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Learning Objectives

Learning Objectives. To learn to identify the different types of environments that affect a firm To learn what the components of the industry and macroenvironment are To learn how to apply environmental evaluation to understanding how a firm selects competitive strategies.

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Learning Objectives

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  1. Learning Objectives • To learn to identify the different types of environments that affect a firm • To learn what the components of the industry and macroenvironment are • To learn how to apply environmental evaluation to understanding how a firm selects competitive strategies

  2. The Five Forces Model • Risk of Entry • Rivalry among established companies • Bargaining power of buyers • Bargaining power of suppliers • Threat of substitute products • Complementors

  3. Risk of Entry Economies of scale Brand loyalty Absolute cost advantage Customer switching costs Government regulation

  4. Rivalry Among Established Companies Industry competitive structure Industry demand Cost conditions Exit barriers

  5. Bargaining Power of Buyers • Size of suppliers • Size of buyers • Number of suppliers • Number of buyers • Purchase quantity • Supplier dependence on buyers • Switching costs • Supplier competition • Likelihood of vertical integration by buyer

  6. Bargaining Power of Suppliers • Size of suppliers • Size of buyers • Number of suppliers • Number of buyers • Number of substitute products that can be supplied • Importance of the product supplied • Importance of the customer to the supplier • Supplier product differentiated • Likelihood of vertical integration by supplier

  7. Industry Life Cycle Analysis • Embryonic industries • Growth industries • Industry shakeout • Mature industries • Declining industries • Limitations

  8. The Macroenvironment • Macroeconomicforces • Global forces • Technological forces • Demographic forces • Social forces • Political & legal forces

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