After studying this chapter, you should have a good understanding of: the importance of developing forecasts of the business environment; why environmental scanning, environmental monitoring, and collecting competitive intelligence are critical inputs to forecasting; why scenario planning is a useful technique for firms competing in industries characterized by unpredictability and change. | Chapter Two Analyzing the External Environment of the Firm Learning Objectives The importance of developing forecasts of the business environment. Why environmental scanning, monitoring, and collecting competitive intelligence are critical inputs to forecasting. Why scenario planning is a useful technique for firms competing in industries characterized by unpredictability and change. The impact of the general environment on a firm’s strategies and performance. How forces in the competitive environment can affect profitability. How a firm can improve its competitive position by increasing its power vis-à-vis forces in the competitive environment. How trends and events in the general environment and forces in the competitive environment are interrelated and affect performance. The concept of strategic groups and their strategy and performance implications. After studying this chapter, you should have a good understanding of: TRANSPARENCY-1 Inputs to Forecasting Environmental . | Chapter Two Analyzing the External Environment of the Firm Learning Objectives The importance of developing forecasts of the business environment. Why environmental scanning, monitoring, and collecting competitive intelligence are critical inputs to forecasting. Why scenario planning is a useful technique for firms competing in industries characterized by unpredictability and change. The impact of the general environment on a firm’s strategies and performance. How forces in the competitive environment can affect profitability. How a firm can improve its competitive position by increasing its power vis-à-vis forces in the competitive environment. How trends and events in the general environment and forces in the competitive environment are interrelated and affect performance. The concept of strategic groups and their strategy and performance implications. After studying this chapter, you should have a good understanding of: TRANSPARENCY-1 Inputs to Forecasting Environmental Scanning Environmental Monitoring Competitive Intelligence Forecasts Exhibit TRANSPARENCY-1 General Environment: Key Trends and Events Exhibit Demographic – Aging population – Rising affluence – Changes in ethnic composition – Geographic distribution of population – Greater disparities in income levels Sociocultural – More women in the workforce – Increase in temporary workers – Greater concern for fitness – Greater concern for environment – Delays in family formation Political/Legal – Tort reform – ADA (Americans with Disabilities Act) – Repeal of Glass-Stegall Act in 1999 (now banks may offer brokerage services) – Deregulation of utility and other industries – Increases in Federally-mandated minimum wages – Taxation at local, state, federal levels Technological – Genetic engineering – Emergence of Internet technology – Computer Aided Design/Computer-Aided Manufacturing Systems – Research in man-made and exotic materials – Pollution/Global warming – Miniaturization of .
