cycles • Short product design cycles • New technologies • Frequent entry by unexpected outsiders • Repositioning by incumbents • Tactical redefinitions of market boundaries as diverse industries merge.

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    Description

    Learn about the role of Socio-cultural, Political-legal, Economic, and Technological forces in environmental scanning and industry analysis. Understand how to identify external environmental variables like the natural environment and other factors influencing corporations.

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