Chapter 1: Business Environments Flashcards
What is environmental scanning?
The process of obtaining information about possible current and future events that may impact the performance of the business.
It ensures that the business is prepared for developments in internal and external environments.
What is the main purpose of environmental scanning?
To identify possible challenges and opportunities for the business in a constantly changing environment.
This helps businesses adapt and strategize effectively.
What are the different elements of strengths in SWOT?
- Competitive Price
- Location
- Unique product
- Work skills
- Business culture
- Good Marketing and Strong brand
- Access to financing and resources
- Operational efficiency
What is considered a strength in environmental scanning?
Competitive price, location, patents, skilled workforce, business culture, good marketing and brand, access to financing, operational efficiency.
Each of these factors contributes positively to a business’s market position.
How does a competitive price act as a strength?
It differentiates the business within the market and attracts price-conscious consumers.
This can provide the business with a good selling proposition.
Why is location important for a business?
It should be easily accessible to the target market, considering demographics like age and income levels.
This affects customer accessibility and overall sales.
What is the role of patents in a business?
They provide legal exclusivity to produce a unique product, limiting competition.
Patents can enhance a business’s competitive advantage.
What does product differentiation achieve for a business?
It creates a competitive advantage.
Differentiation can make a product more appealing to consumers.
What is the significance of a skilled workforce?
It leads to less wastage and improved productivity.
Skilled employees are essential for operational efficiency.
Define business culture.
The ‘way things are done in the business,’ which can be a strength or weakness.
A strong culture of meeting deadlines can enhance customer confidence.
How does good marketing affect a business?
It leads to higher sales, reduces marketing costs, and allows for premium pricing.
A positive brand image is crucial for business success.
What are opportunities in the context of environmental scanning?
External factors that present chances to outperform competitors.
Leveraging these can significantly benefit a business.
What is a SWOT matrix?
A tool used to develop business strategies by linking strengths, weaknesses, opportunities, and threats.
It helps visualize interconnectivity among these elements.
What does TOWS analysis involve?
Examining the interplay between different elements of SWOT to formulate strategies.
It helps in strategic planning.
What does SO strategy stand for?
Strategies that utilize strengths to take advantage of opportunities.
This approach maximizes the benefits of both internal strengths and external opportunities.
What is an ST strategy?
Strategies that use strengths to avoid threats.
This helps businesses remain competitive and secure.
Define WT strategies.
Strategies that assess how a business could avoid threats by reducing or eliminating weaknesses.
This is crucial for risk management.
What do WO strategies aim to achieve?
They aim for a business to overcome weaknesses to take advantage of opportunities.
This fosters growth and adaptability.
What is the purpose of Porter’s Six Force Analysis and what are it’s elements?
To assess the attractiveness of a market based on potential for high profits.
Elements:
Threat of new competitors
Current competitors
Threat of substitute products
Power of suppliers
Power of the buyer
Impact of complementary products
List three characteristics of attractive markets.
- High barriers to enter
- Low levels of competition
- Weak supplier bargaining power
Identify three characteristics of unattractive markets.
- Low barriers to enter
- High levels of competition
- Strong buyer bargaining power
What does the threat of new entrants assess?
How easy or difficult it is for new competitors to enter the market based on entry barriers.
High barriers generally protect existing businesses.
What is meant by rivalry among existing competitors?
The need for businesses to compete aggressively for market share, potentially reducing profits.
Intense rivalry can lead to price wars.
What does the threat of substitutes refer to?
The risk that buyers can easily find substitute products at better prices or quality.
This can impact sales of existing products.
