Badm 485 - Whole Foods

Mary Albrecht

BADM 485

Chapter 3 Assignment

1. The macro environment includes seven principle components: population demographics, societal values and lifestyles, political, technological factors, general economic conditions, and global forces. Each component has the potential to effect affect a firm's immediate industry and competitive environment and can have a bearing on the decisions a company makes about its direction, objectives, strategy, and business model.

2. The five forces model holds that the competitive forces affecting industry profitability go beyond rivalry among competing sellers and include pressures stemming from four coexisting sources.

a. Rivalry is strong when markets where buyer demand is growing slowly or declining, and when high exit barriers keep unprofitable firms from leaving the industry. It increases as it becomes less costly for buyers to switch brands, increases as the products of rival seller become more alike, more intense when there is unused production capacity, intensifies as the number of competitors increases and as competitors become more equal in size and competitive strength, is more intense as the diversity of competitors increases in terms of long-term directions, objectives, strategies, and countries of origin.

b. Bargaining power of buyers is strong if switching to a competing brand or supplier is low, if industry goods are standardized or differentiation is weak, when they are large and few in number relative to the number of sellers, if buyer demand is weak, if there is a credible threat they can integrate backward and self-manufacture, or if they can delay their purchases or not make the purchase at all.

c. Bargaining power if sellers is strong if suppliers products are in short supply, if it is difficult for industry members to switch their purchases from one supplier to another, if there are no good substitutes available for the supplier's products, when the supplier market is more concentrated than the industry it sells to, and if it doesn't make economic sense for the industry members to integrate backward and self-manufacture the items.

d. Threat of new entrants is strong when there is a rapidly growing market demand and high potential profits, motivating potential entrants to commit the resources needed to overcome entry barriers.

3. Key success factors are the competitive factors that affect industry members' ability to survive and prosper in the marketplace and between profit and loss. How well the elements of a company's strategy measure up against and industry's KSFs determine how financially and competitively successful that company will be.

4. Driving forces are the agents of change. They include an industry's long-term growth rate, increasing globalization, changes in who buys the product