Strategic Management Chapter 3 Quiz

Strategic Management Concepts: A Competitive Advantage Approach, Concepts and Cases

• The book is the Seventeenth Edition.
• It is a Concepts & Cases textbook.
• The book is by Fred David, Forest David, Meredith, and David.
• Copyright is held by Pearson Education, Inc.
• The chapter is Chapter 3, The External Assessment

Learning Objectives (Page 2)

• 3.1: Explain the nature and purpose of external assessment in strategy formulation.
• 3.2: Identify and discuss 10 external forces that impact organizations.
• 3.3: Explain Porter's Five-Forces Model and its relevance in strategy formulation.

Learning Objectives (Page 3)

• 3.4: Describe key sources of information for identifying opportunities and threats.
• 3.5: Discuss forecasting tools and techniques.
• 3.6: Explain how to develop and use an External Factor Evaluation (EFE) Matrix.
• 3.7: Explain how to develop and use a Competitive Profile Matrix (CPM).

External Audit (Page 5)

• Focuses on trends and events outside the firm's control.
• Reveals opportunities and threats.
• Helps managers create strategies.

Purpose of External Audit (Page 6)

• Aims to identify important factors.
• Enables firms to respond offensively or defensively to factors.
• Strategies can use opportunities and/or reduce threat impacts.

Key External Forces (Page 7)

• Divided into five categories:
  • Economic forces
  • Social, cultural, demographic, and environmental (SCDE) forces
  • Political, governmental, and legal forces
  • Technological forces
  • Competitive forces

Figure 3.2 Relationships Between Key External Forces and an Organization (Page 8)

• Diagram illustrating relationships between various external forces and organizational opportunities and threats.
• Shows how different forces influence the opportunities and threats facing an organization.

The AQCD Test (Page 9)

• Four factors are important for identifying key external factors in strategic planning:
  • Actionable
  • Quantitative
  • Comparative
  • Divisional
• AQCD is a measure of external factor quality.

Which one passed AQCD test? (Page 10)

• Online retail grocery shopping grew 4% in 2018.
• Consumer's average disposable income increased greatly in 2018.

Economic Forces (Page 11)

• Shift to service economy
• Availability of credit
• Disposable income level
• Propensity of people to spend
• Interest rates
• Inflation rates
• GDP trends
• Consumption patterns
• Unemployment trends
• Value of the dollar

Economic Forces (Page 12)

• Import/Export factors
• Demand shifts for goods and services
• Income differences by region and consumer group
• Fluctuations in prices
• Foreign countries' economic conditions
• Monetary and Fiscal policies
• Stock market trends
• Tax rate variation by country /state
• European Economic Community (EEC) policies
• Organization of Petroleum Exporting Countries (OPEC) policies

Social, Cultural, Demographic, and Environmental (SCDE) Forces (Page 13)

• Impact on virtually all products, services, markets, and customers.
• Shape how people live, work, produce, and consume.

Key SCDE Variables (Page 14, 15, 16)

• Various factors that fall under the SCDE umbrella, including population changes, regional tastes, marriages, deaths, immigration, social security, life expectancy, income, social media, retirement, energy conservation, product quality, customer service, pollution control, attitudes toward foreign peoples, social programs, and number of churches (and members).

Political, Governmental, and Legal Forces (Page 17)

• Local, state, federal laws and regulations impact strategies of different organization types.

Political, Governmental, and Legal Variables (Page 18, 19)

• Various specifics including environmental regulations, protectionist actions, changes in patent laws, and equal employment laws. (Additionally, USA vs. other countries, political conditions, oil prices, local laws, import/export regulations, tariffs, and elections.)

Technological Forces (Page 20, 21, 22)

• Internet of Things, 3D printing, cloud, mobile devices, biotech, analytics, autotech, robotics & artificial intelligence, and the increasing prevalence of Chief Information Officers (CIOs) and Chief Technology Officers (CTOs).

Competitive Forces (Page 23)

• Identifying rival firms' strengths, weaknesses, capabilities, opportunities, threats, objectives, and strategies is an important part of external audit.

Obtaining Competitive Intelligence (Page 24, 25)

• Legal and ethical ways to gather information about competitors.
• Includes options like reverse engineering, surveys, analyzing financial reports, and visits, online databases, and contact with government agencies.

Key Questions About Competitors (Page 26, 27, 28)

• Questions to ask about competitors, including their strengths, weaknesses, products, strategies, reactions to trends, vulnerabilities to new strategies, ability to counterattack, social media presence, industry exits/entrances, and factors determining competitive position, and supplier/distributor relationships.

Competitive Intelligence Programs (Page 29)

• A systematic and ethical process for gathering and analyzing data on competitors, and general business trends, to support a business' own goals.

The Five-Forces Model of Competition (Page 30, 31)

• A model used for understanding industry structure through analyzing competitive forces.
• Focuses on power among competing firms and other forces like substitutes and potential entry.

The Five-Forces Model (Page 32, 33, 34, 35, 36, 37, 38, 39, 40)

• Detailed factors influencing rivalry among competitors, entry, substitutes, suppliers, and consumer power.
• Includes specific conditions related to each competitive force, ranging from the number of competitors to price fluctuations, and consumer switching costs.

Industry Analysis: EFE Matrix (Page 45)

• Summarizing and evaluating various factors (Social, Cultural, Demographic, Economic, Environmental, Political, Governmental, Legal, Technological, and Competitive) for analyzing industry dynamics.

EFE Matrix Steps (Page 46)

• Detailed steps for using the EFE Matrix to analyze external factors and strategies.

Table 3.8 EFE Matrix for a Local 10-Theater Cinema Complex (Page 47, 48)

• Examples of how an EFE Matrix can be used for performing risk analysis for cinema complex industry. Presents data from a hypothetical local cinema complex to understand its opportunities and challenges from various factors.

Industry Analysis: Competitive Profile Matrix (CPM) (Page 49)

• Identifying competitor strengths and weaknesses in relation to a sample firm. Assessing critical success factors that include both internal and external elements.

Table 3.10 An Example Competitive Profile Matrix (Page 50)

• Example CPM displaying ratings and weighted scores for competitor analysis. Illustrates how to assess strengths, weaknesses, and overall competitive performance of different firms operating in the same industry.

Figure 3.4 How to Gain and Sustain Competitive Advantages (Page 51)

• A circular diagram depicting the cyclical process of gaining and sustaining competitive advantages, highlighting steps from establishing a clear vision/mission to evaluating results and adapting to change.

Copyright (Page 52)

• Copyright restrictions for educational use.

Test your knowledge on Chapter 3 of 'Strategic Management Concepts' which focuses on the External Assessment. This quiz covers Porter's Five-Forces Model, key external forces impacting organizations, and tools for evaluating opportunities and threats. Perfect for students looking to reinforce their understanding of strategic analysis.