This chapter covers the following objectives:

  • The importance of developing forecasts of the business environment.
  • Why environmental scanning, environmental monitoring, and collecting competitive intelligence are critical inputs to forecasting.
  • Why scenario planning is a useful technique for firms competing in industries characterized by unpredictability and change.
  • The impact of the general environment on a firm’s strategies and performance.
  • How forces in the competitive environment can affect profitability and how a firm can improve its competitive position by increasing its power vis-à-vis these forces.
  • How the Internet and digitally based compatibilities are affecting the five competitive forces and industry profitability.
  • The concept of strategic groups and their strategy and performance implications.