Globus Exam 2

PESTEL model A framework that categorizes and analyzes an important set of external factors (political, economic, sociocultural, technological, ecological, and legal) that might impinge upon a firm. These factors can create both opportunities and threats for the firm. political factors process and actions of government bodies that can influence the decisions and behavior of firms economic factors largely macroeconomics, affecting economy-wide phenomena sociocultural factors society's cultures, norms, and values technological factors capture the application of knowledge to create new processes and products ecological factors involve broad environmental issues such as the natural environment, global warming, and sustainable economic growth Legal Factors official outcomes of political processes as manifested in laws, mandates, regulations, and court decisions industry effects firm performance attributed to the structure of the industry in which the firm competes firm effects firm performance attributed to the actions managers take industry a group of incumbent companies that face more or less the same set of suppliers and buyers Industry Analysis identify an industry's profit potential derive implications for a firm's strategic position within an industry. strategic position a firm's strategic profile based on the difference between value creation and cost (V-C) Five Forces Model A framework that identifies five forces that determine the profit potential of an industry and shape a firm's competitive strategy. Threat of Entry the risk that potential competitors will enter an industry