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A firm's macroenvironment consists of what factors (PESTEL)
- Political
- Economic
- Sociocultural
- Technological
- Ecological
- Legal
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describes the influence government bodies can have on firms
political environment
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Mainly affected by 5 factors: growth rates, interest rates, levels of employment, price stability and currency exchange rates
Economic environment
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Capture a society's cultures, norms and values
Sociocultural
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capture the application of knowledge to create new processes and products
Technological
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Concern a firm's regard for environmental issues such as the natural environment, global warming, and sustainable economic growth
Ecological factors
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Capture the official outcomes of the political processes that manifest themselves in laws, mandates, regulations and court decisions
Legal environment factors
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What determines the competitive structure of an industry
- Size of competitors
- Whether the firm possess some degree of pricing power
- The type of product or service the industry offers
- Height of entry barriers
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Industry characterized by many small firms, a commodity product, low entry barriers, and no pricing power for individual firms
Perfectly competitive industry
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Industry characterized by many firms, a differentiated product, medium entry barriers and some pricing power
Monopolistic
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Industry characterized by few (large) firms, a differentiated product, high entry barriers, and some degree of pricing power
oligopolistic
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Exists when there is only one firm supplying the market
Monopoly
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Can create a positive-sum game, resulting in a larger pie for everyone involved
Co-opetition
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Increase demand for the primary product, enhancing the profit potential for the industry and the firm
Complements
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Attractice industries for co-opetition are characterized by
- High entry barriers
- low exit barriers
- Low buyer and supplier power
- Low threat of substitutes
- Availability of complements
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When formally unrelated industries begin to satisfy the same customer need
Industry convergence, often brought on by technological advances
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a set of firms within a specific industry that pursue a similar strategy in their quest for competitive advantage
Strategic group
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What generally happens with strategic groups
- Usually 2 based on 2 different strategies
- One pursues a low-cost strategy
- One pursues a differentiation strategy
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Intra-group rivalry _______ inter-group rivalry
exceeds
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Movement between strategic groups is
restricted by mobility barriers
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Obstacles that determine how easily a firm can enter an industry
Often one of the most significant predictors of industry profit
entry barriers
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Framework that determines the profit potential of an industry and shape a firm's competitive strategy
five forces model
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