MGT 4090 Management Policy & Strategy Week 2

Flashcards covering key concepts from the MGT 4090 lecture on external analysis in management policy and strategy.

External Environment

The external conditions and factors that affect a firm's performance, including macroeconomic and industry-specific elements.

PESTEL Model

A framework that groups environmental factors into six segments: Political, Economic, Sociocultural, Technological, Ecological, and Legal.

Political Factors

Processes and actions of government bodies that influence a firm, shaped through lobbying, public relations, contributions, and litigation.

Economic Factors

Macroeconomic elements that affect economy-wide phenomena such as growth rates, interest rates, and employment levels.

Sociocultural Factors

Society's cultures, norms, and values; they are dynamic and differ across groups, requiring monitoring of demographic trends.

Technological Factors

Application of knowledge leading to innovations in processes (like lean manufacturing) and products (like smartphones and electric cars).

Ecological Factors

Broad environmental issues concerning the natural environment, like global warming and sustainable economic growth.

Legal Factors

Official outcomes of political processes including laws, regulations, and court decisions that affect industries.

Industry Effects

Outcomes derived from the economic structure of an industry, including common barriers to entry, size, and types of products.

Firm Effects

Performance attributes that can be attributed to the actions of managers, emphasized as more critical than industry effects.

Threat of Entry

The risk that potential competitors will enter an industry, affecting profitability and increasing competition.

Power of Suppliers

The ability of suppliers to influence the price and availability of inputs, impacting the profitability of the industry.

Power of Buyers

The ability of buyers to affect pricing and quality standards, influencing industry profit potential.

Threat of Substitutes

Products or services that meet the same basic customer needs in different ways, posing a competitive threat to established industries.

Porter’s Five Forces Model

A framework that helps assess the competitive forces within an industry (outside of the firms’ control) to determine its profit potential and strategic positioning.

Competitive Forces (Porter’s 5 forces)

Five forces that shape competition in an industry: Threat of Entry, Power of Suppliers, Power of Buyers, Threat of Substitutes, and Rivalry Among Existing Competitors.