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week 4 notes

by: Michelle Notetaker
Michelle Notetaker

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chapter 4
Strategic management and business policy
Dr. Alkhateeb
Class Notes
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This 3 page Class Notes was uploaded by Michelle Notetaker on Sunday October 2, 2016. The Class Notes belongs to BADM 490 at Southern University at New Orleans taught by Dr. Alkhateeb in Fall 2016. Since its upload, it has received 5 views. For similar materials see Strategic management and business policy in Business Administration at Southern University at New Orleans.

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Date Created: 10/02/16
Michelle N. Ainey September 13, 2016 Chapter Four: 1) Describe the four general forces in the societal environment.  a. Economic Forces: regulate the exchange of materials, money, energy and  information. Examples include the unemployment rate, interest rates and  disposable and discretionary income. b. Technological Forces: generate problem­solving inventions. Examples include  patent protection, productivity improvements (efficiency), digital technology,  internet connectivity (infrastructure) and online consumer behavior. c. Political­legal Forces: allocate power and provide constraining and protecting  laws and regulations. Examples include environment protection laws/regulations,  foreign trade regulations, property laws and laws that prevent discrimination in  hiring and promotion d. Sociocultural Forces: regulate the values, mores and customs of society.  Examples include life­style changes, consumer involvement, life expectancies and birth rates. 2) List eight current sociocultural trends in the U.S. that are transforming North America and the  world.  a. Demographics b. Increasing environmental awareness c. Growing health consciousness d. Expanding seniors market e. Impact of Gen Y f. Declining mass market g. Changing pace and location of life h. Changing household composition i. Increasing diversity of workforce and markets 3) Describe Porter's approach to industry analysis.  Michael Porter contends that a corporation is most concerned with the intensity of competition within its industry. The level of this intensity is determined by basic competitive  forces. These are the threat of new entrants, rivalry among existing firms, threat of substitute  products or services, bargaining power of buyers, bargaining power of suppliers, and relative  power of other stakeholders. New entrants to an industry typically bring to it new capacity, a desire to gain  market share, and substantial resources. The threat of entry depends on the presence of entry  barriers and the reaction that can be expected from existing competitors. 1 Copyright © 2010 Pearson Education, Inc. A competitive move by one firm can be expected to have noticeable effect on its  competitors and thus may cause retaliation or counter efforts. Intense rivalry is related to the  presence of the competitors, rate of industry growth, product or service characteristics, the  amount of fixed costs, capacity, the height of exit barriers, and the diversity of rivals. Substitute products are those products that appear to be different but can satisfy  the same need as another product. Buyers affect an industry through their ability to force down  prices, bargain for higher quality or move services, and play competitors against each other.  Supplies can affect an industry through their ability to raise prices or reduce the quality of  purchased goods and services. The sixth force includes a variety of stakeholder groups from the  task environment. The importance of these stakeholder groups varies by industry. 4) Distinguish between a fragmented and consolidated industry.  A fragmented industry has no firm with a large market share and each firm serves  only a small piece of the total market in competition with others. As new competitors enter the  industry, prices drop as a result of competition. A consolidated industry is dominated by a few large firms, each of which  struggles to differentiate its products from competition. The automobile, petroleum, and major  home appliance industries are examples of mature, consolidated industries each controlled by a  few large competitors. 5) What are the two factors that tend to determine whether an industry will be primarily  multidomestic or primarily global?  The factors that tend to determine whether an industry will be primarily  multidomestic or primarily global are pressure for coordination within the multinational  operations operating in that industry and pressure for local responsiveness on the part of  individual country markets. 6) Describe the four strategic types of the Miles and Snow typology.  According to Miles and Snow, there are four general types of firms based on a  common strategic orientation and a combination of structure, culture, and processes consistent  with that strategy. Defenders are companies with a limited product line that focus on improving  the efficiency of their existing operations. Prospectors are companies with fairly broad product  lines that focus on product innovation and market opportunities. Analyzers are corporations that  operate in at least two different product­market areas, one stable and one variable. Reactors are  corporations that lack a consistent strategy­structure­culture relationship. 7) Define competitive intelligence.  Competitive intelligence is a formal program of gathering information on a  company’s competitors. Often called business intelligence, it is one of the fastest growing fields  within strategic management. 8) Discuss the most commonly practiced form of forecasting.  Trend extrapolation is the most widely practiced form of forecasting with over  70% of the world’s largest firms using this technique either occasionally or frequently.  Extrapolation is the extension of present trends into the future. It rests on the assumption that the  2 Copyright © 2010 Pearson Education, Inc. world is reasonably consistent and changes slowly in the short run. Time­series methods are  approaches of this type: they attempt to carry a series of historical events forward into the future.  The basic problem with extrapolation is that a historical trend is based on a series of patterns or  relationships among so many different variables that a change in any one can drastically alter the  future direction of the trend. As a rule of thumb, the further back into the past you can find  relevant data supporting the trend, the more confidence you can have in the prediction. 3 Copyright © 2010 Pearson Education, Inc.


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