A competitor’s capabilities can be measured by studying its current strategies and future objectives

The competitor analysis is the final part of the external environment analysis and focuses on each company against which a firm directly competes (for example, Coca-Cola and PepsiCo, Home Depot and Lowe’s, and Airbus and Boeing)

The strengths of the five competitive forces are similar across strategic groups within an industry

Competitor analysis is focused on the factors and conditions influencing an industry’s profitability potential.

The global segment of the external environment provides many opportunities for large corporations but does not represent an appropriate market segment for family business firms, even large ones

China allows its firms to copy, or pirate, software created by firms in the United States and other countries. The Chinese firms take the intellectual property created by the other companies and then sell the resulting products for a lower price, undercutting the sales of the companies that invested in the product development. This activity represents a threat in the general environment that might prevent the U.S. companies from achieving strategic competitiveness

Suppliers are powerful when the industry is dominated by a few large companies, no satisfactory substitutes are available, the selling industry is relatively more concentrated than the purchasing industry, or switching costs are high

A firm that sells cannabis in the states of Colorado and Washington might consider expanding into California, as that state recently legalized the retail selling of cannabis. The firm may also want to examine other state laws to see where else cannabis sales is legal. However, it would be ineffective to develop a strategy to encourage legalization in states that currently prohibit it as a means of future expansion, since firms are generally unable to influence the political/legal segment of the external environment

The legislation introduced in the U.S. Congress during the early tenure of the Obama administration intended to reduce the amount of work U.S. companies outsource and is an example of a potential change in the sociocultural segment of the general environment

Opportunities allow a company to exploit conditions in the environment while threats can lead to damage to a company’s integrity