Strategic Analysis: analyzing the external environments. 2/MNG3701-
Strategic Planning IIIA EXAM PREP UPDATE 45 QUESTIONS AND
ANSWERS 2025.
Importance of Analyzing the External Environment - (Answer)-Managers can mitigate
threats.
-Managers can leverage opportunities.
-Gain understanding of potential impacts.
-Understand the source / proximity of factors.
The PESTEL Model - (Answer)-Groups environmental factors into six segments:
--Political
--Economic
--Sociocultural
--Technological
--Ecological
--Legal
These factors can create:
--Opportunities
--Threats
Political Factors - (Answer)-Processes & actions of government bodies
-Firms can shape this factor through:
--Lobbying
--Public Relations
--Contributions
--Litigation
Example: Tesla
-Has a build-to-order sales model
-Cuts out dealers
-Dealers are lobbying for new legislation
Economic Factors - (Answer)-Largely macro-economic
Examples include:
--Growth rates
--Levels of employment
--Interest rates
--Price stability
--Currency exchange rates
Sociocultural Factors - (Answer)Society's cultures, norms, and values
-Are constantly in flux
-Differ across groups
Demographic trends
-Present opportunities and threats
, -Population characteristics related to age, gender, family size, ethnicity, sexual
orientation, religion, and socioeconomic class
Technological Factors - (Answer)Application of knowledge
-To create new processes
-To create new products
Innovations in process technology:
-Lean manufacturing, Six Sigma quality, and biotechnology
Innovations in product technology:
-Smartphones, computer tablets, and high-performing electric cars such as the Tesla
Model S
Legal Factors - (Answer)Official outcomes of political processes:
-Laws
-Mandates
-Regulations
-Court decisions
Industry deregulations affect multiple industries:
- Airlines, telecom, energy, and trucking
Governments can achieve desired outcomes:
-To buy electric vehicles the government offers a £2000 subsidy.
Porters five forces - (Answer)Analyses the nature of competition in the industry in terms
of how much power a firm enjoys over consumers, competitors and suppliers.
Threat of Entry - (Answer)The risk that potential competitors will enter an industry
Lowers industry profit potential:
-Incumbents lower prices
Incumbents spend more to satisfy existing customers.
Entry barriers:
-Obstacles blocking others from entering
-A significant predictor of industry profit potential
Types of Entry Barriers (6) - (Answer)1. Economies of scale
2. Customer switching costs
3. Capital requirements
4. Access to distribution channels
5. Product differentiation
6. Cost disadvantages
Strategic Planning IIIA EXAM PREP UPDATE 45 QUESTIONS AND
ANSWERS 2025.
Importance of Analyzing the External Environment - (Answer)-Managers can mitigate
threats.
-Managers can leverage opportunities.
-Gain understanding of potential impacts.
-Understand the source / proximity of factors.
The PESTEL Model - (Answer)-Groups environmental factors into six segments:
--Political
--Economic
--Sociocultural
--Technological
--Ecological
--Legal
These factors can create:
--Opportunities
--Threats
Political Factors - (Answer)-Processes & actions of government bodies
-Firms can shape this factor through:
--Lobbying
--Public Relations
--Contributions
--Litigation
Example: Tesla
-Has a build-to-order sales model
-Cuts out dealers
-Dealers are lobbying for new legislation
Economic Factors - (Answer)-Largely macro-economic
Examples include:
--Growth rates
--Levels of employment
--Interest rates
--Price stability
--Currency exchange rates
Sociocultural Factors - (Answer)Society's cultures, norms, and values
-Are constantly in flux
-Differ across groups
Demographic trends
-Present opportunities and threats
, -Population characteristics related to age, gender, family size, ethnicity, sexual
orientation, religion, and socioeconomic class
Technological Factors - (Answer)Application of knowledge
-To create new processes
-To create new products
Innovations in process technology:
-Lean manufacturing, Six Sigma quality, and biotechnology
Innovations in product technology:
-Smartphones, computer tablets, and high-performing electric cars such as the Tesla
Model S
Legal Factors - (Answer)Official outcomes of political processes:
-Laws
-Mandates
-Regulations
-Court decisions
Industry deregulations affect multiple industries:
- Airlines, telecom, energy, and trucking
Governments can achieve desired outcomes:
-To buy electric vehicles the government offers a £2000 subsidy.
Porters five forces - (Answer)Analyses the nature of competition in the industry in terms
of how much power a firm enjoys over consumers, competitors and suppliers.
Threat of Entry - (Answer)The risk that potential competitors will enter an industry
Lowers industry profit potential:
-Incumbents lower prices
Incumbents spend more to satisfy existing customers.
Entry barriers:
-Obstacles blocking others from entering
-A significant predictor of industry profit potential
Types of Entry Barriers (6) - (Answer)1. Economies of scale
2. Customer switching costs
3. Capital requirements
4. Access to distribution channels
5. Product differentiation
6. Cost disadvantages
