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

| September 28, 2018

31. The Chapter 2 Strategic
Focus on efforts by firms to address the physical environment indicated that
producing and selling “green” (environmentally friendly) products was not a
successful strategy.

32. Producing and selling “green” (environmentally friendly) products
is one way that companies have responded to pressures from the physical
environment (Chapter 2 Strategic Focus).

33. According to the Chapter 2 Strategic Focus, in response to hard
economic conditions, there is declining trend among many companies to reduce
their impact on the physical environment.

34. The Chapter 2 Strategic Focus indicates that producing and selling
“green” (i.e., environmentally friendly) products is one way that companies
have responded to pressures from the physical environment.

35. According to a recent study reported in the Wall Street Journal,
95% of consumer products examined committed at least one offense of “green
washing,” a term used to describe unproven environmental claims (Chapter 2
Strategic Focus).

36. Compared with the general environment, the industry environment
has a more indirect effect on the firm’s strategic competitiveness and ability
to earn above-average returns.

37. The five forces model expands the arena of competitive analysis
beyond direct competitors (i.e., rivals) to include buyers and suppliers who
may also be a source of competition.

38. A high threat of new entrants keeps pricing pressures on existing
firms, keeping consumers happy and making the industry attractive and

39. Switching costs, access to distribution channels, economies of
scale, large numbers of competing firms, and slow industry growth are some of
the entry barriers that may affect the threat of new entrants to an industry.

40. An example of a government policy barrier to entry would be where
the Antitrust Division of the Department of Justice disallows a merger because
it creates a firm that is too dominant and would thus create unfair

41. Suppliers are powerful when the industry is dominated by a few
large companies, no satisfactory substitutes are available, the selling
industry is relatively more concentrated than the purchasing industry, and
switching costs are high.

42. The main competitive factor facing newspaper companies is the
existence of substitute products and services.

43. Tablets such as the iPad have had little effect on the sale of PCs
in the U.S. and PC producers such as Taiwan’s Acer Computers have experienced
significant growith.

44. One broad theme of the Chapter 2 Strategic Focus is that
traditional sources of media (paper, tape, and film) are facing powerful
substitutes in the form of digital media.

45. Substitution of digital for traditional media has led to industry
convergence. For example, mobile phone producers such as Nokia, Samsung, and
Motorola now produce smartphones in response to Apple’s iPhone (Chapter 2
Strategic Focus).

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