Chapter 8: ethics Flashcards
____ can hurt a company by taking its customers. However, it is important to understand that competitors may be less of a threat to a firm if: (1) the company has achieved large economies of scale, meaning a potential competitor would have to invest large amounts of money in property, plant, equipment and employees to match a firm’s low per-unit manufacturing costs; (2) if a company has intensely brand-loyal customers who are not likely to abandon it for another firm; or if (3) government regulations (for example, tariffs on foreign competitors’ products) limit or prevent competitors’ abilities to poach customers.
Competitors
(1) increasing demand for a firm’s product; (2) serving as a magnet to attract potential customers; (3) giving a firm ideas, if that firm benchmarks—through environmental scanning – and implements competitors’ best business practices; and (4) by becoming a strategic partner instead of being a competitor.
How competitors can help a company
can create opportunities for – or threats to – a firm
Economic Forces
A strong economy is conventionally thought to create opportunities for many, if not all, firms; while this is mostly true, a strong economy may hurt some firms and industries such as _____.
auto-repair businesses (because potential customers needing car repair may instead opt to purchase a new car rather than fix the current one).
A weak economy, while being a threat to many firms, may actually benefit some companies. There is some evidence, for example,
that discount movie theatres (like Danbarry Dollar Saver Cinemas) may increase earnings when an economy is weak, as people wishing to see a movie will wait a while and see a movie for considerably less money rather than spend larger sums of money to see a first-run film. Similarly, during an economic slowdown, car- repair businesses and colleges and universities see revenues grow.
can help or hurt a firm. ______ represents an opportunity for a business if it develops its own _____ or invests in new ______ wisely.
technology
However, technology can be a threat to a firm that _____ investing in needed technology or makes poor purchasing decisions when buying.
delays
Hospitals that have laser surgery technology enjoy a over ______ hospitals that don’t; for the former, technology represents an opportunity while for the latter technology is a threat.
competitive advantage
can create opportunities for and/or threats to businesses. For example, society’s growing health awareness has created opportunities for healthy food companies (organic food-makers, vitamin-makers, health-food stores, etc.) but threats to candy-makers (Hershey, Mars, etc.) whose products are seen as not healthy.
social-cultural forces
can create opportunities for businesses or threats to businesses. We discussed how the aging of the baby-boomer demographic (people born between 1946 and 1964) is creating both opportunities for businesses (for example, in the funeral industry) and potential threats to the same businesses (less revenues than anticipated because ecologically-minded baby-boomers will choose to be cremated, cheaper than being traditionally interred in a more expensive steel coffin).Also, we discussed how the 75 million people categorized as Millennials represent opportunities for and threats to firms.
Demographic forces
pass laws (which reflect society’s wishes) that create opportunities for—and threats to—businesses. We spoke in particular about how state lawmakers (in Kentucky, Ohio and Indiana, for example) who passed laws reducing the blood alcohol content level needed to convict someone of drunken driving from 0.10 to 0.08 created opportunities for some businesses and threats to others while safeguarding the public.
Political-Legal Forces
Included in Political-Legal Forces are ______. (for example, Mothers Against Drunk Driving or M.A.D.D.) can affect a firm’s Political/Legal Environment by shaping laws a legislature is considering passing. For instance, M.A.D.D. could say to law-makers, “If you don’t pass a tougher law that will keep drunken drivers off the road, we will vote against you and organize community support against you. However, if you do pass a tougher law, we’ll work to help you get elected or get re-elected.”
Pressure group
