ADMS 4900 Lecture Notes - Switching Barriers, Marginal Cost, Capital Requirement
Document Summary
General manager must always forecast the direction of environmental change. This always includes uncertainty because information is not always perfect: 3 types of uncertainty. State uncertainty: you don"t know how the environment will turn out. Response uncertainty: you don"t know how or when to respond to change. Outcome uncertainty: given certain actions, you don"t know how it will turn out: reduce uncertainty by (descriptive model) Imitation of leaders, similar firms, direct competitors, large firm. Economic (e. g. gdp, interest rates, unemployment rate) Technological (e. g. smartphones, internet, clouding computing, solar energy: change in p. e. s. t will lead to change in firm behavior/strategy, because they want to respond to changes in external environment. Firms are passive: at times firm"s strategy can change the environment. Industry age: legitimacy: social acceptance of your industry, competition: firms will die out if they are not efficient and innovative. Leads to market consolidation, mergers and acquisitions and inefficient firms will die out.