Question

4. What are the seven segments of the general environment? Explain the differences among them! Type your answer here Page yo. tabte 2.1. Each seam of the general environment segment recoginize, 4. How do the five forces of competition in an industry affect its profit potential? Explain. Type your answer here 6. What is a strategic group? Of what value is knowledge of the firm's strategic group in formulating that firm's strategy? Type your answer here 7. What is the importance of collecting and interpreting data and information about competitors? What practices should a firm use to gather competitor intelligence and why? Type your answer here WOL uns, such as marketing, Firms sometimes form stra urchasing

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Answer 1

5. The five force model shows the industry forces that affect the long term growth and sustainability of a firm. The five forces –bargaining power of suppliers, bargaining power of buyers, the threat of new entrants, the threat of alternative and substitute and the industry rivalry play a key role in the profitability and growth of any firm. Suppose a firm produces mobile handsets. If we consider the five forces, there is very high competition in the market due to a large number of competitors. There is also high bargaining power among the buyers who can easily switch from one maker to another. There is also a high dependency on suppliers to ensure they provide all the raw materials at the right moment. Suppose one of these factors changes due to any unforeseen circumstance, then the entire product portfolio and supply chain get disturbed. Any change in the equilibrium will force the end customer to move away to another product. This will start impacting the potential revenue sources. To compensate this, the firm will invest more in the supplier network or other project initiatives to ensure the get the customer back. But suppose after all the work, the market forces change again. This would mean there is even more need for change and management decisions. All these changes affect the earning potential and profit margins of the firm. Any small change in the market forces where the firm is highly dependent on the external forces will have a huge impact on the revenues and profit margins.

6. In general terms, a strategic group is a management decision to join forces with other firms who are of the same objective to achieve a larger value in the market. This is a common phenomenon that is observed when multiple firms see a higher value in trying to achieve a goal together rather than trying to achieve the same individually. A common example of this is when firms try to enter new markets. Firms often get into a strategic partnership to share knowledge across others so that they can overcome the local forces and succeed in the market. Since knowledge and information are shared across partners it is vital that there are collaboration and constant engagements. Having a deep knowledge of a firm`s strategic plan also helps in ensuring the right decisions are taken while entering into such partnerships.

7. While working in any industry, there will be a lot of competition and there will be firms that often work on similar products. It is therefore crucial that every firm keeps a watch on the new products and services offered by others. The most common method that is used by the firm for gathering competitor intelligence is to rely on market research companies who provide an unbiased report and data to every firm regarding the competition. Apart from this, all basic data can be collected from annual and financial reports published by firms. Analyzing these data will help firms in identifying the areas the firm needs to work upon to reach market leadership. Also having an insight into the firm's products and services reinforces the firm`s own ability to understand the customer mindset properly.

8. There are many techniques that can be used to identify a firm`s strengths and weaknesses. Detailed business analysis is done of the firm`s own competence to understand the areas that need to improve or phased out. Techniques such as SWOT analysis, Pestle analysis, five forces model, etc. are used commonly across industries to identify strengths and weaknesses. Based on these parameters, the management team can identify the areas that need to be improved. These insights are vital when taking on new projects and initiatives. Suppose the firm is lacking in certain areas, then managers need to take action to ensure the weak areas can be improved. In other areas where the firm has strong competence, the manager can recommend taking additional projects or initiatives in the market to capture a higher market share.

9. Core rigidity can be explained as over-reliance or dependency of a firm on certain aspects. This is often caused by prolonged dependency on the competencies of the firm. In the long term, it could be possible that a firm takes those core advantages for granted and relaxes the improvement focus on other areas. This often means over a period of time, there will be only a few core skills and the firm is over-reliant on them. While this can succeed in the short term, in the long run, it is absolutely vital to keep on improving the areas or else they could easily be left behind in the market. It is, therefore, necessary that the management continues to improve every possible venture rather than be over-dependent on a few core areas.