Chapter 2—The External Environment: Opportunities, Threats, Competition, and Competitor Analysis

| September 28, 2018

46. One barrier faced by
digital device producers is that the firms producing the content (musicians,
news organizations and newspapers, television and movie producers, and
publishers) have resisted making that content available through all digital
devices. (Chapter 2 Strategic Focus).

47. Typically, fast industry growth increases the vigor of retaliation
by existing firms against a new industry rival.

48. High exit barriers are factors that cause a company to remain in
an industry even though the profitability of doing may be questionable.

49. Exit barriers are especially low in the airline industry as
aircraft are not particularly specialized and can easily be sold to other
airlines, air cargo companies, the military,
or even to wealthy individuals
who want to own a private jet.

50. Generally, the stronger the competitive forces, the higher the
profit potential of an industry.

51. An attractive industry is one that is characterized by high entry
barriers, suppliers and buyers with strong bargaining power, low threats from
substitute products, and low rivalry among firms.

52. Strategic groups are firms in different industries following the
same or similar strategies.

53. The strengths of the five competitive forces are similar across
strategic groups within an industry.

54. The more distant strategic groups are in terms of their
strategies, the greater the liklihood of rivalry between the groups.

55. A firm experiencing intense rivalry with powerful competitors
should energetically engage in competitor analysis.

56. The competitor analysis is the final part of the external
environment analysis and focuses on each company against which a firm directly
competes (e.g., Coca-Cola and PepsiCo, Home Depot and Lowe’s, and Airbus and
Boeing).

57. The process of competitor analysis should examine the competitor’s
future objectives, current strategy, assumptions, and capabilities.

58. When Delta airlines wants to study Continental Airlines, it must
examine both Continental and its complementor, Star Alliance.

59. Eavesdropping is an ethical way to obtain information about
competitors’ actions.

60. Any competitor intelligence practice that is legal is also
ethical.

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