Business environments C1 *G11 Flashcards by Luffie M

Environmental scanning definition *3

The process of obtaining information*
about possible events*
that may have an impact on the business’s performance*

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Purpose of environmental scanning *4

*identify possible challenges and opportunities in a constantly changing environment
*info gained > flexible strategies > help bs respond quickly to crisis/opportunity
*help understand impact of bs decisions on competitive position and sustainability
*understand pace and nature of things taking place

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What is the definition of crisis

a quick and unexpected change

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Trends definition

Changes that occur over a period of time

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Continuous environmental scanning elements *4
[vira fights iya ent]

*vision/mission
*formulate a strategy
*implementation of strategy
*evaluation of control

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What must an entrepreneur look at before deciding to start a business *4

*viability of products
*strength of competitors
*size of potential market
*stability of resources

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Explain the vision (environmental scanning)

Business considers where the business wants to go* then formulates a mission* to give direction to the goals*

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External business environments *2

Macro
Market

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Macro environmental scanning tool *2

PESTLE

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Market environmental scanning tool

Use porters model

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Internal business environment

Micro environment

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Micro environmental scanning tool

SWOT

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Explain market and environment *3

*Market - outside elements that can affects the business
*limited control
*influence>control

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Explain macro environment

Elements the business has no control over (PESTLE)

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Micro environment problem solving techniques *4

*SWOT
*Environmental scanning
*Resource-based approach (RBA)
*Value chain analysis

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Explain RBA *3

*approach used to assess the strategic assets
*based on the idea that the efficient
application of useful resources helps determine competitive advantages

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Explain value chain analysis *2

*analyze the costs of component parts
with the aim of reducing those costs
*thereby increasing product value

Strengths definition

Factors within the business that add value to its performance

Examples of possible strengths
*Min 5 Max 8

*competitive price
*location
*unique products patents (know how)
*work skills
*business culture
*good marketing and strong brand
*access to financing and other resources
*operational efficiency (good quality)

Explain competitive price as a strength

prices differentiates itself > customers more likely to support

Explain patents as a strength

Registered unique products can give a business exclusivity to a product > limited potential competition

Explain good marketing as a strength

Positive associations = higher sales

Explain a skilled workforce as a strength

Employees knowing how to perform > less wastage + more productivity

Explain access to finance (and other resources) as a strength

Sufficient capital= easier to obtain resources

Explain weaknesses

Areas internally where the business is weak and affects the success of the business

Explain opportunities

External factors that present the opportunity to outperform competitors

Explain threats

External factors that hamper growth and success

Explain the elements of a balanced score card perspectives *4

Financial perspective Customer perspective Internal process perspective Learning/growth perspective

Explain porters six forces model

strategic business tool that helps evaluate the competitiveness and attractiveness of a market

What are the 6 forces

1. Threat of new competitors 2. Impact of complementary products 3. Power of buyers 4. The power of suppliers 5. Threat of substitute products 6. Current competitors

Explain attractive markets (P6F) *5

High level barriers to enter Low competition levels Few substitute products Weak supplier bargaining power Weak buyer bargaining power

Explain unattractive markets (P6F) *5

Low barriers to enter High levels of competition Many substitute products Striping supplier bargaining power Strong buyer bargaining power

Explain threat of new entrants in a market (P6F)

how easy it is for a competitor to enter the current market

Explain rivalry among existing competitors (P6F)

Business has to compete aggressively to gain and maintain its market share

Explain threat of substitutes (P6F)

Bs threatened when there’s substitutes that have better quality and price > customers switch

Explain bargaining power of suppliers (P6F)

*high bargaining power = suppliers can sell for a higher price and/or lower price as there’s no one else to go to

Explain bargaining power of buyers

*high power = buyer can demand lower prices and higher quality *can lower profits

Explain complementary products (P6F)

Something complementary can increase the demand for the demand of original product

Elaborate on understanding the pace nature of changes taking place *2

*crisis > change not anticipated > no contingency plan *trend > forewarned to adapt current strategies > deal with change

Location should *5

*be easily accessible to TM *be close to raw material source *fit in the market *have security *be in close proximity to complementary businesses

Balanced score card *3

a management system that provides feedback on both internal business processes* and external outcomes* to continuously improve strategic performance and results*