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Questions and Answers
What percentage of an analysis should typically be dedicated to strategic analysis?
What percentage of an analysis should typically be dedicated to strategic analysis?
Which of the following is NOT emphasized in a good analysis?
Which of the following is NOT emphasized in a good analysis?
What does the Five Forces Model primarily help strategic leaders understand?
What does the Five Forces Model primarily help strategic leaders understand?
Which of the following should be a key focus in strategic management?
Which of the following should be a key focus in strategic management?
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What is one of the key insights from Porter’s Five Forces Model?
What is one of the key insights from Porter’s Five Forces Model?
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What is a key factor influencing customer attraction to fitness programs?
What is a key factor influencing customer attraction to fitness programs?
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What pricing strategy is increasingly necessary to maintain fitness program membership?
What pricing strategy is increasingly necessary to maintain fitness program membership?
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Why must firms differ between various influential factors in their analysis?
Why must firms differ between various influential factors in their analysis?
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What is one major consideration when analyzing firm strategy?
What is one major consideration when analyzing firm strategy?
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Which strategic tool helps identify the competitive forces influencing a market?
Which strategic tool helps identify the competitive forces influencing a market?
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What must be avoided during the analysis to ensure comprehensive understanding?
What must be avoided during the analysis to ensure comprehensive understanding?
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Which of the following best describes the importance of conducting a strategic analysis?
Which of the following best describes the importance of conducting a strategic analysis?
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What is the primary purpose of conducting a PESTEL analysis?
What is the primary purpose of conducting a PESTEL analysis?
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Which of the following frameworks helps in analyzing the profit potential of different industries?
Which of the following frameworks helps in analyzing the profit potential of different industries?
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What do firm effects and industry effects help to differentiate?
What do firm effects and industry effects help to differentiate?
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In segmenting an industry, what is the goal of appraising the relative attractiveness of different segments?
In segmenting an industry, what is the goal of appraising the relative attractiveness of different segments?
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What does the term 'Key Success Factors' refer to?
What does the term 'Key Success Factors' refer to?
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What is the first step in segmentation analysis?
What is the first step in segmentation analysis?
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What is the first step to a comprehensive industry analysis?
What is the first step to a comprehensive industry analysis?
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Which of the following best describes key success factors?
Which of the following best describes key success factors?
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Which strategy focuses on providing products at the lowest cost in an industry?
Which strategy focuses on providing products at the lowest cost in an industry?
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What does market survival primarily depend on according to the content?
What does market survival primarily depend on according to the content?
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What role does stakeholder analysis play in strategy development?
What role does stakeholder analysis play in strategy development?
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In the context of competitive forces, which of the following best describes the threat from substitutes?
In the context of competitive forces, which of the following best describes the threat from substitutes?
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What is the purpose of constructing a segmentation matrix?
What is the purpose of constructing a segmentation matrix?
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What aspect does analysing competition focus on when determining key success factors?
What aspect does analysing competition focus on when determining key success factors?
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Which of the following is NOT a step in the segmentation analysis process?
Which of the following is NOT a step in the segmentation analysis process?
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What is a consequence of a high threat from substitutes in an industry?
What is a consequence of a high threat from substitutes in an industry?
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What factor contributes to the strong brand positions of Coke and Pepsi in the market?
What factor contributes to the strong brand positions of Coke and Pepsi in the market?
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Which of the following is a barrier to entry in the soft drink industry?
Which of the following is a barrier to entry in the soft drink industry?
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What is a key reason consumers remain loyal to their chosen soft drink brands?
What is a key reason consumers remain loyal to their chosen soft drink brands?
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How do strong brand positions affect the perception of substitutes in the market?
How do strong brand positions affect the perception of substitutes in the market?
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Which of the following is NOT a threat when analyzing an industry’s underlying economics?
Which of the following is NOT a threat when analyzing an industry’s underlying economics?
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What does Warren Buffet suggest about the impact of talented management in a declining industry?
What does Warren Buffet suggest about the impact of talented management in a declining industry?
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What is a primary focus of the Five Competitive Forces framework?
What is a primary focus of the Five Competitive Forces framework?
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What benefit do incumbents gain from limited shelf space in retail outlets?
What benefit do incumbents gain from limited shelf space in retail outlets?
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What is a key benefit of using conflict-inducing techniques in decision making?
What is a key benefit of using conflict-inducing techniques in decision making?
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Which approach involves assigning someone the role of official critic to challenge proposals?
Which approach involves assigning someone the role of official critic to challenge proposals?
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How can asking heretical questions impact decision making?
How can asking heretical questions impact decision making?
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What should be analyzed to ensure a company achieves its long-term mission effectively?
What should be analyzed to ensure a company achieves its long-term mission effectively?
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What is a potential effect of failing to critically evaluate alternatives?
What is a potential effect of failing to critically evaluate alternatives?
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What aspect of the competitive environment is important for a company to analyze?
What aspect of the competitive environment is important for a company to analyze?
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What should a firm assess to understand how its value chain adds value?
What should a firm assess to understand how its value chain adds value?
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What type of question can spark innovative thinking in a firm?
What type of question can spark innovative thinking in a firm?
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Study Notes
External Analysis
- External analysis looks at factors outside the firm impacting performance.
- Includes PESTEL analysis, Porter's Five Forces, and key success factors.
- Helps understand industry attractiveness and competitive opportunities.
Learning Objectives
- Recall what strategy is.
- Conduct a PESTEL analysis to evaluate external factors.
- Differentiate firm and industry effects on performance.
- Apply Porter's Five Forces to analyze industry profit potential.
- Segment industries into constituent markets with attractiveness appraisals.
- Analyze competition and customer requirements to identify competitive advantages.
Course Plan
- Understand gaining and sustaining competitive advantage.
- Learn about PESTEL, Porter's Five Forces, and key success factors.
- Explore internal analysis, core competencies, and resource-based view.
- Examine business strategy, generic business strategies, cost leadership vs. differentiation.
- Dive into business strategy II—innovation, entrepreneurship, and platforms
- Understand diversification, vertical integration, strategic alliances, mergers, and acquisitions.
- Learn about competing globally and the integration-responsiveness framework.
Recall Lecture 01: What is Strategy?
- Strategy is a firm's quest for competitive advantage.
- Competitive advantage is having a better plan and execution.
- Strategy is linked to high efficiency.
- Strategic decision-making involves mission, vision, and values to execute plans.
- Vision statements can be product-oriented or customer-oriented.
Stakeholder Impact Analysis
- Stakeholders are identified; Step 1
- Stakeholder interests and claims are understood; Step 2
- Opportunities and threats posed by stakeholders are assessed; Step 3
- Economic, legal, ethical, and philanthropic responsibilities are clarified; Step 4
- Strategies for addressing stakeholder concerns are defined; Step 5
PESTEL Analysis
- PESTEL analysis is a framework to assess macro-environmental factors.
- Factors considered are Political, Economic, Sociocultural, Technological, Ecological, and Legal.
- The framework helps understand environmental influences on firms.
- Opportunities and threats emerging from environmental trends are important in strategic planning.
Profitability of US Industries (2000-2010)
- Data for various industries is presented, including tobacco, household products, motor vehicles, entertainment, and airlines.
- Data includes median Return on Equity (ROE).
- Leading companies in each industry are noted.
Porter's Five Forces Model
- Industries have multiple participants competing for profits from suppliers, buyers, rivals, potential entrants, and substitute products/services.
- The five forces help understand profit distribution.
- Profitability is a function of willingness to pay, price, and cost.
Applying Industry Analysis
- Industry analysis explains profitability differences between industries and changes over time.
- Analysis aids in strategic positioning and predicts competitions and industry changes.
- Identifying competitive pressures on industries is an advantage.
Key Concepts and Takeaways
- Strategic management is an integrative field combining analysis, formulation, and implementation.
- Strategic management allows a holistic view of a firm and understanding superior performance.
- Porter's Five Forces reveals industry profit potential and competitive positioning.
Decision Making Techniques
- Using heretical questions can challenge long-held beliefs.
- Asking disruptive questions can lead to better solutions.
- Conflict-inducing tools like devil's advocacy and dialectical inquiry encourage critical evaluation.
Analyzing Organizational Goals and Objectives
- Analyzing objectives and goals include examining inconsistency with long-term mission, stakeholder equality, and conflicts with policies.
Analyzing the External Environment
- Understanding general environmental trends and their impact on business is a key factor.
Analyzing the Internal Environment
- Analyze internal processes to determine how they add value, resource source and vitality, and financial performance relative to competitors.
Assessing Firm's Intellectual Assets
- Assessing intellectual assets focuses on identifying underutilized human capital.
- Exploring strategic alliances and knowledge management systems is valued.
Formulating Business-Level Strategies
- Choosing the correct competitive strategy for industry and competitive situation is important.
Formulating International-Level Strategies
- Considering local competition on the global stage is essential for international strategies.
- Choosing between cost reduction and local adaptation is central to international success.
Creating Effective Organizational Designs
- Organizational structures fit the type of business.
- Effective use of boundaryless designs while maintaining control.
Fostering Corporate Entrepreneurship
- Effective innovation management requires dilemmas to be resolved.
- New venture initiatives and entrepreneurial orientations are important for success.
A Good Analysis
- Organizing and providing a graphical analysis is better, avoiding the obvious, adding background of the problem, making logical suggestions, recommending solutions, and applying rigorous quality control.
Segmentation Analysis
- Dividing the market into segments based on characteristics influencing behavior.
- Identifying key success factors for each segment is necessary.
- Variables, matrix construction, and segment scope are key considerations.
Key Success Factors
- Factors affecting a company's ability to survive are important criteria.
- Understanding customer needs, competition, and internal ability to support these needs is essential.
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Description
This quiz covers external analysis in business strategy, focusing on tools like PESTEL and Porter's Five Forces. You'll learn to identify factors impacting performance and industry attractiveness. Prepare to apply these concepts to real-world scenarios and enhance your strategic decision-making skills.
