Analyzing the

External
Environment
of the Firm:
Creating
Competitive
Advantages

chapter 2
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 The General Environment
2-2

The general environment is composed of factors

that are both hard to predict and difficult to
control:
▪ Demographic ▪ Technological
▪ Sociocultural ▪ Economic
▪ Political/Legal ▪ Global

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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
 Porter’s Five-Forces Model of
Industry Competition
2-3

Exhibit 2.4 Porter’s Five-Forces Model of Industry Competition

Source: Adapted and reprinted with permission of The Free Press, a division of Simon & Schuster Adult Publishing Group, from Competitive
Strategy: Techniques for Analyzing Industries and Competitors by Michael E. Porter. Copyright © 1980, 1998 by The Free Press. All rights
reserved.
Copyright © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Strategic Groups Within Industries
2-4

▪ Two unassailable assumptions in industry

analysis:
▪ No two firms are totally different
▪ No two firms are exactly the same
▪ Strategic groups – clusters of firms that share
similar strategies:
▪ Breadth of product & geographic scope
▪ Price/quality
▪ Degree of vertical integration
▪ Type of distribution

Copyright © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Strategic Groups Within Industries
2-5

▪ Strategic groups as an analytical tool

▪ Helps identify barriers to mobility that protect a
group from attacks by other groups
▪ Helps identify groups whose competitive position
may be marginal or tenuous
▪ Helps chart the future direction of firms’ strategies
▪ Helps to think through the implications of each
industry trend for the strategic group as a whole

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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Strategic Groups Within Industries
2-6

Exhibit 2.7 The World Automobile Industry: Strategic Groups

Note: Members of each strategic group are not exhaustive, only illustrative.
Copyright © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.