Strategic Management Chapter 5

Analyzers

organizations operate in at least two different product-market areas, one stable and one variable. In the stable areas, efficiency is emphasized. In the variable areas, innovation is emphasized.

Bargaining power of buyers

large purchases, backward integration, alternative suppliers, low cost to change suppliers, product represents a high percentage of buyer's cost (incentivized to shop around), buyer earns low profits (cost/service sensitive), product is unimportant to buyer

Competitive intelligence

a formal program of gathering information about a company's competitors; sources: social media, information brokers, internet, industrial espionage, investigatory services

Competitors

the companies that offer the same products or services as the subject company

Complementor

a company or an industry whose product(s) works well with another industry's or firm's product and without which that product would lose much of its value

Consolidated industry

an industry in which a few large companies dominate; each struggles to differentiate products from its competition

Defenders

organizations operate with a limited product line that focus on improving the efficiency of their existing operations. This cost orientation makes them unlikely to innovate in new areas

EFAS table

a table that organizes external factors into opportunities and threats and how well management is responding to these specific factors

Entry barrier

an obstruction that makes it difficult for a company to enter an industry

Environmental analysis

the monitoring, analyzing, and evaluation of information relevant to the organization development of strategy

Environmental uncertainty

the degree of complexity plus the degree of change existing in an organization's external environment; increasing due to markets becoming more global and technological change

Exit barrier

an obstruction that keeps a company from leaving an industry

Externalities

side effects on the natural environment

Fragmented industry

an industry in which no firm has large market share and each firm serves only a small piece of the total market in competition with other firms

Global industries

an industry in which a company manufactures and sells the same products, with only minor adjustments for individual countries around the world

Hypercompetition

an industry situation in which the frequency, boldness, and aggressiveness of dynamic movements by the players accelerates to create a condition of constant disequilibrium and change; threatened by short product life cycles, short product design cycles, new technologies, frequent entry by unexpected outsiders, repositioning by incumbents, tactical redefinitions of market boundaries as diverse industries merge

Industry

a group of firms producing a similar product or service

Industry analysis

an in-depth examination of key factors within an organization's task environment

Industry matrix

a chart that summarizes the key success factors within a particular industry

Industry scenario

a forecasted description of an industry's likely future

Key success factors

variables that significantly affect the overall competitive position of a company within a particular industry

Multidomestic industries

an industry in which companies tailor their products to the specific needs of consumers in a particular country

Multinational corporation

a company that has significant assets and activities in multiple countries; conduct the following activities in other countries: marketing, financial, manufacturing, and other function activities

Natural environment

that part of the external environment that includes physical resources, wildlife, and climate that are an inherent part of existence on Earth; form an ecological system or interrelated life

New entrants

businesses entering an industry that typically bring new capacity to an industry, a desire to gain market share, and substantial resources

Prospectors

companies operate with fairly broad product lines that focus on product innovation and market opportunities. This sales orientation makes them somewhat inefficient. They tend to emphasize creativity over efficiency

Reactors

corporations operate with a lack of a consistent strategy-structure culture relationship. Their (often ineffective) responses to environmental pressures tend to be piecemeal strategic changes. Reactor organizations are not generally stable

Regional industries

an industry in which multinational corporations primarily coordinate their activities within specific geographical areas of the world

Societal environmental

humankind's social system that includes general forces that do not directly touch on the short-run activities of an organization but influence its long-run decisions; economic, technological, political-legal, and sociocultural environment

STEEP analysis

an approach to scanning trends in the societal and natural environment that examines socio-cultural, technological, economic, ecological, and political-legal forces

Strategic group

a set of business units or firms that pursue similar strategies and have similar resources; can be mapped by plotting the market positions on industry competitors on a two-dimensional graph, using two strategic variables as the vertical and horizontal axes

Strategic type

a category of firms based on a common strategic orientation and a combination of structure, culture, and processes that are consistent with that strategy

Substitute product

products that appear to be different but can satisfy the same need as other products; identification of possible substitute products means searching for products that can perform the same function, even though they have a different appearance

Sustainability

premised on the view that long-term survival of society depends on the responsible use of these resources; carbon footprint is one way to measure a firm's commitment to sustainability

Task environment

the part of the business environment that includes the elements of groups that directly affect the corporation and, in turn, are affected by it; government, local communities, suppliers, competitors, customers, creditors, employees/labor unions, special-interest groups, and trade associations

Threat of new entrants

some of the possible barriers to entry are economies of scale, product differentiation, capital requirements, switching costs, access to distribution channels, cost disadvantages independent of size, government policy