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CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: External Environment

A firm analysing its external environment lists its main competitors, tracks their pricing, new launches and market share, and studies likely moves they may make next. This activity is best described as:

This activity is competitor analysis. Tracking rivals' pricing, product launches and market share and anticipating their next moves is an external analysis, unlike value chain or capability profiling, which examine the firm's own internal activities and resources.

  1. ACompetitor analysisCorrect
  2. BInternal capability profiling
  3. CValue chain analysis
  4. DPortfolio analysis

Explanation

Studying rivals' pricing, launches, share and likely actions is competitor analysis, part of the external environment. Value chain and capability profiling look inward at the firm's own activities, and portfolio analysis evaluates the firm's own businesses.

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