Chapter 3 - scanning the business environment Flashcards
define an environmental scan
an assessment of the business environment to see what factors could impact the growth and success of an organization in achieving its goals
What is PEST?
review of Political, Economics, Social, and Technological facors
How do we assess the competitive landscape looking at what 5 facors?
current competitors, potential competitors, substitutes, bargaining power of suppliers and bargaining power of buyers
what’s the SWOT analysis?
Assessment of Strengths, weaknesses, oppourtunities, and threats
role of federal government
oversees Canada’s overall economic performance and issues that can impact all Canadian citizens - role in international trade regulations, nation’s banking + monetary system, national defense, immigration
what’s the role of provincial government
watch over issues that impact citizens within a province - healthcare, employment standards, education
what’s the role of municipal governemnt
oversees issues that impact cities - water, sewage, public transportation
define deregulation
removal of some laws + regulation which can allow for more competition
what’s the role of law and regulations in consumers and businesses?
to protect consumers and businesses - can add in more competition or support businesses.
define a fiscal policy
how the government keeps the economy stable through increase and decreases in both taxes and government spending
why do countries strive to have a low corporate tax rate
where businesses have more money by paying less tax, they can help grow the economy and increase productivity by investing in technology, people, or launching new products + services
define national debt
accumulation of government deficits over time
define the unemployment rate
as the percentage of people who are unemployed out of the total labour force (those seeking work or working)
define business cycle
suggests the rise and fall in economic activity over time
what are the phases of the business cycle?
- trough - lowest point of economic activity
- recovery - after the trough, economic activity begins to rise with increased demand for good + services
- expansion - a rise in economic activity where product’s + services are sold, jobs are created and demand continues to grow
- peak - economic reached its highest points, it triggers the end of the expansionary phase
- contraction - after peak, economic activity will start to decline
define a recession
a period where there are 2 or more consecutive quarters of decline in GDP
define depression in economics
severe form of recession
who controls the monetary policy in canada?
bank of canada
what are the key priorities for the bank of Cnada
- keeping inflation low, stable, and predictable
- managing the complex financial system
- preserving the value of our money
define inflation
rise in the price of goods + services over time
how to measure the inflation
consumer price index
consequence of inflation?
reduces the purchasing power of money
how does the bank of canada keep inflation rates low, stable
adjusting interest rate
define the benchmark interest rate
rate at which it loans money to canada’s major financial institutions
what happens when the interest rate is low?
financial institutions are encouraged to borrow more, making more money available for individuals + businesses to borrow from them.
define the Gross Domestic Product
total value of final goods + services produced within a country in a year
define GDP per capita
GDP per person in that country
why does looking at GDP matter?
used as an measure of economic and social progress for a country
why is important for a company to monitor demographic trends
it impacts the business decisions of the consumer such as their demand for certain products/services, purchasing power.
define triple bottom line reporting
where a company reports on their performance with social, environmental and economic factors
how does public opinion impact an organization
impacts the business practices and how laws can evolve
the role of technology in the business
a way to connect with the customer
automate their process for more efficiency
what tool can a business use to assess the attractiveness of an industry where a business wants to operate in
porter’s five forces
in porter’s five forces - describe the role of current competitors
with lots of competitors, it may be challenging to start
describe the role of potential competitors in porter’s five forces
considers how easy or hard it can be to enter the industry’ by examining any barriers to entry
what are the barriers to entry
- existing dominance in the marketplace - an entrenched competitors may have already created fierce brand loyalty 0 making it more difficult for new entrants to launch a competing product or service
- capital requirements - money required to start a new company could be a barrier/deterrent
- laws + regulations - government policies can encourage or impede whether new companies launch in an industry - patents, trademarks
- economies of scale - existing companies that have grown over time, they have expand making it difficult for new entrant to compete at a fair price
what’s the role of substitutes in porter’s five forces
important to be mindful of the alternatives + choices available to consumers
what’s the role of the bargaining power of suppliers in porter’s five factors
the price and quantity of their supply (inputs) - higher prices means higher prices for businesses + consumers
what’s the role of the bargaining power of consumers
if a buyer has multiple supplier options they have greater bargaining power as they can shop around to to get the best price + greater quality.
limitations of the porter’s 5 forces
focus on the current power relationships which is not helpful in an industry that’s changing fast.
the dominance of another firm
technological changes.
what components are in the SWOT internal and external perspective?
internal - strengths + weaknesses
external - oppourtunities + threats
what’s role of an internal perspective in SWOT
examines what you control and managewithin a company - considers your tangible + intangible resources
what’s the orle of the external perspective in SWOT
looks at factors you can not control will have to respond to as an organizaton
what are the steps to take after completing a SWOT analysis?
capitalize on your strengths, improve on your areas of weakness, take advantage of opportunities, mitigate any threats
define the consumer price index
a price index that compares the changes in prices for a basket of commonly purchased goods (food, housing, clothing, recreation, transportation)
define the monetary policy
management of money supply and interest rates
define switching costs
the monetary + psychological costs to change form one product/supplier to another
