External Forces
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Created by:
oliverherbst on May 5, 2011
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Strategic Management
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20 terms
Terms | Definitions |
|---|---|
 Give me five broad categories of the Key external forces: | 1. Political, governmental and legal forces 2. Economic forces 3. Social, cultural and demographic forces 4. Technological forces 5. Competitive forces |
| EXTERNAL Forces - MACRO | 1. demographic/economic 2. technological 3. social/cultural 4. political/legal |
| EXTERNAL Forces - MICRO | 1. customers 2. competitors 3. channels 4. suppliers 5. publics |
| How could affect the types of external forces a firm? | 1. products/services an entity develops and offers, 2. the nature of its market positioning and marketing strategies, 3. its relationships with vendors and suppliers, 4. the nature of alliances it forms, 5. its relationships with customers |
| Figure: Porter's five forces model |  |
| Identifying and evaluating opportunities and risks posed by external forces allows the entity to develop: | 1. A clear vision and an explicit statement of mission; 2. Detailed objectives and effective strategies for achieving those objectives; 3. Effective and efficient policies and procedures to implement strategic plans and to achieve detailed objectives. |
| 1. Political, governmental & legal forces | 1. Government stability & relations with other countries 2. Government spending and taxation policies 3. Government industrial policies (extent and nature of regulation/deregulation) 4. State and local government policies and regulations 5. Laws and regulations (Antitrust & mergers, Employment [equal opportunity and workplace safety], Environment protection, Foreign trade, duties and tariffs, Patents, trademarks and copyrights) |
| 2. Economic forces | 1. Inflation & unemployment rates 2. GNP and GNP growth rates 3. Disposable income & consumer spending 4. Business cycles 5. Capital and commodity markets (Availability of capital, Interest and currency exchange rates, Energy and basic raw materials prices) 6. Import/export conditions |
| 3. Social, cultural and demographic forces | 1. Population demographics (Age, sex & race distributions) 2. Distribution of income and wealth 3. Education systems, education levels 4. Social class structure and mobility 5. Lifestyle trends: attitudes toward (Leisure time and retirement, Sex roles, Religion and social responsibility) 6. Work place (attitudes toward: Authority and control, Cooperation and teamwork, Unionization) 7. Consumerism (attitudes toward: Product quality and customer service, Consumption, saving and investing) 8. Environmentalism (attitudes toward: Pollution, ozone depletion & endangered species) 9. Conservation, recycling and waste management |
| 4. Technological forces | 1. New discoveries/developments in own or related industry 2. Speed of technological transfer 3. Obsolescence rates within own or related industry 4. Government policies and spending on research 5. Information & communication technology ch |
| Figure_2: Porter's five forces model |  |
| 5. Competitive forces | 1. Rivalry among existing competitors 2. Threat of new entrants into own or related industry 3. Threat of substitute products or services 4. Bargaining power of suppliers 5. Bargaining power of customers 6. Strategic positioning in markets |
| 1. Rivalry among existing competitors | 1. Industry size, growth & overcapacity 2. Product differences & brand identity 3. Switching costs & barriers to exit 4. Market concentration 5. Diversity & size of competitors |
| 2. Threat of new entrants into own or related industry | 1. Economies of scale 2. Proprietary product features & brand identity 3. Capital requirements 4. Cost advantages (proprietary designs/processes & access to inputs) 5. Government policies and regulation |
| 3. Threat of substitute products or services | 1. Switching costs & relative price of substitutes 2. Buyers' propensity to substitute |
| 4. Bargaining power of suppliers | 1. Differentiation of inputs 2. Firm's versus suppliers' switching cost 3. Availability of substitute products/services 4. Suppliers' versus firm's concentration 5. Importance of purchase volume to suppliers versus firm 6. Treat of forward versus backward integration |
| 5. Bargaining power of customers | 1. Bargaining leverage: - Customers' versus firm's concentration - Customers' versus firm's switching costs - Importance of sales volume to customers versus firm - Ability of customers to backward integrate - Availability of substitute products/services 2. Price Sensitivity: - Product differences and brand identity - Impact on quality/performance - Customer profitability |
| 6. Strategic positioning in markets | 1. Firm's versus competitors' product differentiation and cost leadership 2. Firm's versus competitor's competitive scope (broad market/product focus versus narrow market/product focus) |
| External economies of scale | the cost per unit depends on the size of the industry, not the firm |
| Internal economies of scale | the cost per unit depends on size of the individual firm |
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