Important for a firm to study and understand the external environment

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Why is it important for a firm to study and understand the external environment?

What are the differences between the general environment and the industry environment? Why are these differences important?

What is the external environmental analysis process (four parts)? What does the firm want to learn when using this process?

What are the seven segments of the general environment? Explain the differences among them.

How do the five forces of competition in an industry affect its profitability potential? Explain.

What is a strategic group? Of what value is knowledge of the firm’s strategic group in formulating that firm’s strategy?

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?

Review Questions – chapter 3
Why is it important for a firm to study and understand its internal organization?

What is value? Why is it critical for the firm to create value? How does it do so?

What are the differences between tangible and intangible resources? Why is it important for decision makers to understand these differences? Are tangible resources more valuable for creating capabilities than are intangible resources, or is the reverse true? Why?

What are capabilities? How do firms create capabilities?

What four criteria must capabilities satisfy for them to become core competencies? Why is it important for firms to use these criteria to evaluate their capabilities’ value-creating potential?

What is value chain analysis? What does the firm gain by successfully using this tool?

What is outsourcing? Why do firms outsource?

How do firms identify internal strengths and weaknesses? Why is it vital that managers have a clear understanding of their firm’s strengths and weaknesses?

What are core rigidities? What does it mean to say that each core competence could become a core rigidity?

Sample Solution

Business environments change frequently and require consideration when planning and conducting operations. Business managers and executives have a responsibility to examine internal concerns for how they may influence company decisions. It’s also important to monitor any external environmental factors that can affect how the business functions as well as develop methods for overcoming these challenges. Choosing to monitor the dynamic nature of external environment factors allows businesses to protect themselves against predictable events and mitigate the effects of unexpected changes.

After extensive experience working and traveling in Latin America, Mr. and Mrs. Jones have developed a long-standing interest in international development and poverty alleviation. They have developed a desire to launch a new venture that might be able to help address economic development and job creation. The founders have based the concept for this new venture on two major assumptions including, their belief that supporting formal above-board business creation and providing ongoing support is more effective at addressing poverty the approach taken by MFIs to support the informal market and consumption lending. Moreover, they believe that there is a market within the study abroad sector for using students and study abroad programs as a resource for international development.

 

 

A literature review will be conducted comprised entirely of secondary research and will focus on the three major components or sectors relevant to the success of the new venture. These sectors are; the microfinance sector, business incubators for economic development and the study abroad sector. The literature review will be conducted to provide the evidence required to perform a thorough analysis and discussion.

The purpose of this GMP is to test the assumptions of the founders by performing a two-stage analysis and discussion and will answer the question, are economic incubators more or less effective than MFIs at addressing poverty through job creation? Stage one will be a literature review and discussion of microfinance institutions and incubators for economic development. This discussion will answer the three questions; what are they, how are they supposed to operate as well as what are the intended results and what are the actual results? It will also discuss the limitations of these methodologies and provide a broad picture of the study abroad sector. Stage two will be used to describe the organization and its structure, evaluate the external environment and the study abroad industry, and to define the company’s internal environment through the development of a targeted marketing plan. This two stage analysis will be done to effectively choo

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