KEY CONCEPTS AND OBJECTIVES
Below a list of some of the main key terms you will find in this chapter. Keep in mind that getting familiar with these may help you in the rest of the class.
- Chapter 2: The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis
o Explain the importance of analyzing and understanding the firm’s external environment.
o Define and describe the general environment and the industry environment.
o Discuss the four parts of the external environmental analysis process.
o Name and describe the general environment’s seven segments.
o Identify the five competitive forces and explain how they determine an industry’s profitability potential.
o Define strategic groups and describe their influence on firms.
o Describe what firms need to know about their competitors and different methods (including ethical standards) used to collect intelligence about them.
- Chapter Concepts:
o The external environment
o External environmental analysis
o Five forces of competition
o Strategic groups
o Competitor analysis
o Strategic leaders
Class, Exercise 2 talks about what the future looks like: Read it and then answer the following question.
Which of the seven dimensions of the general environment will this affect (may be more than one)?
- Describe the effect.
- List some business opportunities that will come from this.
- Identify some existing organizations that stand to benefit.
- What, if any, are the ethical implications?
posted by Andrew
The geographic distribution is an interesting component of the general environment to discuss. Geographic distribution in the past, was a much bigger aspect than I believe it is today. Geographic distribution still matters, but the ability to move, especially within the United States, has never been greater. More people that not that I meet in Colorado, especially in my age group, are not from here. 50 years ago, you simply would not see this kind of shift in geographic distribution. Most people just lived their lives wherever they were born and grew up. Now, people can move to where the jobs are and where the economy is better. This is a trend that I think will continue with the advancing of technology.
Discuss the four parts of the external environmental analysis process
posted by Andrew
To take my last post about the external environment a step further, it is important to also discuss the four parts of the external environment. The four are scanning, monitoring, forecasting, and assessing. Scanning entails “identifying early signals of environmental changes and trends” (Hitt, Ireland, Hoskisson, 2015, p. 11). This is important to prevent companies from falling behind. Monitoring involves “detecting meaning through ongoing observations of environmental changes and trends” (Hitt et al., 2015, p. 11). Monitoring is essentially like scanning, but more of following over time instead of observing early on. Forecasting involves “developing projections of anticipated outcomes based on monitored changes and trends” (Hitt et al., 2015, p. 11). The final part, assessing, is the last piece of the puzzle. Assessing includes “determining the timing and importance of environmental changes and trends for firms’ strategies and their management” (Hitt et al., 2015, p. 11). Assessing is important because it is the only way to continue to improve in the future. If you
scan, monitor, and forecast, but do not assess, the previous steps were basically meaningless.