ENVIRONMENTAL CONSIDERATIONS
key implementers to ensure commitment. and there is sufficient managerial capability to allow for effective implementation. Firms must also determine whether the competitor's strengths. weaknesses. and consistency will change over time and in which direction.
Firms must examine the competitor's ability to grow and evaluate (1) whether its capabilities would increase or diminish if it did grow: (2) its potential for growth in terms of people. skills. and plant capacity and(3) the degree of growth it could sustain from a financial perspective
The competitor's quick-response capability its ability to mount an immediate counteroffensive must be evaluated. Specific factors to analyze include uncommitted cash reserves, reserve borrowing power. excess plant capacity, and unintroduced new products that could quickly be placed on the shelf.
The competitor's quick-response capability its ability to mount an immediate counteroffensive must be evaluated. Specific factors to analyze include uncommitted cash reserves, reserve borrowing power. excess plant capacity and u new products that could quickly be placed on the shelf
The competitor's ability to adapt to change is critical. Firms should examine the competitor's ability to respond to external events such as technological advances. inflation. and greater g intervention The ability to adapt to changes relative to each functional area must also be examined. For example. can the competitor adapt to an escalation in marketing activity or manage a more complex product line? The competitor's ability to adapt to change will be influenced by(1) fixed versus variable costs. (2) cost of unused capacity. (3) existence of exit barriers. and(4) shared manufacturing other facilities or personnel such as sales force or with other units of its corporate parent
The competitor's staying involves its ability to sustain a protracted power battle Staying power will be a function of cash reserves. unanimity among management. long time honzon in its financial goals. and lack of stock market pressure. Knowledge of key competitors is important enough to justify developing competitor analysis procedures and maintaining competitor files that contain all relevant and legally obtainable information on each major competitor Table 2.2 presents a list of the necessary information. These files should be continually updated and periodically evaluated
Customers Customers are an integral part of a firm's task environment. A base of loyal customers can be a firm's most valuable asset(see Perspective 2.3). This loyalty is created by satisfying customers' needs and desires better than do the competitors.
Another key issue regarding customers involves their overall bargaining power. Powerful buyers can reduce industry profitability by forcing prices down or by demanding higher quality or more services. Buyers have a relatively large amount of power when factors such as the following are present: