structure of the industry, and each gives rise to its

own set of opportunities and threats.

12. The competitive forces, strategic group, and

industry life-cycles models all have limitations.

The competitive forces and strategic group

models present a static picture of competition

that deemphasizes the role of innovation. yet

innovation can revolutionize industry structure

and completely change the strength of differ-

ent competitive forces. The competitive forces

and strategic group models have been criti-

cized for deemphasizing the importance of

individual company differences. A company

will not be profitable just because it is part of

an attractive industry or strategic group; much

more is required. The industry life-cycle model

is a generalization that is not always followed,

particularly when innovations revolutionize an

industry.

13. The macroenvironment affects the intensity

of rivalry within an industry. Included in the

macroenvironment are the macroeconomic

environment, the global environment, the tech-

nological environment, the demographic and

social environment, and the political and legal

environment.

DISCuSSIon QuESTIonS
1. Under what environmental conditions are price

wars most likely to occur in an industry? What

are the implications of price wars for a com-

pany? How should a company try to deal with

the threat of a price war?

2. Discuss the competitive forces model with refer-

ence to what you know about the global mar-

ket for commercial jet aircraft (see the Opening

Case). What does the model tell you about the

level of competition in this industry?

3. Identify a growth industry, a mature industry,

and a declining industry. For each industry,

identify the following: (a) the number and size

distribution of companies, (b) the nature of bar-

riers to entry, (c) the height of barriers to entry,

and (d) the extent of product differentiation.

What do these factors tell you about the nature

of competition in each industry? What are the

implications for the company in terms of oppor-

tunities and threats?

4. Assess the impact of macroenvironmental fac-

tors on the likely level of enrollment at your

university over the next decade. What are the

implications of these factors for the job secur