Chapter 3 - scanning the business environment

Question 1

define an environmental scan

Answer 1

an assessment of the business environment to see what factors could impact the growth and success of an organization in achieving its goals

Question 2

What is PEST?

Answer 2

review of Political, Economics, Social, and Technological facors

Question 3

How do we assess the competitive landscape looking at what 5 facors?

Answer 3

current competitors, potential competitors, substitutes, bargaining power of suppliers and bargaining power of buyers

Question 4

what’s the SWOT analysis?

Answer 4

Assessment of Strengths, weaknesses, oppourtunities, and threats

Question 5

role of federal government

Answer 5

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

Question 6

what’s the role of provincial government

Answer 6

watch over issues that impact citizens within a province - healthcare, employment standards, education

Question 7

what’s the role of municipal governemnt

Answer 7

oversees issues that impact cities - water, sewage, public transportation

Question 8

define deregulation

Answer 8

removal of some laws + regulation which can allow for more competition

Question 9

what’s the role of law and regulations in consumers and businesses?

Answer 9

to protect consumers and businesses - can add in more competition or support businesses.

Question 10

define a fiscal policy

Answer 10

how the government keeps the economy stable through increase and decreases in both taxes and government spending

Question 11

why do countries strive to have a low corporate tax rate

Answer 11

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

Question 12

define national debt

Answer 12

accumulation of government deficits over time

Question 13

define the unemployment rate

Answer 13

as the percentage of people who are unemployed out of the total labour force (those seeking work or working)

Question 14

define business cycle

Answer 14

suggests the rise and fall in economic activity over time

Question 15

what are the phases of the business cycle?

Answer 15

1. trough - lowest point of economic activity
2. recovery - after the trough, economic activity begins to rise with increased demand for good + services
3. expansion - a rise in economic activity where product’s + services are sold, jobs are created and demand continues to grow
4. peak - economic reached its highest points, it triggers the end of the expansionary phase
5. contraction - after peak, economic activity will start to decline

Question 16

define a recession

Answer 16

a period where there are 2 or more consecutive quarters of decline in GDP

Question 17

define depression in economics

Answer 17

severe form of recession

Question 18

who controls the monetary policy in canada?

Answer 18

bank of canada

Question 19

what are the key priorities for the bank of Cnada

Answer 19

1. keeping inflation low, stable, and predictable
2. managing the complex financial system
3. preserving the value of our money

Question 20

define inflation

Answer 20

rise in the price of goods + services over time

Question 21

how to measure the inflation

Answer 21

consumer price index

Question 22

consequence of inflation?

Answer 22

reduces the purchasing power of money

Question 23

how does the bank of canada keep inflation rates low, stable

Answer 23

adjusting interest rate

Question 24

define the benchmark interest rate

Answer 24

rate at which it loans money to canada’s major financial institutions

Question 25

what happens when the interest rate is low?

Answer 25

financial institutions are encouraged to borrow more, making more money available for individuals + businesses to borrow from them.

Question 26

define the Gross Domestic Product

Answer 26

total value of final goods + services produced within a country in a year

Question 27

define GDP per capita

Answer 27

GDP per person in that country

Question 28

why does looking at GDP matter?

Answer 28

used as an measure of economic and social progress for a country

Question 29

why is important for a company to monitor demographic trends

Answer 29

it impacts the business decisions of the consumer such as their demand for certain products/services, purchasing power.

Question 30

define triple bottom line reporting

Answer 30

where a company reports on their performance with social, environmental and economic factors

Question 31

how does public opinion impact an organization

Answer 31

impacts the business practices and how laws can evolve

Question 32

the role of technology in the business

Answer 32

a way to connect with the customer automate their process for more efficiency

Question 33

what tool can a business use to assess the attractiveness of an industry where a business wants to operate in

Answer 33

porter's five forces

Question 34

in porter's five forces - describe the role of current competitors

Answer 34

with lots of competitors, it may be challenging to start

Question 35

describe the role of potential competitors in porter's five forces

Answer 35

considers how easy or hard it can be to enter the industry' by examining any barriers to entry

Question 36

what are the barriers to entry

Answer 36

1. 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 2. capital requirements - money required to start a new company could be a barrier/deterrent 3. laws + regulations - government policies can encourage or impede whether new companies launch in an industry - patents, trademarks 4. 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

Question 37

what's the role of substitutes in porter's five forces

Answer 37

important to be mindful of the alternatives + choices available to consumers

Question 38

what's the role of the bargaining power of suppliers in porter's five factors

Answer 38

the price and quantity of their supply (inputs) - higher prices means higher prices for businesses + consumers

Question 39

what's the role of the bargaining power of consumers

Answer 39

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.

Question 40

limitations of the porter's 5 forces

Answer 40

focus on the current power relationships which is not helpful in an industry that's changing fast. the dominance of another firm technological changes.

Question 41

what components are in the SWOT internal and external perspective?

Answer 41

internal - strengths + weaknesses external - oppourtunities + threats

Question 42

what's role of an internal perspective in SWOT

Answer 42

examines what you control and managewithin a company - considers your tangible + intangible resources

Question 43

what's the orle of the external perspective in SWOT

Answer 43

looks at factors you can not control will have to respond to as an organizaton

Question 44

what are the steps to take after completing a SWOT analysis?

Answer 44

capitalize on your strengths, improve on your areas of weakness, take advantage of opportunities, mitigate any threats

Question 45

define the consumer price index

Answer 45

a price index that compares the changes in prices for a basket of commonly purchased goods (food, housing, clothing, recreation, transportation)

Question 46

define the monetary policy

Answer 46

management of money supply and interest rates

Question 47

define switching costs

Answer 47

the monetary + psychological costs to change form one product/supplier to another