competitive strategy
Alku_1301
HI60062b11.ppsx
Lecture 2b: External Environment
Part B
HI6006 Competitive Strategy
Learning Objectives in this week
Understand a firm’s external environment and be able to analyse it
Differentiate between the general environment and the industry environment
Apply an External Analysis to any industry
Elements of the General Environment
Opportunity or Threat
A firm’s external environment creates:
opportunities (e.g. the opportunity for BP to enter other global markets)
threats (e.g. the possibility that additional regulations in its global markets will reduce opportunities for BP to extract oil and gas)
Opportunities and threats affect a firm’s strategic actions
A Way to Analyse the External Environment
P – the Political landscape
E – the Economic outlook
S – the Socio-Cultural adaptations
T – the Technology space
E – the earth Environment and Sustainability
L – the Legal and Ethical domain
An industry is a group of firms that produce similar products or offer similar services that are close substitutes.
Compared with the general environment, the industry environment has a more direct effect on a firm’s:
Strategic competitiveness
Ability to earn above-average returns
Industry Environment Analysis
