Chapter 3 Flashcards
Analysis of the macroenvironment
Macroenvironmental forces affect industries and individual firms within industries. The focus at this stage of analysis is on the industry, not the firm.
PEST
Political, Economic, Social, Technological
Political-Legal Forces
Political-legal forces include such factors as the outcomes of elections, legislation, and judicial court decisions, as well as the decisions rendered by various commissions and agencies at every level of government.
Government Regulations
Regulation can be costly to firms, but are not always opposed. Sometimes large firms even lobby for regulations that create entry barriers
Patient Protection and Affordable Care Act (2010)
Increases regulations on health care providers and insurance companies in the U.S. in an effort to lower costs and expand coverage
The short- and long-term effects are still widely debated
Global Trends
Globally, regulation and protectionism rose after World War II, gradually shifting toward free trade in the late 1980s through the 2000s.
U.S. Trends
In the U.S., the trend shifted back toward greater regulation in the late 2000s, sparked by the financial crisis and the election of President Obama
Economic Forces
Gross Domestic Product (GDP) & Recessions
Inflation Rates
Interest Rates
Exchange Rates
Ecological Forces
Ecological influences are part of the economic environment because they can alter cost structures in entire industries.
Ecological forces are often intertwined with political-legal forces because governments frequently attempt to manage economic development or address ecological concerns with regulations.
Key Economic Considerations
When the dollar declines in value, U.S. exports become less expensive but U.S. imports become more expensive, at least in the short run.
A good economy is not good for all industries. Pawn shops and discount stores often thrive during recessions.
Case Analysis Steps 5 and 6
Identify the specific political-legal (step 5) and economic/ecological (step 6) forces that affect the industry.
Specify precisely how the factors identified affect the industry.
Focus on the industry, not the firm.
Specific applications to the firm come later.
Things on exam not in notecards
Opponents of anthropogenic climate change viewpoint, definition of GDP recession (2 consecutive quarters), stage of maturity are they trying to use products in new ways?
