SUMMARY REVIEW QUESTIONS

1. Why must managers be aware of a firm’s external
   environment?
2. What is gathering and analyzing competitive
   intelligence, and why is it important for firms to
   engage in it?
3. Discuss and describe the six elements of the external
   environment.
4. Select one of these elements and describe some
   changes relating to it in an industry that interests you.
5. Describe how the five forces can be used to determine
   the average expected profitability in an industry.
6. What are some of the limitations (or caveats) in using
   five-forces analysis?
7. Explain how the general environment and industry
   environment are highly related. How can such
   interrelationships affect the profitability of a firm or
   industry?
8. Explain the concept of strategic groups. What are the
   performance implications?

APPLICATION QUESTIONS & EXERCISES

1. Imagine yourself as the CEO of a large firm in an
   industry in which you are interested. Please (1)
   identify major trends in the general environment, (2)
   analyze their impact on the firm, and (3) identify
   major sources of information to monitor these trends.
   (Use Internet and library resources.)
2. Analyze movements across the strategic groups in the
   U.S. retail industry. How do these movements within
   this industry change the nature of competition?
3. What are the major trends in the general environment
   that have impacted the U.S. pharmaceutical industry?
4. Go to the Internet and look up www.kroger.com. What
   are some of the five forces driving industry competition
   that are affecting the profitability of this firm?

ETHICS QUESTIONS

1. What are some of the legal and ethical issues involved
   in collecting competitor intelligence in the following
   situations?
   a. Hotel A sends an employee posing as a potential
   client to Hotel B to find out who Hotel B’s major
   corporate customers are.
   b. A firm hires an MBA student to collect
   information directly from a competitor while
   claiming the information is for a course project.
   c. A firm advertises a nonexistent position and
   interviews a rival’s employees with the intention
   of obtaining competitor information.
2. What are some of the ethical implications that arise
   when a firm tries to exploit its power over a supplier?