Chapter 2- The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis

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MGMT 490- CSUSB

General Environment

is composed of dimensions in the broader society that influence an industry and the firms within it.

Industry Environment

is the set of factors that directly influence a firm and its competitive actions and competitive responses: the threat of new entrants, the power of suppliers, the power of buyers, the threat of product substitutes, and the intensity of rivalry among competitors.

Opportunity

is a condition in the general environment that if exploited effectively, helps a company achieve strategic competitiveness.

Threat

is a condition in the general environment that may hinder a company's efforts to achieve strategic competitiveness.

Demographic Segment

is concerned with a population's size, age structure, geographic distribution, ethnic mix, and income distribution.

Economic Environment

refers to the nature and direction of the economy in which a firm competes or may compete.

Political/Legal Segment

is the arena in which organizations and interest groups compete for attention, resources, and a voice in overseeing the body of laws and regulations guiding interactions among nations as well as between firms and various local government agencies.

Sociocultural segment

is concerned with a society's attitude and cultural values.

Technological Segment

includes the institutions and activities involved with creating new knowledge and translating that knowledge into new outputs, products, processes, and materials.

Global Segment

includes relevant new global markets, existing markets that are changing, important intentional political events, and critical cultural and institutional characteristics of global markets.

Physical environment segment

refers to potential and actual changes in the physical environment and business practices that are intended to positively respond to and deal with those changes.

Industry

is a group of firms producing products that are close substitutes.

Strategic Group

is a set of firms emphasizing similar strategic dimensions to use a similar strategy.

Competitor Intelligence

is the set of data and information the firm gathers to better understand and better anticipate competitors' objectives, strategies, assumptions, and capabilities.

Complementors

are companies or networks of companies that sell complementary goods or services that are compatible with the focal firm's good or service.

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