Chapter 4 - External Analysis

Question 1

Organizations external environment - 7 components

Answer 1

• political, legal + regulatory factors
• economic conditions
• social forces
• technological factors
• natural environment
• global forces
• demographics

Question 2

complementary views for external analysation

Answer 2

1. identifying + analyzing relevant actors from the macro-environment => stakeholder analysis
2. analyzing the immediate industry + competitive environment => porter’s five forces

Question 3

Stakeholder analysis

Answer 3

=> positioning means active management of relationships w/ relevant stakeholders
Attributes for stakeholder Analysis:
Power
Urgent
Legitimacy (1) time sensitivity 
(2) critically

Question 4

industry + environment analysis - central questions

Answer 4

1. opportunities for growth?
2. competitive forces?
3. driving changes in industry?
4. market positions of rivals
5. strategic moves rivals likely to make?

Question 5

Q2: competitive forces - porter’s 5

Answer 5

• competition from rivals
• competition from potential new entrants
• competition from substitute products producers
• supplier bargaining power
• costumer bargaining power

Question 6

(5 forces) rivalry strong when

Answer 6

• slowly growing buyer demand + excess capacity
• low buyer’s switching costs
• products weakly differentiated
• firms high fixed costs
• numerous competitors
• rivals face high exit barriers

Question 7

(5 forces) entry threats strong when

Answer 7

• low entry barriers
• members unable to contest entry
• many potential entrants
• members looking to expend market reach by new product segments/ geographic areas

Question 8

(5 forces) competition from substitute products producers strong when…

Answer 8

• good substitutes available + attractive price
• substitutes better/ comparable performance
• buyers low switching costs
• sales of substitutes growing faster
• producers expand capacity

Question 9

(5 forces) supplier bargaining power strong when

Answer 9

• supplier products are in short supply/ differentiated/ critical to production process
• high switching costs (industry members)
• no good substitutes
• suppliers not dependent on industry
• supplier industry dominated by 1/ 2
• limited backward integration possible

Question 10

(5 forces) buyers bargaining power strong when

Answer 10

• low switching costs
• standardized products
• few in number relative to sellers
• demand weak
• well informed about quality, prices etc.
• have ability to postpone purchase

Question 11

porters five forces

Answer 11

• analyses profit potential of an industry
• explains average industry profitability
  -focuses on price and cost
  => the more powerful the forces, the more pressure on price/cost, the less attractive the industry to its incumbents

Question 12

porters five forces - analysis steps

Answer 12

1. Define the relevant industry
2. Identify the key players (in each of the five forces and group them into different categories (i.e., how strong is the impact of each group?))
3. Identify underlying drivers of each force. Which forces are strong, and which are weak and why?
4. Assess the overall industry structure. What is the industry‘s profit potential? Identify forces that directly influence industry profit potential (not all forces have an equal effect)

Question 13

Q3 driving changes -> what impact? - Analysis of industry dynamics

Answer 13

1. identifying drivers of changes
2. Drivers individually/ collectively? Make more/ less attractive?
3. What strategy changes to prepare for impact of changes?
   Tool: scenario Analysis

Question 14

Q4 market positions of industry rivals

Answer 14

constructing strategic group map:

1. identify competitive characteristics that differentiate firms
2. plot firms on two-dimensional map using pairs of differentiating competitive characteristics
3. same map location = same strategic group
4. circles around each strategic group => circle sizes = size of total industry sales revenue

Question 15

Q5 strategic moves of rivals

Answer 15

• competitive intelligence

- signals of the likelihood of strategic moves

Question 16

stakeholder types

Answer 16

1) Dormant
2) Discretionary
3) Demanding
4) Dominant
5) Dangerous
6) Dependent
7) Definitive
8) non-stakeholder

Question 17

Dormant stakeholder

Answer 17

Power

Question 18

Discretionary stakeholder

Answer 18

Legitimacy

Question 19

Demanding stakeholder

Answer 19

Urgency

Question 20

Dominant stakeholder

Answer 20

Power + Legitimacy

Question 21

Dangerous stakeholder

Answer 21

Urgency + Power

Question 22

Dependent stakeholder

Answer 22

Urgency + Legitimacy

Question 23

Definitive stakeholder

Answer 23

Power + Urgency + Legitimacy