MGMT 3015 Week 3: Environmental Scanning & Industry Analysis

Vocabulary flashcards covering macro-environmental factors, industry analysis frameworks, and strategic thinking methodologies based on Week $$3$$ lecture materials.

Macroenvironment

The broad environmental context in which a company's industry is situated — the outer ring of forces beyond the immediate competitive environment.

PESTEL Analysis

A framework for assessing the strategic relevance of six macro-environmental factors: Political, Economic, Sociocultural, Technological, Environmental, and Legal/Regulatory forces.

Political Factors (PESTEL)

Forces including tax policy, tariffs, political climate, government interventions, fiscal policy, strength of institutions, and trade restrictions.

Economic Factors (PESTEL)

Forces including interest rates, exchange rates, inflation rate, unemployment, economic growth rate, savings rates, and trade deficits/surpluses.

Sociocultural Factors (PESTEL)

Forces including societal values, attitudes, cultural influences, lifestyles, and demographic factors such as age and population size.

Technological Factors (PESTEL)

Forces including the pace of technological change, R&D, patent and copyright laws, and disruptive technologies.

Environmental Factors (PESTEL)

Forces including weather, climate, climate change, flooding, and water shortages.

Legal/Regulatory Factors (PESTEL)

Forces including consumer laws, labour laws, antitrust laws, and occupational health and safety.

Five Forces Framework

A model devised in $1979$ that diagnoses the principal competitive pressures in a market by examining rivalry, new entrants, substitutes, suppliers, and buyers.

Rivalry Among Competing Sellers

The most powerful force situated at the centre of the Five Forces model, influenced by the other four forces.

Threat of New Entrants

A competitive force dependent on entry barriers and the expected reaction of existing firms to new competition.

Substitute Products

Products from outside the industry that can perform the same or similar functions for the consumer as the industry's own products.

Price Ceiling

The maximum price established for an industry's products by the availability and performance of substitutes.

Bargaining Power of Suppliers

The pressure exerted when suppliers can raise prices, restrict supply, or limit terms, squeezing industry profitability.

Bargaining Power of Buyers

The pressure exerted when customers can demand lower prices, better terms, or switch brands easily.

Reductionist Thinking

A strategic approach that seeks static, narrow conceptions of causality and isolates the firm from its context, such as the SOAR framework.

Systems Thinking

A strategic approach that explores dynamic, interconnected causal relationships across the whole landscape, such as Strategic Group Maps.

SOAR Framework

A reductionist tool for analysing a single rival's likely future move by examining their Strategy, Objectives, Assumptions, and Resources & Capabilities.

Strategic Group

A cluster of industry rivals that have similar competitive approaches and market positions.

Strategic Group Map

A visual two-dimensional diagram used to capture the competitive landscape by plotting firms according to two non-correlated key variables.

Mobility Barriers

Factors that restrict firms in one strategic group from moving to a more attractive group within the same industry.

Key Success Factors (KSFs)

The specific strategy elements, product attributes, resources, and competitive capabilities essential for surviving and thriving in an industry.