Midterm Flashcards
What are the factors of production?
Basic resources, Labour, Capital, natural resources, information, information, entrepreneur
What is a Command economy?
Government controls most or all of the resources and decides their allocation and what goods to produce
What is a Market economy?
Business and consumers make decisions through supply and demand
What is a Mixed Market economy?
Most countries are this. An economy that mixes command and market economies.
What interactions does the government have with businesses?
Taxation, regulations, service provider, incentive/assistant provider, customer and competitor
What are the degrees of competition?
Perfect competition, monopolistic competition, Oligopoly, Monopoly
What is an external environment?
Factor beyond an organizations boundaries that can not be controlled, eg competition, regulation etc
What is an organizational boundary?
That which seperates th eorganization from the environment
What are the 7 dimensions of the external environment?
Technological environment, Economic environment, Political-legal, Global, Socio-cultural, Business and emerging challenges and opportunities environments
What are the key economic goals?
Economic growth, stability and full employment
What are the 4 phases of a business cycle?
Peak, recessions, trough and recovery
What are 3 factors that affect economic stability?
inflation, deflation and unemployment
What are the 4 types of unemployment?
Frictional, Seasonal, Cyclical and structural.
Technological environemnt is what?
The ways that a company creates value for it’s customers, ie knowledge, work methods, physical equipment etc
What are the 2 types of R&D?
Basic R&D: research that does not yet have an immediate market eg duct tape
Applied R&D: How a new idea can be put to use in a product or market eg Apple pay
What is the political-legal environment?
reflects the relationship between business and government eg regulations and taxes. A governmetn can have either a pro- or anti business sentiment. Political-legal environment includes political stability and international relations
What is the Socio-Cultural environment?
Customs, values, attitudes and demographic characteristics of the society in which the organization functions. Includes customer preferences and tastes that vary across abnd within national boundaries that may change over time. Includes ethics and responsibilities of business owners and the business environment.
Business environment
Essentially porters 5 forces model - Threat of new entrants, Bargaining power of suppliers, Threat of substitutes and bargaining power of consumers all of which affect the industry rivalry
What is industry rivalry?
The number of close competitors in the industry. This includes the size and market share of said competitors. Includes industry structure (monopoly, oligopoly etc), industry growth rate, advertising spent and whether or not their is price wars (among other, smaller, things)
What is threat of new entrants?
How easy it is for a new business to enter the industry. eg How loyal are the customers in a market, how easy is it for customers to switch to another product, industry regulations, capital requirements, ease of access to distribution/sales channels and how easy it is to train new employees
Threat of substitutes?
Are there goods and services that perform a similar function? eg How many close substitute products are there? How expensive are they? What is the quality of the substitutes? etc
What is the bargaining power of supplier?
How strong are the suppliers? How much influence do they have? eg How many suppliers can you use? How many other customers or industries does your supplier serve? Does the business have a high switching cost between suppliers?
Bargaining Power of consumers?
How many buyers do you have? How much sales do they acount for? Can your buyers easily switch to a competitive offering? Are the buyers able to enter your business themselves? Are buyers only purchasing from you or other firms as well?
What are the emerging challenges and opportunities in the business environment?
Most succesful firms are getting leaner by focusing on their core competencies (the skills and resources with which an organization competes best and creates the most value for owners) by outsourcing non-core processes
What is divestitures and spinoffs
Selling part of existing business or setting it up as a new corporation
What is a strategic alliance?
two or more companies temporarily join forces (joint ventures)
What is ethics?
standards or moral values that dictate what is right or wrong, is culturally based and formed upon society’s expectations. Varies by person and situation.
What is cultural relativism?
One end of the ethical spectrum opposite to ethical imperialism. Essentially no cultures ethics are superior. The values and practices of the local setting determine ‘right or wrong’
What is Ethical Imperialism?
Certain absolute truths apply everywhere. Universal values exist across cultures and determine ‘right or wrong’. Opposite of cultural relativism.
What influences personal code ethical behaviour?
Family, peer group and experiences.
How do you assess ethical behaviour in the workplace?
- Gather the relevant factual information
- Analyze the facts to determine the most appropriate moral values.
- Make an ethical judgement based on the rightness or wrongness of the proposed activity or policy
What are 4 methods of to asses ethical behaviour in the workplace?
Utility: Does the act represent what is best for those affected by it?
Rights: Does it respects the rights of individuals involved?
Justice: Is it consistent with what we regard as fair?
Caring: Is it consistant with people’s responsibilities to others?
What are 3 benefits of having a written code of ethics?
Increase public confidence in a firm, Improve internal operations by providing consistent standards of both ethical and legal conduct, Helps managers respond to problems as a result of unethical or illegal behaviour
How can ethical standards be maintained?
Ethics training - structured that help participants understands ethical aspects of decision making
Whistleblowers - Expose misdeeds of other people to preserve ethical standards and protect against wasteful, harmful or illegal acts
Have ethical role models: “walk the talk” All managers can influence the ethical behaviour of those who work for them
What is the “triple bottom line”?
Profits, environment society.
What are the 4 areas of social responsibility?
Responsibility towards the environment, customers (unfair pricing, ethics in advertising etc), employees and investors.
What are the rights of consumers?
right to safe products, informed about relevant aspects of product, right to be heard, choose what to buy, right to be educated about purchases and courteous services.
What are a companies responsibility to investors?
avoiding improper financial management, kiting cheques, insider trading and misrepresentation of finances
What is financial mismanagement?
Doing a poor job of managing the financial resources of a company. May or may not be legally punishable and may be difficult to replace management because firm unrest can devalue stock.
What is insider trading?
using confidential info to sell stocks. Can include collusion of investors buying an selling stock at the appropriate time to make huge profits.
What are the 4 approaches for a firm to take on corporate social responsibility?
Obstructionist stance - Does little or nothing to prevent issues or will cover them up
Defensie stance - Only the minimum effort required to prevent ethical issues
Accomodative stance - all legal obligations are met or gone beyond but not pro-active
Proactive stance - actively looks to prevent issues for coming up
What are the 4 steps to implementing a social responsibility program?
- Top management support - devlop policy statement outlining commitment to ethical behaviour
- Strategic planning - Managers develop a plan level of support ie percentage of sales go to social issues, promise to train chronically unemployed people etc
- Appoint a Director executive administrator appointed to oversee program (part time or full time)
- Perform a social audit - Systematic analysis of how the frim is using funds, addresses effectiveness and triple bottom line
What is CSR?
Corporate social responsibility
What is a business model?
Describes the rationale of how the organization creates, delivers and captures value
What are the 9 building blocks in business model canvas?
- customer segment
- value propositions
- channels
- customer relationships
- revenue streams from 1-4
- key resources
- key activities
- key partnerships
- cost structure
What is the Customer Segment building block
description of different groups the company wants to serve. Who are we creating value for - Mass market, niche market? Which are the most important customers - Segment vs multi-sided?
ie. banks sort customers by asset level
What is the value proposition building block?
Bundle of products and services that create value for specific customer segments eg apple creates convenience for ipod users with itunes
What value do we add for our customers? - Performance vs customization
Which of our customer’s problems are we solving? - design/aesthetics or status
Which customer needs are we satisfying? - Price, convenience
What is the channels building block?
Describes how the organization communicates with and reaches it’s customer segments eg retail stores and web sites.
Which ways do customers want to be reached? How are we reaching them now? How are our channels integrated.
Awareness -> Evaluations -> Purchase -> Delivery -> after sales
What is the customer relationships building block?
The types of relationships the organizations establishes with specific customer segments. eg banking professionals dedicated to serve high net worth individuals
What type of relationships does ourt each of our customer segments want? Which ones have we established? How costly are they?
Dedicated personal assistance -> personal assistance -> self service -> automated services -> community -> co-creation
What is the Revenue streams building block?
Represents the cash generated from each customer segment eg. assets sales such as a car dealer selling cars or usage fees such as phone charges based upon minutes
For what values are the customers really willing to pay? For what do they currently pay? How would they prefer to pay?
Asset sales, usage fee, subscription, licensing, advertising
What is the key resources building block?
The most important assets required to make a business model work? Eg Nike relies heavily on brand, Microsoft relies on intellectual property, retailers rely on physical asset such as a network of stores
What key resources do our value propositions require? What do distribution channels require? Customer relationships?
Asset types: physical, financial, intellectual, human, technological, cultural
What are the key activities building block?
The most important activities that the organization must do to make it’s business model work. Key activities are required to create and offer the value proposition, reach markets, maintain customer relationships and earn revenues. eg microsoft’s key activity is software development, manufacturing firms design, make and deliver product
What key activities do our value propositions require? Our distribution channels? Customer relationships?
ie production, problem solving, platform/network
What are the key partnerships building block?
The network of suppliers and partners that make the business model work. eg Key suppliers, strategic alliances between non-competitors, joint ventures to develop new business
Which key resources do we acquire from partners? Which key activities do partners perform?
examples: strategic alliances between non-competitors, cooperation between competitors, joint ventures and buyer-supplier relationships
What is the cost structure building block?
The most important costs incurred to operate the business model eg. Cost driven business models such as “no frills” airlines or value driven business models such as Ritz Carlton which focuses on value creation
What are the most important costs inherent in our model? Which key activities and resources are most expensive?
fixed vs variable costs, economies of scale and economies of scope?
What are economies of scope?
When a firm buys a company related to the product they were producing.`
What is a free-based business model?
Free to consumer but is paid by advertising or selling customer info etc
What is freemium business model?
Free basic service with opt-in for paid premium service
What is bait and hook business model?
Free or inexpensive service that baits customer in for repeated extra charges
Describe the frequency in which the following change:
- Core principals and organizational values
- Organizational behaviour
- Strategies and practices
- Core principals - unchanging
- behaviour - infrequently changed
- strats and practices - revised frequently
What is a small business?
bUS WITH LESS THAN 100 EMPLOYEES
What is entrepreneurship?
The process of identifying and matching an opportunity in the marketplace with the capital and resources to capitalize it.
What are intrapreneurs?
People who create something new within an existing large frim or organization
What are the steps to the entrepreneurial process?
Identifying opportunities - Idea generation, screening idea and developing the opportunity
Acessing resources - finacial and other resources
Building the right team
Assesing the fit between elements in the entrepreneurial process - entrepeneur-opportunity fir, opportunity-resources fit, entrepreneur resources fit
What are 4 criteria for screening ideas?
Idea creates or adds value for the customer - solves problem or makes solution easier
Idea provides a competative advantage that can be sustained - people need to see the benefit and you need to hold tyhe benefit over competitors
Idea is marketable and financially viable - ensure enough customers and that sales will lead to profit
The idea has low exit costs - Can be shut down with minimal loss of time money and reputation
What are the 4 sources of financial resources?
Personal savings
Love money from friends and relatives or even business associates
Private investors - “angels” who are financially and successful entrepeneurs
Venture Capitalists - Proffesionally managed pools of investor money that focus on high growth opportunities with high return (above 35%)
What are the most common sources of debt financing?
Financial institutions - common for small businesses but new businesses find it hard to get a loan. Entrepeneurs are usually more succesful with a personal loan against house, insurance or other asset.
Suppliers - Can offer supplies on short term credit (usually 30 days) Helps reduce immediate start up costs, still difficult for new business to get a loan
What are business incubators?
Provide assistance to new businesses via consultation, legal advice, accounting services, contracts, clerical services and office space to help them stay afloat.
What are the advantages and dis-advantages of franchising?
pros - rapid growth, share cost of advertising, economies of scale, financial assistance provided, dont have to build business from scratch, brand name etc
cons - Can be expensive, long agreements, hidden fees, lots of expenses to incur, less creative control.
what are the advantages/disadvantages of a sole proprietorship?
pros - easy to start-up, freedom to do as you please with business, dont need to register business, tax benefits to owner
cons - unlimited legal liability for debts, owner has to pay out of pocket for all losses, company dissolves when owner dies, financial/managerial constraints may hold back the business, difficult to get loans
Pros and cons of a partnership?
pros - can grow by adding talent and money, easier time borrowing funds than sole prprietorships, few legal requirements (just partnership agreement)
cons - unlimited liability, owe debts other partners created, dissolves when a partner withdraws, difficult to transfer ownership, conflicts between partners
pros and cons of incorporation?
pros - limited liability, continuity, can raise money by selling stock, continuity in professional management
cons - costs money to incorporate, have to meet heavier regulations, double taxation
pros and cons of a co-operative
pros - same as corp, each member is equal regardless of wealth, no double taxation
cons - difficult to raise capital because owners aren’t incentivesed to invest in capital and benefits go to those that participate more, democraticness discourages some
What is BRICS?
Brazil, Russia, India, China and South Africa is a group of powerful traders that meet to discuss strategies
What 4 factors are national competetive advantage based on?
Factor conditions - land, labour, capital, entrepreneurs, natural resource and info
Demand conditions - reflect a large domestic consumer base that promotes innovative products
Related and supporting industries - - include strong local or regional supplier and/or industrial customers
Strategies, structures and rivalries - firms and industries that stress cost reduction, product quality, higher productivity, and innovative products
What questions should a firm ask before going international?
Is there international demand?
Can the product be modified to fit a foreign market?
Is the foreig business climate suited to imports?
Does the firm have the necessary skills and knowledge to do business there?
What is an international firm?
Conducts significant amount of it’s business abroad but is concerned the most with domestic market. Might have all of it’s manufacturing domestically but sources from foreign countries.
What is a multinational firm?
Does not think of itself as having domestic or international divisions. All planning is geared towards global markets.
What is an independent agent?
foreign individual that represents exporters interests. Acts as sales reps by selling, collecting payment, and ensuring customer satisfaction.
What are licensing arrangements?
right to manufacture and or market product in foreign market in exchange for royalties.
What is an interational strategic alliance?
Cooperation between domestic and foreign firm
What are local content laws?
Laws requiring that products that are sold in a country be at least partially made in that country.
What is GATT?
General agreement on trade and tariffs - signed after WW II to to reduce or eliminate trade barriers and to let nations protect domestic industries within a certain limits.
What are the 3 goals of the WTO?
- promote trade by encouraging members to adopt fair trade practices
- Reduce trade barriers
- establish fair procedures for resolving disputes among members
What is TPP?
Trans Pacific Partnership between 12 countries that will increaes canadas foothold in Asia-Pacific
What is CETA?
Canada-European union Economic and Trade agreement. 28 members to strengthen Canadas relationship w EU
What are the 5 characteristics of emotional intelligence?
- Self awareness - ability to detect the moods drives and emotions of self and their impacts on others\
- Self regulation - ability to redirect and control disruptive moods and impulses as well as withhold judgement and think before acting
- Motivation - passion for work that goes beyond money or status, the propensity to pursue goals with energy and persistance
- Empathy - ability to understand emotional makeup in others and react accordingly
- Social Skill - Proficiency in managing relationships and building network, ability to find common ground and relate
What are Hallmarks of self awareness?
self confidence, realistic self assesment and deprecating sense of humour.
What are Hallmarks of self regulation?
trustworthiness and integrity, comfort with ambiguety and openness to change
What are Hallmarks of Motivation?
Strong drive to achieve even in the face of failure of organizational commitment
What are Hallmarks of empathy?
expertise in building and retaining talent, cross cultural sensitivity and service to clients and customers
What are Hallmarks of Social skill?
Effectiveness in leading change, persuasiveness, expertise in building and leading teams.
