Академический Документы
Профессиональный Документы
Культура Документы
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Session Objectives
To stress the importance of the sectors of the firms external environment to strategy formulation. To develop a broader sense of competition and competitive pressures. To understand the purpose of competitive strategy
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Ecological
Industry Environment (Global and Domestic) Entry barriers Buyer power Supplier power Substitute availability Competitive rivalry Operating Environment (Global and Domestic) Competitors Customers Creditors Labor Suppliers
THE FIRM
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Economic Factors
Concern nature and direction of economy in which a firm operates
Types of factors
General availability of credit Level of disposable income Propensity of people to spend Prime interest rates
Inflation rates
Trends in growth of gross national product
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Social Factors
Include beliefs, values, opinions, and lifestyles of people Recent social trends
Entry of large numbers of women into labor market Accelerating interest of consumers and employees in quality-of-life issues Shift in age distribution of population
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Political Factors
Define legal and regulatory parameters within which firms must operate
Types of factors
Fair-trade decisions Antitrust laws Tax programs Minimum wage legislation
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Technological Factors
Types of changes
New products
Improvements in existing products Manufacturing and marketing techniques
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Ecological Factors
Involve relationships among human beings and other living things and air, soil, and water Current concerns
Global warming Loss of habitat and biodiversity Air, water, and land pollution
Responsibilities of firms
Eliminating toxic by-products of current manufacturing processes Cleaning up prior environmental damage
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Industry/Competitive Environment
Michael E. Porters Five Forces Model the concept of industry environment as integral to strategic thought and business planning. The five forces shape competition in an industry. The framework helps strategic managers link remote factors to their effects on a firms operating environment.
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The corporate strategists goal is to find a position in the industry where his or her company can best defend itself against these forces or can influence them in its favor.
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To Achieve a Defensible Position Against the Competitive (Five) Forces that Are Constantly Working to Erode Industrywide Profitability
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Competitive Forces
Any Entity (Group or Class of Firms) that has the Potential to Erode Profitability Among Firms within an Industry
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An industry is a collection of firms that offer similar products or services. Structural attributes are the enduring characteristics that give an industry its distinctive character. Concentration refers to the extent to which industry sales are dominated by only a few firms. Barriers to entry are the obstacles that a firm must overcome to enter an industry.
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Powerful Suppliers
A supplier group is powerful if: It is dominated by a few companies and is more concentrated than the industry it sells to Its product is unique or at least differentiated, or if it has built-up switching costs It is not obliged to contend with other products for sale to the industry It poses a credible threat of integrating forward into the industrys business The industry is not an important customer of the supplier group
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Powerful Buyers
A buyer group is powerful if: It is concentrated or purchases in large volumes The products it purchases from the industry are standard The products it purchases from the industry form a component of its product and represent a significant fraction of its cost It earns low profits The industrys product is unimportant to the quality of the buyers products or services The industrys product does not save the buyer money The buyers pose a credible threat of integrating backward
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Substitute Products
By placing a ceiling on the prices it can charge, substitute products or services limit the potential of an industry Substitutes not only limit profits in normal times but also reduce the bonanza an industry can reap in boom times Substitute products that deserve the most attention strategically are those that are
subject to trends improving their price-performance trade-off with the industrys product or produced by industries earning high profits
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Direct/Operating/Task Environment
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Also called task environment Includes competitor positions relative to the five forces and profiling based on the following factors:
Geographic Demographic Psychographic Buyer Behavior
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