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| Broad trends in the context within which a firm operates that can have an impact on a firm's strategic choices |
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| Creates both opportunity and threats |
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| The distribution of individuals in a society in terms or age, sex, marital status, income, ethnicity, and other personal attributes |
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| The values, beliefs and norms that guide behavior in a society |
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| The overall health of the economic systems within which a firm operates |
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| When activity in an economy is relatively low |
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| A recession that lasts for several years |
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| Legal and political conditoins |
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| The laws and legal system's impact on business coupled with the general nature of the relationship between government and business |
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| Specific international events |
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| Events such as civil wars, political coups, terrorism, ware between countries, famines, and country or regional economic recessions. |
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| The cycle of prosperity followed by recession followed by prosperity |
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Term
| Structure Conduct Performance Model |
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Definition
| Model for a firm which includes its structure, conduct, and performance. |
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Definition
| Number of competitors, the heterogeneity of products, and the cost of entry and exit. |
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| Strategies that firms in an industry implement |
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| Relationship between performance of individual firms and as a whole |
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Term
| Five Forces Model of Environmental Threats |
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Definition
Threat of Entry
Threat of Rivalry
Threat of Substitutes
Threat of Powerful Buyers
Threat of Powerful Suppliers |
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Term
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Definition
Includes:
Economies of Scale
Production Differentiation (Brand recognition)
Cost Advantages (Propriety Technology, Managerial Know-how, Favorable Access to Raw Materials, and Learning Curve Costs)
Government Policy |
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| The intensity of competition among a firm's direct competitors |
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Definition
Products that somewhat meet the needs of a person but not exactly.
Ex. Reading a book vs. Watching a movie |
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| Threat of Powerful Suppliers |
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Definition
| Suppliers can pose a threat by raising prices or reducing quality. Suppliers may also be a threat if they vertically integrate forward |
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| Threat of Powerful Buyers |
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Definition
| When firms have few buyers or one buyer the threat of powerful buyers can be very threatening. firms also face the threat of buyers integrating backward. |
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| Industry Structure and Environmental Opportunnities |
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Definition
Consolidation
First Mover Advantages
Product Refinement, Service, and Process Innovation
Leadership Nice, Harvest, and Divestment |
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Term
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Definition
Stands for 4 questions One Must Ask:
Value
Rarity
Imitabality
Organization |
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Term
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Definition
| Do resources enable a firm to exploit an external opportunity and neutralize and external threat |
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| How many competing firms already possess particular valuable resources and capabilities? |
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Definition
| Do firms without a resource or capability face a cost disadvantage in obtaining or developing it compared to firms that already possess it? |
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Definition
| Is a firm organized to exploit the full competitive potential of its resources and capabilities? |
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