Exam Flashcards
Why does PEST matter?
- Framework for analyzing the general environment
- Identifies trends or changes in the environment that will have an effect on our business
- Helps managers identify opportunity and prepare for threats in the environment
What are some of the things that identify as a political factor?
- Laws and regulations
- Taxes and tariffs
- Trade agreements
- Political system
- Political stability
Their main job is the protect consumers, support domestic businesses and create opportunities in foreign markets
How do Governments affect businesses?
Promotes competition between firms
-Small business support, subsidies, and the Competition Act
Promote Innovation
-Intellectual property rights that protect businesses intellectual properties
Protects Customers
-Hazourdas product act, or certain warning labels
Achieve social goals
-Healthcare and eduacation, protect the enviroment through carbon tax
Protect the Enviroment
-Canada water act, regulations of pollution
What are the roles of Goverment
Regulator
- Promote competition
- Protect consumers
- Promote social goals
Customers
- They have to buy infastrucute and labour from other companies to make things such as highways
- Purchase materials and equipment
- Companies bid on tenders
Competitors
-Crown corporations competing with the market
Taxation Agent
-Collected at 3 different levels
(Municipal, provincial and federal)
Provider of Essential services
-Roads, healthercare, and education
(social values and infastrucute)
Provider of incentives -Subsidies -Tax breaks -Bails outs (example, candain goverment has had to bail out companies like bombardia so that it would still contribute to the economy
What are the links between goverment roles and porters 5 forces
- They play a part in potential entrants since if they are a competitor in the market, it may be a deterent for people entering
- Industry amongest firms increased through patents
- influences buyer power since maybe the government is the only provider of a certain product or service
How does business influence goverment?
Lobbyists
-Politicains hired to persaude goverment to pass legislation
Trade Associations
-Fragmented industries group together to collaberate resouce wise
Industry Contracts
-provides expert opinion on industry
Advertising
-Pays for advertising to sway voters
(Don’t specifically say who to vote for, they just mention who not to vote for)
What is intellectual property?
legal rights that result from intellectual activity from industrial, scientific, literary and artisitic fields
Grants exclusive rights to the creator
What are the three types? and why are the important
Trademarks
- words, design, symbols
- used for identification of brands
Why?
-Protects brand reputation
-Valuable asset
(example, nike vs kawih leonard)
Patents
-Goverment grants that give inventor exclusive rights
-Lasts for 20 years before it becomes public
(Common in the drug industry, tynonal at first had a competitive advantage but now everyone uses their formula)
Why?
- Protection for owner
- Sparks innovation
Copyrights
- any orginal literary, artisitic, musical work
- Last for the creators lifetime plus 50 years
- Don’t need to register
Why?
- Recieve royalties
- Recieves credit
- you have the exclusive rights to produce it so you can license it out to make a profit through royalties
What are the 4 forms of ownership?
- Sole proprietorship
- Pros: You get to keep all the profits and it is easy to form
- Cons: You have unlimited liabilty, if company goes bankrupt or sued you are responsible for it
- Tax: Taxed as personal income - Partnership
- Pros: Share rescouces and costs and it is easy to form
- Cons: You have unlimited liability, you may disagree with your partners, don’t last long (lack of continuity)
- Tax: taxed as personal income (personal income split between owners) - Private corporation (legal entity up to 49 shareholders)
- Pros: Limited liability, continuity, privacy, low regulation, privacy gives company a competitive advantage
- Cons: Other shareholds care who you sell your shares to, moderatly comlpex to form
- Tax: Double taxation, the company pays taxes and then issues dividents which are taxed again - Public Corparation
- Pros: Easy to fianace, (stocks), limited liability, continuety
- Cons: No privacy, a lot of regulation, complex to set up
- Tax: Double taxation
What is globalization?
basically the process of busniesses and economies becoming intergrated with one another
Businesses can benifit from the resouces of other countries
What are the three components of International strategy?
- Should we go international
- Is there a demand for the product?
- Can our product be modified to fit the forgein market?
- Is the forgein business climate suited to imports?
- Does the firm have or can it get the skills and knowledge it’ll need to do business there? - Barriers to entry
- PEST
- Tariffs, subsides
- Exchange rates
- adapting to customer needs
- Intellectual property laws, technolical formats
(Solutios)
- Goverment treaties
-Alliances with local firms, establish forgein subsidaries
-Alliance with local firm, branch office, local agents
(LICENSING)
3.Entry stratergy
-Licensing/royalties: Giving another companies rights to your property/idea and just taking a royalty
-Local Agents: Employ sales people that know local culture
-Branch offices: Serves customers in that country, does not perform all functions E.G keeping manufacturing in the states
-Alliances with Local Firms: Joint venture/ partnership that are mutually benificials (local chocolate manufactue for kitkat)
-Forgein subsidiaries: Establish operations in another country, all functions of the business
What are the 4 finicial pillars?
- The chartered Banks
- your everday banks that conduct loans and transactions everyday - Alternate Banks
- Cedit unions
- Small medium enterprise primarly lending source - Specialized Lending
- influenceial source of investments capital for firms
- mid/large sized companies, private equity/ borrowing
- Venture capital firms - Investment dealers
- facilitate the trading of stocks, bonds ect.
- Primary market: investment bankers
- Toronto stock exchange
What are bonds?
- Repersents debt for issuing corporation/goverment
- They are legally binding so if a company goes bankrupt you are the first to get paid
- fixed return date
- fixed rate or return which is the coupon rate
What are stocks?
Common shares - you get a vote -No fixed term -Variable returns (based on companies performance how much you get on your dividents or if you get them at all) -High risk (last to get paid)
Preferred Shares
- No voting rights
- Payment promised but not legally required
- Fixed-term
- Lower risk (pay you first before they pay common share holders)
Three different types of ethics
Individuals
-Your own personal beliefs about what is right or wrong
Managerial ethics
-Standard of behaviour that guides managers
corprate social responsibilty
- What the organization does to and for its stakeholders
- Guides company behaviour
