Chapter 2: The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis 49
For example, the economies in a number of
European countries are still suffering from
the major recession (e.g., Greece, Spain). Of
likely concern to firms is the fact that histor-
ically, high degrees of economic uncertainty
coincide with periods of lower growth. And
again, according to some research, “it is clear
that (economic) uncertainty has increased in
recent times.”^54 This current degree of eco-
nomic uncertainty suggests the possibility of
slower growth for the foreseeable future.
When facing economic uncertainty,
firms want to be certain to study the eco-
nomic environment in multiple regions and
countries throughout the world. Although
economic growth remains relatively weak
and economic uncertainty has been strong
in Europe, the economic growth has been
better in the United States in recent times.
For example, the projected average annual
economic growth in Europe for 2015–2017 is
1.4 percent and in the United States it is 2.9
percent. Alternatively, the projected aver-
age annual economic growth for 2015–2017 is 7.0 percent in China, 6.8 percent in India,
2.6 percent in Brazil, and 3.6 percent in Mexico. These estimates highlight the anticipa-
tion of the continuing development of emerging economies.^55 Ideally, firms will be able to
pursue growth opportunities in regions and nations where they exist while avoiding the
threats of slow growth periods in other settings.
2-3c The Political/Legal Segment
The political/legal segment is the arena in which organizations and interest groups com-
pete for attention, resources, and a voice in overseeing the body of laws and regulations
guiding interactions among nations as well as between firms and various local govern-
mental agencies.^56 Essentially, this segment is concerned with how organizations try to
influence governments and how they try to understand the influences (current and pro-
jected) of those governments on their competitive actions and responses. Commonly,
firms develop a political strategy to specify how they will study the political/legal segment
as well as approaches they might take (such as lobbying efforts) in order to successfully
deal with opportunities and threats that surface within this segment at different points
in time.^57
Regulations formed in response to new national, regional, state, and/or local laws
that are legislated often influence a firm’s competitive actions and responses.^58 For
example, the state of Nevada in the United States recently legalized the business
of online poker/gambling. New Jersey and Delaware quickly took the same action.
In response to Nevada’s regulatory change, firms such as MGM Resorts International
were trying to decide the degree to which these decisions represented a viable oppor-
tunity. According to a MGM official, the immediate concern with respect to Nevada
is that “the state may be too small to provide a lucrative online market on a stand-
alone basis.”^59
At a regional level, changes in the laws regarding the appropriate regulation of
European banks are still being actively debated.^60 For interactive, technology-based firms
The political/legal
segment is the arena in
which organizations and
interest groups compete
for attention, resources, and
a voice in overseeing the
body of laws and regulations
guiding interactions among
nations as well as between
firms and various local
governmental agencies.Christopher Polk/ACMA2010/Getty Images
To date, most legalized gambling has been provided in resorts such as
MGM Resorts. However, recent changes in regulations within the state
of Nevada in the United States allows online gambling which is now
being evaluated as an opportunity for these resorts.