Amazon Company (Other (Not Listed) Sample)

Week 2 PowerPoint
Objectives
•Upon completion of this lesson, you will be able to:
–Identify how the six segments of the general environment affects an industry and its firms
–Identify the five forces of competition that impacts an industry
–Analyze the external environment for opportunities and threats that impact the firm
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Supporting Topics
•The General, Industry, and Competitive Environments
•External Environment Analysis
•Segments of the General Environment
•Industry Environment Analysis
•Interpreting Industry Analysis
•Strategic Groups
•Competitor Analysis
•Ethical Considerations
General, Industry, and Competitor Environments
•Six Dimensions of Environmental Segments
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External Environmental Analysis
•Opportunities
•Threats
•Scanning
•Monitoring
•Forecasting
•Assessing
Check Your Understanding
Segments of the General Environment
•Demographic Segment
•Economic Environment
•Political/Legal Segment
•Sociocultural Segment
•Technological Segment
•Global Segment
Segments of the General Environment, continued
•Physical Environment Segment
–Deals with potential and actual changes in the physical environment
–Business Practices
•Environmental sustainability
–Energy Consumption
–Reduction of Environmental Footprints
Industry Environment Analysis
•Industry
–Group of firms producing products that are close substitutes
–Five Forces of Competition

Interpreting Industry Analyses
•Effective Industry Analyses
–End result of careful studying and interpretation of data
•Multiple sources
•Unattractive Industry Characteristics
•Attractive Industry Characteristics
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Strategic Groups
•What is a Strategic Group
–A set firms that emphasize similar strategic dimensions
–Use similar strategies
•Strategic Dimensions in a Strategic Group
•Limitations of Forming Strategic Groups
•Strategic Groups Implications
Threat of New Entrants
•Barriers to Entry
–Economies of scale
–Product differentiation
–Capital requirements
–Switching costs
–Access to distribution channels
–Cost disadvantages independent of scale
–Government policy
•Expected Retaliation
Bargaining Power of Suppliers
•Supplier Group Powerful
–Dominated by a few large companies
–Substitutes not available
–Industry firms not a significant customer
–Suppliers’ goods are critical to success
–High switching costs
–Credible threat to integrate forward
Bargaining Power of Buyers
•Customers Powerful
–Large portion of industry’s total output
–Sales account for significant portion
–Switch to another product
–Products are standardized
Threat of Substitute Products
•Perform similar or the same functions as a product that the industry produces
•Strong Threat
–Prices may be lower
–Performance capabilities are equal or greater
Intensity of Rivalry Among Competitors
•Factors to Affect Intensity
–Numerous or equally balanced competitors
–Slow industry growth
–High fixed costs or high storage costs
–Lack of differentiation or low switching costs
–High strategic stakes
–High exit barriers

Competitor Analysis
•Future Objectives
•Current Strategy
•Assumptions
•Strengths and Weaknesses
Ethical Considerations
•Following Laws and Regulations
–The line between legal and ethical practices can be difficult to determine
–Practices Considered Legal and Ethical
•Respect the principles of common morality and the right of competitors
•Appropriate Guidelines


Instructions: Respond to the following:
Can any firm beat Amazon in the marketplace? If not, why not? If so, how can they best do so? How formidable a competitor is Google for Amazon? Please explain. Consider:
What are Amazon's major strengths?
Does it have any weaknesses? Please explain.
Is Jet.com a potential concern for Amazon? Why or why not?
Given the importance of understanding the external environment, why do some firms fail to do so? Provide examples of firms that did not understand their external environment.
What were the implications of the firm's failure to understand that environment?