Environment- The set of external conditions and forces that have the potential to influence the organization.
General Environment (or Macroenvironment) - Overall trends and events in society such as social trends, technological trends, demographics, and economic conditions.
Industry (or Competitive Environment) - Multiple organizations that collectively compete with one another by providing similar goods, services, or both.
Opportunity- Events and trends that create chances to improve an organization’s performance level.
Primary Activity- An action directly involved in the creation and distribution of goods and services.
Threat- Events and trends that may undermine an organization’s performance.
PESTEL Analysis- The examination of political, economic, social, technological, environmental, and legal factors and their implications for an organization.
Political Segment- The portion of the general environment that involves governments.
Economic Segment- The portion of the general environment that involves economic and financial conditions.
Social Segment- The portion of the general environment that involves demographics and cultural trends.
Technological Segment- The portion of the general environment that involves scientific advances.
Environmental Segment- The portion of the general environment that involves the natural environment.
Legal Segment- The portion of the general environment that involves the law and courts.
Intellectual Property Rights- The ability of an organization to protect intangible goods such as movies, software, and video games from piracy.
Five Forces Analysis- A technique for understanding an industry by examining the interactions among competitors in an industry, potential new entrants to the industry, substitutes for the industry’s offerings, suppliers to the industry, and the industry’s buyers.
Competitors- The set of firms that produce goods or services within an industry.
Exit Barriers- Factors that make it difficult for a firm to stop competing in an industry.
Potential New Entrants- Firms that do not currently compete in an industry but might join the industry in the future.
Substitutes- Offerings from other industries that fulfill the same need or a very similar need as an industry’s products or services.
Suppliers- Providers of inputs that the competitors in an industry need to create goods or services.
Forward Vertical Integration- A strategy that involves a supplier entering the industry that it supplies inputs to.
Buyers- Purchasers of the goods or services that the competitors in an industry create.
Backward Vertical Integration- A strategy that involves a buyer entering the industry that it purchases goods or services from.
Strategic Groups- Sets of firms that follow similar strategies.
Mobility Barriers- Factors that make it unlikely or illogical for a firm to change strategic groups overtime.
Resource-Based Theory- A theory that contends that the possession of strategic resources can provide an organization with competitive advantages over its rivals.
Valuable- Resources that help a firm create strategies that capitalize on opportunities and ward off threats.
Rare- Resources that are unique when contrasted with the resources of competitors.
Difficult to Imitate- Resources that cannot be easily duplicated by competitors and are often protected by various legal means, including trademarks, patents, and copyrights.
Nonsubstitutable- Resources that exist when competitors cannot find alternative ways to gain the benefits that a resource provides.
Sustained Competitive Advantage- A competitive advantage that will endure over time.
Tangible Resources- Resources than can be readily seen, touched, and quantified, such as physical assets, property, plant, equipment, and cash.
Intangible Resources- Resources that are difficult to see, to touch, or to quantify, such as the knowledge and skills of employees, a firm’s reputation, and a firm’s