The purpose of this module is to familiarize students with the forces that shape competition in a company’s external

The purpose of this module is to familiarize students with the forces that shape competition in a company’s external environment and to discuss techniques for identifying strategic opportunities and threats. The central theme is that if a company is to survive and prosper, its management must understand the implications environmental forces have for strategic opportunities and threats. This module first defines industry, sector, market segments, and changes in industry boundaries. The next section offers a detailed look at the forces that shape competition in a company’s industry environment, using Porter’s Five Forces Model as an overall framework. In addition, a sixth force – complementors – is introduced and discussed. The module continues, exploring the concepts of strategic groups and mobility barriers. The competitive changes that take place during the evolution of an industry are examined. Next the module considers some of the limitations inherent in the five forces, strategic group, and industry life-cycle models. These limitations do not render the models useless, but managers need to be aware of them as they employ these models. Finally, the module provides a review of the significance that changes in the macroenvironment have for strategic opportunities and threats.

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