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By conducting a(n) ________, a firm identifies the critical threats and opportunities in its competitive environment.

A) internal analysis
B) competitive analysis
C) external analysis
D) strategic choice

1 Answer

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Final answer:

A competitive analysis (option B) is conducted by a firm to identify threats and opportunities in its competitive environment. The analysis includes examining competitors' strategies and market dynamics. Additionally, cost/benefit analysis is used to make informed strategic choices, comparing costs to benefits in a structured way.

Step-by-step explanation:

By conducting a competitive analysis, a firm identifies the critical threats and opportunities in its competitive environment. This involves examining the strategies and performance of competitors to understand the dynamics of the market and predict future trends. A comprehensive analysis may include assessing competitors' strengths, weaknesses, products, sales, and marketing strategies.



Additionally, firms often engage in cost/benefit analysis during their decision-making processes. This method compares the costs and benefits of a particular decision or project. A Cost Benefit Analysis often employs a T-shaped chart, where costs are listed on one side, against benefits on the other. Costs represent the sacrifices made, such as money and effort, whereas benefits represent what is gained, such as revenues, time savings, and experience enhancements. Weighing marginal costs and benefits can provide additional insights and guide firms in making strategic choices that align with their objectives and resources.

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