Entity/Environment Flashcards
Five forces
concerned with determining the nature, operating attractiveness, and probable long-run profitability of a competititve industry.
PEST Analysis
concerned with the nature of the macro-environment within which an entity operates
SWOT Analysis
concerned with the relationship between an entity (strengths and weaknesses) and its environment (opp and threats)
Examples of Strengths of an entity
patents
location
good reputation
Examples of weaknesses of an entity
poor location
unfavorable rep
lack of proprietary processes
Examples of opportunities for an entity in the external environment
Opp- chances to benefit from new or unmet demand in the market.
ex. opening of new markets, apply new tech, reduced regulations
Examples of threats to an entity
new substitute products
increased regulation
change in consumer preferences
Explain the cost leadership strategy
an entity seeks to be the low-cost provider for a given level of output in an industry. intended to enable either higher gross profits than competitors or sales at a lower price to gain market share. Requires significant capital invested and an efficient distribution system
What are porter’s generic strategies
Cost leadership
Differentiation
Focus (niche)
Describe the focus strategy
An entity focuses on a narrow industry segment (an industry subgroup or niche) and seeks to achieve either cost leadership or differentiation
Describe the Differentiation strategy
provide G/S that have distinctive features and will not provide G/S that have the lowest cost. Attempt to provide quality or uniqueness that enable charging a premium price.
What goes into a strategic planning process?
Implementation of controls.
Evaluation of results.
Not only concerned with the formulation of strategy
What is considered a long-term issue in financial management
Capital budgeting.
Dividend policy mgmt.
(inventories and trade accounts payable are NOT)
What are considered short-term financial mgmt activities or concerns?
Cash mgmt
inventories mgmt
AP mgmt
