Organizational Strategy Module 2 Quiz

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Questions and Answers

What is the first stage that is conventionally undertaken in strategic analysis?

Analysis of the external environment

What are the two major parts of strategic analysis?

Analysis of the external environment and analysis of the internal environment.

Define 'Industry' as it relates to business analysis.

A group of organizations or business units participating in similar economic or commercial activities, producing similar products or services.

What does the 'value chain' of an industry represent?

<p>The business processes, people, organizations, intellectual property, technology and physical infrastructure that transform raw materials or talents into finished goods and services, which are offered and distributed to the consumer to satisfy demand.</p> Signup and view all the answers

What are the several key steps involved in a comprehensive industry analysis? (Select all that apply)

<p>Assessing the strength of competitors (A), Defining the industry to be analyzed (B), Understanding the value chain (C), Analyzing historical development and current trends (D), Forming a clear understanding of the industry's impact on the larger economy (E), Evaluating the industry's overall profitability (F), Establishing a clear understanding of the industry's major customers (G), Analyzing the future of the industry (H), Comparing the organisation and its key competitors (I)</p> Signup and view all the answers

The term 'Industry segmentation' refers to dividing a market into groups based on their characteristics.

<p>True (A)</p> Signup and view all the answers

The primary goal of strategic competition is to deploy resources in a way that minimizes risk.

<p>False (B)</p> Signup and view all the answers

What is the fundamental purpose of 'competitor analysis'?

<p>To understand the key competitors in the industry to determine what strengths, weaknesses, and strategies they have to win market share.</p> Signup and view all the answers

What is 'value proposition'?

<p>A concise statement that explains how a product or service solves a pain point and communicates its added benefits compared to similar offerings.</p> Signup and view all the answers

Which of the following factors can influence the bargaining power of suppliers in an industry? (Select all that apply)

<p>The supplier's ability to forward integrate into the industry (A), The volume of purchases made to the supplier by the industry (B), Supplier's ability to control the distribution of their products (C), Supplier industry dominance (D), Unique or specialized products (E), Availability of substitutes for the supplier's products (F)</p> Signup and view all the answers

What is a key factor that can increase the intensity of industry rivalry?

<p>A slow growth rate or declining profitability in an industry.</p> Signup and view all the answers

What are the key success factors in the chocolate industry?

<p>Strong brand names, efficient selling and distribution networks, effective brand support, marketing and strong merchandising.</p> Signup and view all the answers

Explain the concept of strategic groups in the context of an industry.

<p>A strategic group encompasses competitors that follow similar strategies in similar product-market classifications.</p> Signup and view all the answers

What is the significance of remote environment analysis?

<p>It helps to understand the general influences that affect an industry, such as social, technological, economic, political, legal, and ethical factors.</p> Signup and view all the answers

What is the primary function of a STEEPLE analysis?

<p>To identify the key drivers of historical and future growth in an industry, considering factors such as social, technological, environmental, ethical, political, legal, and economic influences.</p> Signup and view all the answers

What is the purpose of an industry analysis, especially in relation to profitability?

<p>To understand the underlying forces at play in the industry that affect its profitability and to predict the likely changes in those forces over time.</p> Signup and view all the answers

What is the primary goal in 'customer and market analysis'?

<p>To understand your customers their characteristics, needs, wants, attitudes, and behaviors.</p> Signup and view all the answers

Why is understanding the industry life cycle crucial for an organization?

<p>Different strategies are required at different points in an industry's life cycle, and an organization needs to be adaptable to these changes.</p> Signup and view all the answers

What are the key characteristics of a disruptive technology?

<p>It emerges suddenly and unexpectedly, disrupts established industries or markets, and can have a significant impact on the industry's future growth.</p> Signup and view all the answers

What is the role of the CPA in the context of external environment analysis?

<p>To provide objective analysis, supported by quantitative information, and to guide leaders in decision-making.</p> Signup and view all the answers

How can organizations navigate the digital economy successfully?

<p>By understanding its impact on various external factors and adapting their strategies accordingly to either mitigate its negative effects or leverage its potential opportunities.</p> Signup and view all the answers

Which of the following factors can drive the industry's future growth? (Select all that apply)

<p>Price inflation (A), Technological innovations (B), Disruptive technologies (C), Changes in consumer preferences (D), Economic growth (E), New regulations (F), Population growth (G), Social trends (H), Ethical considerations (I), Government policies supporting certain industries (J), Environmental concerns (K)</p> Signup and view all the answers

Flashcards

External Environment

Factors outside the organization influencing strategy, such as societal issues and political forces.

Industry

A grouping of similar economic activities, e.g., the clothing retail industry.

Market

The grouping of organizations and consumers buying similar products.

STEEPLE Analysis

A framework analyzing Social, Technological, Economic, Environmental, Political, and Legal factors affecting an organization.

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Porter's Five Forces

A model analyzing competition within an industry based on five forces: threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, and industry rivalry.

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Competitive Positioning

The process of defining how a company will compete in the marketplace.

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Strategic Analysis

A method to assess internal and external environments to inform strategy development.

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Data Collection

The process of gathering relevant information for analysis.

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Big Data

Large volumes of structured and unstructured data that organizations can analyze.

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Business Intelligence (BI)

Technologies and strategies used by enterprises for data analysis of business information.

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Key Success Factors

Essential areas of activity that an organization must focus on to be successful.

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SWOT Analysis

A framework for identifying Strengths, Weaknesses, Opportunities, and Threats related to a business.

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Stakeholder Expectations

The needs and demands of individuals or groups with an interest in an organization.

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Industry Life Cycle

The stages an industry goes through from introduction to decline.

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Competitive Analysis

The practice of assessing competitors to understand their strengths and weaknesses.

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Disruption

Innovations that significantly alter or displace existing markets or industries.

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Technological Advances

Improvements and innovations in technology that can impact industries and economies.

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Decision-Making

The process of choosing the best option among multiple possibilities.

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Organizational Strategy

A plan that outlines how an organization will achieve its goals and objectives.

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Value Chain

A model that describes the full range of activities required to create a product or service.

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Market Trends

Patterns or movements in consumer behavior and market conditions over time.

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Sustainability

The ability to maintain or improve a system without compromising future generations.

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Environmental Analysis

Assessing external factors that affect an organization's performance and decision-making.

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Performance Metrics

Measures used to assess the efficiency and success of an organization or project.

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Regulatory Compliance

Adhering to laws, regulations, guidelines, and specifications relevant to the industry.

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Market Positioning

The process of establishing the image or identity of a brand or product in the minds of consumers.

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Risk Management

The identification, evaluation, and prioritization of risks followed by coordinated efforts to minimize impact.

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Financial Analysis

Evaluating an organization's financial data to assess its performance and make informed decisions.

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CPAs Role in Strategy

Certified Public Accountants play a significant role in strategic analysis and decision making.

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Global Strategy

An approach that aims to increase competitiveness on a global scale.

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Leadership in Strategy

The role of leaders in guiding and directing an organization toward achieving its strategic objectives.

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Study Notes

Module 2: Understanding the External Environment

  • After completing this module, students should be able to select key concepts, factors, and frameworks related to understanding how the external environment influences organizational strategy.
  • Evaluate key factors impacting growth, profitability, and competition within the external environment.
  • Appraise how management and leadership roles drive organizational strategy in relation to the external environment.

Assumed Knowledge

  • Students should be able to explain strategic management.
  • Explain the principles of governance and ethics.
  • Describe the key tasks of financial accounting.
  • Describe the overall strategic process, contemporary business context, and role of leadership in strategy.

Strategy Process: Analysis of the Internal Environment

  • The strategy process involves stages like strategic analysis, exploring options, developing strategy, and implementation and monitoring.
  • Strategic analysis is typically undertaken annually, with data collected regularly to track changes in the internal and external environments.
  • External environment analysis examines factors outside the organization, while internal analysis examines internal resources and capabilities.
  • Frameworks like STEEPLE analysis and Porter's Five Forces are helpful in external environment analysis.

Understanding the External Environment

  • Industry is a grouping of similar economic or commercial activities.
  • Market is a grouping of all organizations and their buyers within an industry.
  • External environment includes factors external to an organization impacting its strategy, including industry, markets, societal issues, technological changes, economic drivers, environmental issues, political forces, ethics.

The Role of the CPA in Analysis

  • Data analysis, business intelligence, and decision-making are central to analysis.
  • CPAs are involved in financial and management accounting roles, and issues such as measuring social and environmental performance and shaping data analytics.
  • CPAs assess financial and economic influences on organizations and operations.
  • CPAs provide support in evaluating industry sectors and economic driver influence (e.g., currency, taxation).

External Environment Analysis - Industry Analysis

  • Industry analysis examines factors influencing industry growth and profitability, like industry structure.
  • Life cycle analysis considers stages like start-up, growth, maturity, shakeout, and renewal.
  • Factors for analysis include: industry definition, value chain, key factors for growth and profitability, what drives customer demand, industry key success factors, technological innovations, and competitor analysis.

Gathering Data for Industry Analysis

  • Difficulties in industry analysis include accurately defining the scope, finding reliable/meaningful data, and understanding signals and interpretations.
  • Data-gathering is needed via internal and external sources like public agencies, industry reports, and commercial research.

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SG - M2 - Understanding the External Environment PDF

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