Chapter 2

Question 1

What does SWOT stand for?

Answer 1

Strengths- Favorable
Weakness- unfavorable
Opportunities- favorable
Threats- unfavorable

Question 2

External environment

Answer 2

Elements that Companies cannot control and are constantly changing

Question 3

Name 6 forces in the external environment

Answer 3

SET "CRS"
Social Forces
economic Forces
Technological Forces
Competitive forces
Regulatory forces
Substitute forces

Question 4

Social forces

Answer 4

Social forces affect people’s attitudes, beliefs, and lifestyle. These forces shape consumers’ behavior. Social forces influence what we buy, where we buy, how we buy, how much we buy, and when we buy.

Question 5

Gross Income

Answer 5

What is on your paycheck

total amount received in a year

Question 6

disposable income

Answer 6

Amount of money a person has after paying taxes

Question 7

Discretionary Income

Answer 7

Amount of money a person has after paying taxes and paying for needs/necessities

Question 8

Technological forces

Answer 8

Application of science and research to accomplish a function more efficiently or to solve a problem.

Question 9

(competitive force) Michael Porter’s five forces model

Answer 9

1- Competitive rivalry
2- Power of suppliers
3- Power of Buyers
4- Threat of entrants
5- Threat of substitutes

Question 10

Competitive rivalry

Answer 10

. Rivalry among existing companies in a particular industry varies in intensity based on the type and number of competitors and on the basis of competition—price discounting, advertising, new product offerings, and service quality. High competitive rivalry drives down industry profits.

E.g. Delta vs. United

Question 11

Greatest generation

Answer 11

1901-1927

Question 12

Silent generation

Answer 12

1928-1945

Question 13

Baby boomers

Answer 13

1946-1964

Question 14

Generation X

Answer 14

1965-1980

Question 15

Generation Y/ Millennials

Answer 15

1981-1996

Question 16

Generation Z

Answer 16

1997 and later

Question 17

Power of suppliers

Answer 17

Powerful suppliers can drive down industry profits by charging higher prices and/or reducing product and service quality.

E.g. Oil Industry or Boeing

Question 18

Power of buyer

Answer 18

Powerful buyers (customers) can use their clout to demand and receive lower prices, increased product quality, and more services.

Question 19

Threat of entrants

Answer 19

New entrants can shake up an industry and cause increased competition as they seek to take market share from existing companies in the industry.

Question 20

Threat of Substitutes

Answer 20

Substitute products have the potential of replacing existing products because they perform a similar function. As a result, industry profits suffer.

E.g. Walk, Drive, Bike, Boat

Question 21

Competitive factors

Answer 21

used to determine the attractiveness of an industry.

Question 22

Economic factors

Answer 22

Changes in the economy affect consumer spending

Question 23

Regulatory Factors

Answer 23

The objective of regulation is to protect consumers and businesses. For the consumer, regulation seeks to ensure safety and fair trade practices.