Strategic Management & Business Policy, 14e (Wheelen) Chapter 4 Environmental Scanning and Industry Analysis
1) Environmental scanning is the monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the corporation. Answer: TRE 2) A corporation uses environmental scanning to avoid strategic surprise. Answer: TRE ) !olitical"legal forces regulate the values, mores, and customs of society. Answer: !A"SE #) $he task environment includes the economic, technological, political"legal, and sociocultural forces. Answer: !A"SE %) &ndustry analysis was populari'ed (y ichael !orter. Answer: TRE *) &n dynamic environments, the +E-s focus is on forces in the societal environment. Answer: !A"SE ) $oday-s organi'ations must scan the natural environment for factors that might previously have (een taken for granted. Answer: TRE /) $he transferring of profits from a foreign su(sidiary to a corporation-s head0uarters is known as repatriation of profits. Answer: TRE ) An example of an economic varia(le in the societal environment is antitrust regulation. Answer: !A"SE 1) $he growing health consciousness is an example of a political"legal force. Answer: !A"SE 11) ne of the demographic varia(les in the societal environment is the changing household composition. Answer: TRE
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12) ne of the (reakthrough developments in technology is the porta(le information device. Answer: TRE 1) A multinational corporation is a company with significant assets and activities in multiple countries. Answer: TRE 1#) $he origin of competitive advantage lies in the a(ility to identify and respond to environmental change well in advance of competition. Answer: TRE 1%) $he willingness to re5ect unfamiliar as well as negative information is called issues priority. Answer: !A"SE 1*) A corporation-s internal strategic factors are those key environmental trends that are 5udged to have (oth a medium to high pro(a(ility of occurrence and a medium to high pro(a(ility of impact on the corporation. Answer: !A"SE 1) An industry is a group of firms producing a similar product or service. Answer: TRE 1/) According to ichael !orter, the weaker each of the competitive forces, the more limited companies are in their a(ility to raise prices and earn greater profits. Answer: !A"SE 1) According to ichael !orter, a high force can (e regarded as threat (ecause it is likely to reduce profits. Answer: TRE 2) An entry (arrier is an o(struction that makes it difficult for a company to enter an industry. Answer: TRE 21) ne of the possi(le (arriers to entry is product differentiation. Answer: TRE 22) $he need to invest huge financial resources in manufacturing facilities in order to produce large commercial airplanes creates a significant (arrier to entry to any competitor for 6oeing and Air(us. Answer: TRE
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2) 7overnments can do little to erect (arriers to entry in an industry. Answer: !A"SE 2#) 8utra9weet can serve as a product su(stitute for sugar satisfying the same need. Answer: TRE 2%) A (uyer may (e powerful when changing suppliers costs a great deal. Answer: !A"SE 2*) A consolidated industry is dominated (y a few large firms, each of which struggles to differentiate its products from the competition. Answer: TRE 2) ultidomestic industries are specific to each country or group of countries. Answer: TRE 2/) $he only factor used to determine whether an industry will (e primarily multidomestic or primarily glo(al is the pressure for local responsiveness. Answer: !A"SE 2) c;onald-s and live 7arden are in the same strategic group. Answer: !A"SE )
%) 6usiness intelligence is one of the fastest growing fields within strategic management. Answer: TRE *) A.+. 8ielsen is an example of an outside organi'ation providing a firm with competitive intelligence. Answer: TRE ) $o com(at the increasing theft of company secrets, the >.9. government passed the Economic Espionage Act. Answer: TRE /) ?aulty underlying assumptions are the most fre0uent cause of forecasting errors. Answer: TRE ) Extrapolation rests on the assumption that the world is relatively dynamic and changes 0uickly in the short run. Answer: !A"SE #) 9tatistical modeling is a 0uantitative forecasting techni0ue that attempts to discover causal or at least explanatory factors that link two or more time series together. Answer: TRE #1) An industry scenario is a forecasted description of a particular industry-s likely future. &t is developed (y analy'ing the pro(a(le impact of future societal forces on key groups in a particular industry. Answer: TRE #2) $he com(ination of the degree of complexity and the degree of change existing in an organi'ation-s external environment is@are called A) strategic factors. 6) strategic issues. C) environmental uncertainty# ;) strategic fit. E) scenarios. #) According to the text, one reason environmental uncertainty is a threat to strategic managers is (ecause A) it is a costly and time consuming process. 6) the strategic manager cannot control the environment. +) it forces the strategic manager to (e reactive. $) it hampers their a%ility to develop long&range plans# # +opyright 3 21% 4 21* !earson Education, &nc.
E) there are too many uncontrolla(le varia(les. ##) hich of the following is 8$ descriptive of external environmental scanningB A) >sed as a tool to ensure a corporation-s long"term health. 6) >sed to monitor, evaluate, and disseminate information from the external environment to key people within the corporation. +) >sed to identify opportunities and threats. ;) &t is a tool that corporations use to avoid strategic surprise. E) sed to identi'y strengths and eanesses# #%) $he corporation-s task environment A) encompasses the physical working areas of the organi'ation. *) includes those elements or groups ithin an organi+ation,s industry# +) is an advisory committee to top"management. ;) is an accounting of the many 5o(s within an organi'ation. E) is the 5o( re0uirement specification listing necessary skills and a(ilities. #*) hich of the following is 8$ an element of the organi'ation-s task environmentB A) local communities 6) trade associations +) governments $) technological developments E) special interest groups #) hich environment was generally perceived (y (usiness people to (e a given until the 2th centuryB A) the task environment *) the natural environment +) the industry ;) the societal environment E) the external environment #/) hich of the following is 8$ a ma5or force in the societal environmentB A) political"legal forces *) la%or 'orces +) economic forces ;) technological forces E) sociocultural forces #) All of the following are technological (reakthroughs already having a significant impact on many industries EC+E!$ % +opyright 3 21% 4 21* !earson Education, &nc.
A) groing health consciousness# 6) alternative energy sources. +) genetically altered organisms. ;) smart, mo(ile ro(ots. E) virtual personal assistants.
%) hich societal force includes demographic trendsB A) political"legal forces 6) la(or forces +) economic forces ;) technological forces E) sociocultural 'orces %1) hich of the following is 8$ one of the eight sociocultural trends mentioned in the textB A) &ncreasing environmental awareness. 6) 7rowth of the seniors market. +) ;ecline of the mass market. $) Increasing 'ood consumption# E) &mpact of 7eneration D (oomlet. %2) hich is the largest of the current >9 generationsB A) *a%y *oomers 6) oofies +) 9ilent 7eneration ;) 7en C E) 7en D %) A company with significant assets and activities in multiple countries is known as an) FFFFFFFF. A) multinational corporation 6) repatriated corporation +) transfera(le corporation ;) duplicate corporation E) emancipated corporation %#) hen strategic managers have a willingness to re5ect unfamiliar as well as negative information it is referred to as A) strategic paralysis. 6) corporate inertia. +) management indifference. $) strategic myopia# * +opyright 3 21% 4 21* !earson Education, &nc.
E) +orporate apathy %%) $he issues priority matrix used in environmental scanning is composed of two axis or dimensions which are la(eled A) importance to the industry and likelihood o f occurrence. 6) industry growth rate and pro(a(le competitive position. C) pro%a%ility o' occurrence and pro%a%le impact on the corporation# ;) pro(a(le industry attractiveness and (usiness strength@competitive position. E) issue importance and relative power of stakeholder groups. %*) hat are the key environmental trends that are 5udged to have a medium to high pro(a(ility of occurrence and a medium to high pro(a(ility of impact on the corporationB A) e-ternal strategic 'actors 6) scenarios +) industry forces ;) strategic issues E) historical concerns %) &ndustry analysis is primarily concerned with a corporation-s A) societal environment. *) tas environment# +) sociocultural environment. ;) economic environment. E) internal environment. %/) According to !orter, the corporation is most concerned with A) the intensity o' competition ithin its industry# 6) the aggregate level of demand for a product line. +) a market-s position on its life cycle. ;) the amount of pressure from the societal environment. E) the level of government action in an industry. %) &n addition to !orter-s ?ive ?orces, ano ther force added in the text is A) (argaining power of unions. *) other staeholders# +) threat of prospects. ;) threat of shareholders. E) (argaining strength of employees. *) $he collective strength of the interaction of potential entrants, (uyers, su(stitutes, suppliers, firm rivalry, and other stakeholders determine +opyright 3 21% 4 21* !earson Education, &nc.
A) the level of government action in an industry. 6) the pro(a(le industry attractiveness and (usiness strength position. C) the ultimate pro'it potential in the industry measured in terms o' long&run return on invested capital# ;) the aggregate level of demand for a product line. E) the amount of pressure from the societal environment. *1) According to !orter-s model, a strong or high force is likely to reduce profits and can (e regarded as an) A) (enefit. 6) opportunity. +) advantage. $) threat# E) risk. *2) According to !orter-s model, a low force can ena(le the company to earn greater profits and can (e regarded as an) A) (enefit. *) opportunity# +) advantage. ;) threat. E) risk. *) hich of the following is 8$ descriptive of the Gthreat of new entrantsBG A) ;epends on the presence of entry (arriers. 6) Have a desire to gain market share. +) ;epends on the reaction of existing competitors. $) $oes not impact industry attractiveness# E) 6rings new capacity and su(stantial resources. *#) hich (arrier to entry uses (rand identification to force new entrants to spend heavily to overcome existing customer loyaltyB A) rivalry among existing firms 6) switching costs +) capital re0uirements $) product di''erentiation E) access to distri(ution channels *%) hich (arrier to entry uses cost advantages associated with large si'eB A) rivalry among existing firms 6) switching costs / +opyright 3 21% 4 21* !earson Education, &nc.
+) cost disadvantages independent of si'e ;) capital re0uirements E) economies o' scale **) hich (arrier to entry is demonstrated (y icrosoft-s 9";9 operating systemB A) government policy 6) switching costs C) cost disadvantages independent o' si+e ;) capital re0uirements E) economies of scale *) &ntel was a(le to gain a significant cost advantage over its competitors in the production and sale of microprocessors (ecause of A) capital re0uirements. 6) product differentiation. +) switching costs. $) economies o' scale# E) access to distri(ution. */) hich of the following is 8$ descriptive of intense rivalry among firmsB A) slow industry growth 6) high fixed costs +) high exit (arriers ;) few competitors or competitors that are roughly e0ual in si'e and power E) product o''erings that are highly di''erentiated *) hich of the following is 8$ descriptive of Gthreat of su(stitute products or servicesBG A) 9u(stitute products appear to (e different, (ut satisfy the same need as another product. 6) &f the cost of switching is low, su(stitutes may have a strong effect on an industry. C) Identi'ying su%stitutes is relatively easy since they loo similar# ;) !ossi(le su(stitute products or services may not appear to (e easily su(stituta(le. E) 9u(stitutes limit the potential returns of an industry. ) A sugar company that is worried that consumers may (uy artificial sweetener instead of sugar is concerned a(out the A) threat of new entrants. 6) rivalry among existing firms. C) threat o' su%stitute products# ;) (argaining power of suppliers. E) (argaining power of (uyers.
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1) hich of the following is 8$ descriptive of a high level of (argaining powers of (uyersB A) +hanging suppliers costs very little. 6) Alternative suppliers are plentiful (ecause of standardi'ation of the product. +) $he purchased product represents a high p ercentage of (uyer-s costs. ;) $he (uyer (uys a large proportion of the seller-s product or service. E) A %uyer earns high pro'its and is very insensitive to costs and service di''erences# 2) hen 7eneral otors considers making its own automotive parts, ;elphi Automotive 9upply +ompany would (e concerned with the A) (argaining power of suppliers. *) %argaining poer o' %uyers# +) rivalry among existing competitors. ;) threat of su(stitutes. E) threat of new entrants. ) hich of the following is 8$ descriptive of a high level of (argaining power of suppliersB A) Su%stitutes are readily availa%le# 6) $he product or service is uni0ue. +) $he supplier industry is dominated (y a few companies, (ut sells too many. ;) $he purchasing industry (uys only a small portion of the supplier group-s goods and services. E) 9uppliers are a(le to integrate forward and compete directly with their present customers. #) ther software companies could not compete with icrosoft (ased on the hesitation of consumers to try a new software. hich of !orter-s forces does this reflectB A) threat of new entrants 6) (argaining power of (uyers +) threat of su(stitutes $) %argaining poer o' suppliers E) rivalry among existing firms %) A company or an industry whose product works well with a firm-s product and without which the product would lose much of its value is considered to (e an) A) complementor# 6) oligopoly. +) strategic group. ;) industry leader. E) staggered company. *) A relationship that illustrates the term complementor is A) .icroso't and Intel# 6) 7eneral otors and ?ord. 1 +opyright 3 21% 4 21* !earson Education, &nc.
+) Hewlett !ackard and +ompa0. ;) 7ateway and ;ell. E) America nline and +ompu9erve. ) According to the text, the strength of each of the six driving forces of industry competition varies according to the A) effectiveness of the strategic planning. *) stage o' industry evolution# +) industry growth rate and competitive position. ;) changes in the political environment. E) amount of government regulation. /) &n a fragmented industry A) no firm has large market share. 6) prices drop as new competitors enter the market. +) economies of scale are used to reduce costs. ;) companies integrate to further reduce costs. E) all o' the a%ove# ) $he >.9. ma5or home appliance industry, including the companies of aytag, hirlpool, 7eneral Electric, and Electrolux, is an example of an industry A) that has evolved from an oligopoly to a monopoly. 6) in which each company maintained a distinct product line. C) that as once 'ragmented/ %ut no is consolidated# ;) that has experienced consistent, increasing sales. E) experiencing a successful strategy of product speciali'ation (eca use of product differentiation. /) An industry dominated (y a few large firms, all of which struggle with product differentiation, is known as A) multidomestic. *) consolidated# +) glo(al. ;) indigenous. E) worldwide. /1) &n which type of international industry do corporations tailor their products to the specific needs of consumers in a particular countryB A) consortium industry 6) glo(al industry +) indigenous industry $) multidomestic industry 11 +opyright 3 21% 4 21* !earson Education, &nc.
E) worldwide industry /2) hich type of international industry manufactures and sells the same products with only minor ad5ustments made for individual countries around the worldB A) consortium industry *) glo%al industry +) indigenous industry ;) multidomestic industry E) worldwide industry /) hich of the following is an example of a glo(al industryB A) retailing 6) (anking C) tires ;) insurance E) health care /#) $he two factors that tend to determine whether an industry will (e primarily multidomestic or primarily glo(al are 1) the pressure for coordination within the 8+s operating in that industry and 2): A) the pressure 'or local responsiveness on the part o' individual country marets# 6) the power of the local country governments to restrict 8+ actions. +) the need for (rand management in the various 8+s operating within that industry. ;) the importance of differentiating with integrating mechanisms in regional cooperatives. E) the likelihood of terrorist activity impacting that industry. /%) hen the pressure for coordination is strong and the pressure for local responsiveness is weak for multinational corporations within a particular industry, the industry will tend to (ecome A) glo%al# 6) consolidated. +) multidomestic. ;) risky. E) indigenous. /*) hen the pressure for local responsiveness is strong and the pressure for coordination is weak for multinational corporations in an industry, the industry will tend to (ecome A) glo(al. 6) consolidated. C) multidomestic# ;) risky. E) indigenous. 12 +opyright 3 21% 4 21* !earson Education, &nc.
/) hat is a set of (usiness units or firms that Gpursue similar strategies with similar resourcesBG A) strategic group 6) collective colla(oration +) cooperative ;) integral association E) strategic assem(ly //) hich of the following is 8$ one of the general strategic typesB A) initiators 6) reactors +) analy'ers ;) prospectors E) defenders /) hich strategic orientation is demonstrated (y companies that have a limited product line and focuses on improving the efficiency of their existing operationsB A) initiators 6) reactors +) analy'ers ;) prospectors E) de'enders ) A company that operates in at least two different product"market areas in which one product is sta(le and the other one is varia(le, reflects which strategic orientationB A) initiators 6) reactors C) analy+ers ;) prospectors E) defenders 1) +ompanies with fairly (road product lines that focus on product innovations and market opportunities, reflect which strategic orientationB A) initiators 6) reactors +) analy'ers $) prospectors E) defenders 2) +orporations that lack a consistent strategy"structure"culture relationship reflect which strategic orientationB 1 +opyright 3 21% 4 21* !earson Education, &nc.
A) initiators *) reactors +) analy'ers ;) prospectors E) defenders ) $o succeed in a hypercompetitive industry, companies must (e willing to A) cut prices (elow marginal costs. 6) pursue market share instead of profits. +) operate in the ethical gray 'one. $) canni%ali+e their on success'ul product lines# E) reduce spending on research and development. #) A ta(le which summari'es the key success factors within a particular industry is called an) A) E?A9 $a(le. 6) &?A9 $a(le. +) 9?A9 $a(le. ;) $9 atrix. E) industry matri-# %) $hose varia(les that can affect significantly the overall competitive positions of companies within any particular industry are known as A) external strategic factors. 6) internal strategic factors. +) matrix factors. $) ey success 'actors# E) industry scenario. *) A formal program of gathering information on a company-s competitors is referred to as A) statistical modeling. *) competitive intelligence# +) competitive strategy. ;) 0uantitative forecasting. E) 0ualitative matrix. ) hich of the following is true in regards to competitive intelligenceB A) $he Economic Espionage Act makes it illegal to steal any material that a (usiness has taken Greasona(le effortsG to keep secret. 6) $he 9ociety of +ompetitive &ntelligence !rofessionals urges strategists to stay within the law and to act ethically when searching for information.
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+) $he 9ociety of +ompetitive &ntelligence !rofessionals states that illegal activities are foolish (ecause the vast ma5ority of worthwhile competitive intelligence is availa(le pu(licly via annual reports, we( sites, and li(raries. ;) A num(er of firms hire consultants with 0uestiona(le reputations who do what is necessary to get information when the selected methods do not meet 9!&+ ethical standards or are illegal. E) all o' the a%ove /) $he primary activity of competitive intelligence is to A) monitor competitors# 6) engage in corporate espionage +) survey stakeholders ;) determine industry < 4 ; statistics E) reverse engineer competitors- products. ) A study of nearly % of the world-s largest corporations indicated which of the following to (e the most widely practiced form of forecastingB A) statistical modeling 6) scenario"writing +) delphi techni0ue ;) (rainstorming E) trend e-trapolation 1) ver FFFFFFFF of large companies use trend extrapolation for forecasting. A) 2I 6) I +) #I ;) %I E) 02 11) $rend extrapolation is A) the process of converting intuition and hunches into reality. *) the e-tension o' present trends into the 'uture# +) the process of asking some authorities in the area to make an Ginformed guessG a(out the future. ;) given a large amount of historical data on certain interrelated factors, one attempts to conceptuali'e alternative futures. E) detecting faulty underlying assumptions (efore forecasting errors can occur. 12) A non"0uantitative approach to forecasting that re0uires simply the presence of people with some knowledge of the situation to (e predicted is called A) simulations. 1% +opyright 3 21% 4 21* !earson Education, &nc.
6) the delphi techni0ue. +) signal monitoring. $) %rainstorming# E) scenarios. 1) ne ground rule necessary for effective (rainstorming is A) scrutini'e each idea generated. *) propose ideas ithout mentally screening them# +) calculating future earnings of each idea. ;) criti0ue each idea for rationality. E) forecast the success of each idea. 1#) A forecasting techni0ue using 0uantitative measures that attempt to discover causal or at least explanatory factors that link two or more time series together is called A) the delphi techni0ue. *) statistical modeling# +) trend extrapolation. ;) trend"impact analysis. E) morphological analysis. 1%) $he most widely used forecasting techni0ue used after trend extrapolation is A) statistical modeling. 6) simulations. C) scenario&riting# ;) expert opinion. E) (rainstorming. 1*) hich one of the following is 8$ part of the p rocess of industry scenariosB A) Examine possi(le shifts in societal varia(les. 6) &dentify uncertainties in each of the six forces in the task environment. C) 3enerate at least 1 scenarios# ;) ake a range of plausi(le assumptions a(out future trends. E) Analy'e the industry situation that would prevail under each scenario. 1) $he techni0ue recommended (y the text to organi'e an analysis of external strategic factors is called A) &?A9. *) E!AS# +) 9?A9. ;) 9...$. E) the issues priority matrix. 1* +opyright 3 21% 4 21* !earson Education, &nc.
1/) &n the E?A9 $a(le, the indicator of how well a particular company is responding to current and expected factors in its external environment is characteri'ed (y the A) &?A9. 6) industry matrix. C) total eighted score# ;) 9...$. weighted score. E) 9?A9 weighted score. 1) ;escri(e the four general forces in the societal environment. Answer: The 'our general 'orces in the societal environment are economic/ technological/ political& legal/ and sociocultural# Economic 'orces regulate the e-change o' materials/ money/ energy/ and in'ormation# Technological 'orces generate pro%lem&solving inventions# 5olitical&legal 'orces allocate poer and provide constraining and protecting las and regulations# Sociocultural 'orces regulate the values/ mores/ and customs o' society#
11) Jist eight current sociocultural trends in the >.9. that are transforming 8orth America and the world. Answer: Eight current sociocultural trends in the #S# that are trans'orming 6orth American and the orld are as 'ollos7 Increasing environmental aareness 3roing health consciousness E-panding seniors maret Impact o' 3eneration 8 %oomlet $ecline o' the mass maret Changing pace and location o' li'e Changing household composition Increasing diversity o' or'orce and marets
111) ;escri(e !orter-s approach to industry analysis. Answer: .ichael 5orter contends that a corporation is most concerned ith the intensity o' competition ithin its industry# The level o' this intensity is determined %y %asic competitive 'orces# These are the threat o' ne entrants/ rivalry among e-isting 'irms/ threat o' su%stitute products or services/ %argaining poer o' %uyers/ %argaining poer o' suppliers/ and relative poer o' other staeholders (added later %y the authors)# 6e entrants to an industry typically %ring to it ne capacity/ a desire to gain maret 1 +opyright 3 21% 4 21* !earson Education, &nc.
share/ and su%stantial resources# The threat o' entry depends on the presence o' entry %arriers and the reaction that can %e e-pected 'rom e-isting competitors# A competitive move %y one 'irm can %e e-pected to have noticea%le e''ect on its competitors and thus may cause retaliation or counter e''orts# Intense rivalry is related to the presence o' the num%er o' competitors/ rate o' industry groth/ product or service characteristics/ the amount o' 'i-ed costs/ capacity/ the height o' e-it %arriers/ and the diversity o' rivals# (continued ) Su%stitute products are those products that appear to %e di''erent %ut can satis'y the same need as another product# *uyers a''ect an industry through their a%ility to 'orce don prices/ %argain 'or higher 9uality or more services/ and play competitors against each other# Suppliers can a''ect an industry through their a%ility to raise prices or reduce the 9uality o' purchased goods and services# The si-th 'orce includes a variety o' staeholder groups 'rom the tas environment# The importance o' these staeholder groups varies %y industry#
112) ;istinguish (etween a fragmented and consolidated industry. Answer: A 'ragmented industry has no 'irm ith a large maret share and each 'irm serves only a small piece o' the total maret in competition ith others# As ne competitors enter the industry/ prices drop as a result o' competition# A consolidated industry is dominated %y a 'e large 'irms/ each o' hich struggles to di''erentiate its products 'rom the competition# The automo%ile/ petroleum/ and ma:or home appliance industries are e-amples o' mature/ consolidated industries each controlled %y a 'e large competitors#
11) hat are the two factors that tend to determine whether an industry will (e primarily multidomestic or primarily glo(alB Answer: The 'actors that tend to determine hether an industry ill %e primarily multidomestic or primarily glo%al are pressure 'or coordination ithin the multinational operations operating in that industry and pressure 'or local responsiveness on the part o' individual country marets# A multidomestic industry is one in hich companies tailor their products 1/ +opyright 3 21% 4 21* !earson Education, &nc.
to the speci'ic needs o' consumers in a particular country# A glo%al industry is one in hich companies manu'acture and sell the same products/ ith only minor ad:ustments made 'or individual countries around the orld#
11#) ;escri(e the four strategic types of the iles and 9now typology. Answer: According to .iles and Sno/ there are 'our general types o' 'irms %ased on a common strategic orientation and a com%ination o' structure/ culture/ and processes consistent ith that strategy# $e'enders are companies ith a limited product line that 'ocus on improving the e''iciency o' their e-isting operations# 5rospectors are companies ith 'airly %road product lines that 'ocus on product innovation and maret opportunities# Analy+ers are corporations that operate in at least to di''erent product&maret areas/ one sta%le and one varia%le# Reactors are corporations that lac a consistent strategy&structure&culture relationship#
11%) ;efine competitive intelligence. Answer: Competitive intelligence is a 'ormal program o' gathering in'ormation on a company,s competitors# ;'ten called %usiness intelligence/ it is one o' the 'astest groing 'ields ithin strategic management# .ost companies use outside organi+ations (such as A#C# 6ielsen Co#) to provide them ith environmental data# The Internet provides the 9uicest means to o%tain data# Some companies choose to use industrial espionage or other intelligence& gathering techni9ues to get their in'ormation straight 'rom their competitors#
11*) ;iscuss the most commonly practiced form of forecasting. Answer: Trend e-trapolation is the most idely practiced 'orm o' 'orecasting ith over 02 o' the orld,s largest 'irms using this techni9ue either occasionally or 're9uently# E-trapolation is the e-tension o' present trends into the 'uture# It rests on the assumption that the orld is reasona%ly consistent and changes sloly in the short run# Time&series methods are approaches o' this type7 they attempt to carry a series o' historical events 'orard into the 'uture# The %asic pro%lem ith e-trapolation is that a historical trend is %ased on a series o' patterns or relationships among so many di''erent varia%les that a change in any one can drastically alter the 'uture direction o' the trend# As a rule o' thum%/ the 'urther %ac into the past you can 'ind relevant data supporting the trend/ the more con'idence you can have in the prediction#
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