Chapter 2: The External Environment
Chapter 2 The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis KNOWLEDGE OBJECTIVES 1. 2. 3. 4. 5. 6. 7.
Explain the importance of analyzing and understanding the firm’s external environment. Define and describe the general environment and the industry environment. Discuss the four activities of the external environmental analysis process. Name and describe the general environment’s seven segments. Identify the five competitive forces and explain how they determine an industry’s profit potential. Define strategic groups and describe their influence on the firm. Describe what firms need to know about their competitors and different methods (including ethical standards) used to collect intelligence about them.
CHAPTER OUTLINE Opening Case Phillip Morris International: Effects of Its External Environment THE GENERAL, INDUSTRY, AND COMPETITOR ENVIRONMENTS EXTERNAL ENVIRONMENTAL ANALYSIS Scanning Monitoring Forecasting Assessing Strategic Focus Consumers’ Desire to Receive Additional Value When Purchasing Brand-Name Products SEGMENTS OF THE GENERAL ENVIRONMENT The Demographic Segment The Economic Segment The Political/Legal Segment The Sociocultural Segment The Technological Segment The Global Segment The Physical Environment Segment Strategic Focus Firms’ Efforts to Take Care of the Physical Environment in Which They Compete INDUSTRY ENVIRONMENT ANALYSIS Threat of New Entrants Bargaining Power of Suppliers Bargaining Power of Buyers Threat of Substitute Products Intensity of Rivalry among Competitors INTERPRETING INDUSTRY ANALYSES STRATEGIC GROUPS COMPETITOR ANALYSIS ETHICAL CONSIDERATIONS SUMMARY REVIEW QUESTIONS EXPERIENTIAL EXERCISES VIDEO CASE NOTES
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