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A comprehensive overview of the general environment, external environmental analysis, and the five forces of competition model. It covers key concepts such as the dimensions of the general environment, the four components of external environmental analysis, and the factors influencing the threat of new entrants, bargaining power of suppliers and buyers, threat of substitute products, and rivalry among competing firms. The document also explores tangible and intangible resources, capabilities, core competencies, and value chain analysis, providing a framework for understanding competitive advantage.
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General Environment - ✔✔Composed of dimensions in the broader society that influence an industry and the firms within it Dimensions of the General Environment - ✔✔1. Demographic
Scanning - ✔✔Identifying early signals of envrionmnetal changes and trends Monitoring - ✔✔Detecting meaning through ongoing observations of environmental changes and trends Forecasting - ✔✔Developing projections of anticipated outcomes based on monitored changes and trends Assessing - ✔✔Determining the timing and importance of environmental changes and trends for firms' strategies and their management The Five Forces of Competition Model - ✔✔1. Threat of New Entrants
Using strategic groups to understand an industry's competitive structure requires the firm to plot companies' competitive actions and responses along strategic dimensions, such as: - ✔✔-Pricing decisions
Human Resources - ✔✔-Knowledge
Value Capabilities - ✔✔Allow the firm to exploit opportunities or neutralize threats in its external environment Rare Capabilities - ✔✔Capabilities that few, if any, competitors possess Costly to Imitate Capabilities - ✔✔Capabilities that other firms cannot easily develop Non-substitutable Capabilities - ✔✔Capabilities that do not have strategic equivalents For a capability to be a core competence, it must be: - ✔✔Valuable and unique from a customer's point of view
For a core competence to be a potential source of competitive advantage, it must be: - ✔✔Inimitable and non-substitutable by competitors Value Chain Analysis - ✔✔Allows the firm to understand the parts of its operations that create value and those that do not The firm earns above-average returns only when the value it creates is than the costs incurred to create that value - ✔✔Greater Value Chain - ✔✔A template that firms use to analyze their cost position and to identify the multiple means that can be used to facilitate implementation of a chosen strategy Segmented into value chain activities and support functions
A key reason firms must satisfy customers with their business-level strategy is that returns earned form relationships with customers are the lifeblood of all organizations The most successful companies try to find new ways to: - ✔✔-Satisfy current customers
Reach - ✔✔Dimension of relationships with customers revolves around the firm's access and connection to customers Richness - ✔✔Concerns the depth and detail of the two-way flow of information between the firm and customers Affiliation - ✔✔Concerned with facilitating useful interactions with customers How does a firm decide who the target customer is? - ✔✔By dividing customers into groups based on difference in customers' needs Market Segmentation - ✔✔The process of dividing customers into groups based on their needs Used to customers with similar needs into individual and identifiable groups
