BEC IV BLAKE CPA Flashcards
Porter’s 5 Forces
Barrier to market entry
Bargaining power of customers
Existence of substitute products
Market competitiveness
Bargaining power of suppliers
Two types of Competitive advantage
1) Differentiation
or
2) Cost leadership
Differentiation advantage
May be best obtained by a firm that builds Market Share or increases (not decreases) its Price
Cost Leadership advantage
Firm enjoys a competitive advantage when it is able to match the prices of its rivals
OR has a cost structure that is LOWER than its rivals
SWOT Analysis - Take an honest and unbiased look at the company and assess what the company has evaluating internal and external factors.
Strengths, weaknesses (Internal), Opportunities & Threats (External)
Strengths - Core competencies: the areas where the firm thrives (Internal)
Weaknesses - Areas that need improvement, placing the company at a disadvantage - FOCUS on Internal Factors
Opportunities - Favorable factors with potential to improve current positioning
Threats - Factors that arise in a firm’s external environment that have the potential to hurt its business - relates to EXTERNAL FACTORS
When the supply of and demand for a good both increase what is the effect on equilibrium price? If impact on price is indeterminate?
Equilibrium price may increase, decrease or remain unchanged
When demand for a product is inelastic, A decrease in price would have what effect on the number of units sold & total revenue?
The % change in price will be GREATER than the % change in Quantity, Total REVENUE WILL FALL
Veracity of Data
Trustworthiness of your data
Variety of Data
Type or source of data that is being analyzed
Velocity of Data
Speed or flow of data
Volume of Data
Size of the Data set
Lean manufacturing characteristics
Waste Reduction & Continuous Improvement (KAIZEN)
Total Quality Management Characteristics
Customer Focus
Characteristics of a Just In Time Inventory System
Lot sizes equal to one
Insignificant set-up times & costs
Balanced & level workloads
non-value-adding operations of storing materials is eliminated (minimize storage time and storage costs)
Controlled by a “Pull” approach - item is produced when it is needed down the line and not a “push through system”
Recessionary Phase = Contractionary Phase
GDP is down
Unemployment is going up
Prices are going down
Profits are going down
Expansionary Phase
Government Purchases - stimulating the economy
Recession
Falling national output for two consecutive quarters
Results in a decrease in aggregate demand & aggregate supply
potential national income (long run aggregate supply) exceeds actual national income - Short Run aggregate supply curve shifts to the left
GDP down
Unemployment Up
Confidence Down (Economic expectations)
Profits Down
Multiplier Effect Calculation: An increase in Federal spending of $20 billions at a Marginal Propensity to consume at 0.6 would calculate an increase real GDP as follows:
Step 1) 1/ (1-.0.6) x $20 billion
Step 2) (2.5 x $20 billion) = $ 50 Billion increase in Real GDP
Goods & Services produced in United States
Peak
Face Highest Cost levels - COGS faster than Sales Price
Economy is producing at maximum output
Demand exceeds supply
Economy begins to Overheat
Gross Domestic Product (GDP)
Total market value of all final goods and services produced within the borders of a nation during a particular period
excludes used goods
Supply Shock
Supply Shock Increase
Aggregate Supply Increase
Supply Shock Decrease
Aggregate Supply Decrease
Typical Business Cycle
Peak, Recession, trough, recovery phase
Increase in Exchange Rates on Aggregate Demand
Exchange rates go up Aggregate demand goes down
Exchange Rates go down Aggregate demand goes up
Collusive Pricing
Two gas stations in a small-town jack the price up on gas above the competitive market price since other gas stations are extremely far away and people in that town would have no choice but to buy this high price of gas.
Predatory Pricing
Company puts a low price so it can flush out its competitors, forces an exit for them in the market
Benefits of understanding SWOT analysis
A company can fully understand where they fit into the competitive landscape, and then develop a strategy to achieve any goals that are set
Theory of Constraints
When a company identifies the bottlenecks that impact efficiency. Idea with any company is to maximize the use of the company’s resources (employees, machines, spending ect.)
Economies of Scale
Means that the cost to produce one unit of output DECREASES as OUTPUT INCREASES
When an item is unit elastic what is the impact of price change on revenue?
No Change
If % Change in Price > % Change in demand
Inelastic
