Chapter 3 The External Assessment Strategic Management: Concepts & Cases 13th Edition Fred David Copyright © 2011 Pearson Education‚ Inc. Publishing as Prentice Hall Ch 3 -1 External Audit Environmental Scanning Industry Analysis Copyright © 2011 Pearson Education‚ Inc. Publishing as Prentice Hall Ch 3 -2 External Audit Purpose of an External Audit Develop a finite list of opportunities that could benefit a firm threats that should be avoided Copyright © 2011 Pearson Education
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new entrants emerging to alter the competitive landscape- Depend on size of barriers to entry- Higher the barrier‚ weaker the threat‚ and greater the pricing power of existing participants | - Econ of scale- product differences an brand identify that will deter customers from switching- switching cost that product user will incur if switch- capital requirement to construct facilities and other infrastructure req. to entry industry- Access to distribution channels‚ if existing distributors are at or
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Industry competition is medium to high‚ because it has many competitors‚ but Samsung is clear market leader now. Besides the six major competitors‚ many Chinese firms want into this market. In addition‚ high differentiation and high fixed cost as exist barriers. Bargaining power of buyers is moderate‚ since buyers were largely OEM‚ and Siegel and Chen state: “OEM would negotiate hard for a price as memory represented 4-12% of PC cost and 4-7% of mobile phone cost. Buyers would pay 1% premium for reliable
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products‚ power of suppliers not so much • Movie theatres – production houses strong; substitute products abound; Threat of Entry The threat of entry puts pressure on prices‚ costs and the rate of investment necessary to compete. This puts pressure on profitability. Competitors must hold down prices or boost investment to deter new entrants. Barriers to Entry 1. Supply-side economies of scale: Occurs when firms that produce larger volumes enjoy lower cost per unit‚ because they can
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“The five competitive forces that shape strategy“‚ Michael Porter (2008) updates and extends his “five forces” framework he first introduced in 1979 and which has influenced the academic and business research for decades. He reaffirms that “THREAT OF ENTRY”‚ “THE POWER OF SUPPLIERS”‚ “THE POWER OF BUYERS”‚ THE THREAT OF SUBSTITUTES”‚ and “RIVALRY AMONG EXISTING COMPETITORS” are the forces that shape every single industry‚ and a thorough understanding of such forces help analyze everything from the intensity
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SWOT Analysis A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W)‚ and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis. The SWOT analysis provides information that is helpful in matching the firm’s resources and capabilities
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Office Depot‚ Staples and Office Max. 2. What barriers to entry help maintain the industry structure? Proprietory technology or knowledge‚ patents‚ government regulations/policies‚ exclusive ownership of natural resource or huge investment requirements – can serve to limit the number of new competitors and the pace at which they enter a market. New office superstore suppliers must enter at both local and national level. It has a barrier to entry at local level because saturated existing office
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product enhancement‚ customer lock-in‚ raising entry barriers‚ and alliances to defeat copycat products 2. What role did information systems play in your answer to question 1? Information systems were very important. The database of trainer data was used extensively to help create and maintain the close relationship Fitness Quest desired with their trainers. 3. What additional information systems could Fitness Quest develop to create barriers to entry to the competition and to lock in customers
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787 aircraft project. However‚ the likelihood of Boeing’s success is uncertain due to numerous threats from the market. Boeing faces threats from risks of entry by potential competitors‚ fierce rivalry between the incumbent firms‚ and other macroenvironment factors. The company tries to use strategies such as brand loyalty‚ barrier to entry and customer switching cost to combat these market threats. While some strategies will help reduce external competitive forces‚ they may not be sufficient. To
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CHAPTER 2 External Analysis: The Identification of Opportunities and Threats I. Overview A. For a company to succeed‚ its strategy must either fit the industry environment in which it operates‚ or the company must be able to reshape the industry environment in which it operates to its advantage through its choice of strategy. Companies typically fail when their strategy no longer fits the environment in which they operate. B. To achieve a good fit‚ managers must understand the forces that shape
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