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BU111 FINAL > Political Factors > Flashcards

Political Factors Flashcards

1
Q

elements

A

laws/regulations, taxes, trade agreements

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2
Q

laws

A

(federal, provincial, municipal)

Determines what companies are/aren’t allowed to do

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3
Q

taxes

A

Necessary for health care and education

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4
Q

trade agreements

A

% of foreign content

Duty, tariffs, quotas that are in place to protect consumers and businesses

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5
Q

significance

A

Protection of consumers; unethical businesses; financial and physical safety
Support, protection and regulation of domestic businesses; fair competition; entrepreneurship,
Encourage competition
Opportunity creation in foregin markets

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6
Q

business implications

A

Affects uncertainty, risk, and constraints/ costs faced by firms

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7
Q

business influence over government

A

lobbying
collaboration
advertising

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8
Q

lobbying

A

Individuals hired to represent company’s/ groups interests
Find a politician/member of parliament in the lobby and then persuade them → this is a direct influence
Lobbying Act- must register and follow rules
Previously they did not have to state that they were a lobbyist, so politicians just thought they were a concerned citizen.
But now they have to identify themselves as lobbyists
Trade associations- small businesses/ individuals join and lobby as an industry lobby group (have to make it clear that they are lobbyist)
Big companies such as Rogers and Bell
Small businesses/ individuals can join trade associations

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9
Q

collaboration

A

CRTC (Canadian Radio Television Consulting) consults with industry members
Often times government is open to hearing out a business

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10
Q

advertising

A

Corporations influence voters
Can influence governments through consumers if they get them on their side
Rogers and Bell said more providers for consumers is not good, and many people called their MMPs about it.

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11
Q

government influence over business

A

service provider, business support, laws/regualtions, taxation

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12
Q

service provider

A

a- schools/canada post

i- competition and social goals

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13
Q

business support

A

a- subsidies, trade agreements

I- opportunity, protection

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14
Q

laws/regulations

A

a- competition, consumer, pollution, IP rights

I- competition, consumer protection, innovation, social goals, barriers

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15
Q

taxation

A

a- income, sales, property restrictive

I- consumer spending, incentives, barriers

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16
Q

forms of business ownership

A
  • sole proprietor
  • partner ship (general/limited)
  • corporation (public, private, crown)
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17
Q

sole proprietorship

  • ease of formation
  • regulations
  • control
  • resources
  • taxation
  • liability
A

Owners and business one entity; no distinction between personal and business assets and liabilities
Few regulations
taxed as personal income –> advantage if the business has losses (can subtract the losses from personal income to decrease taxes you pay
unlimited liability

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18
Q

partnership

  • ease of formation
  • regulations
  • control
  • resources and capabilities
  • taxation
  • liability
A

Owners and business one entity; no distinction between personal and business assets and liabilities
partner agreement
more resources, capabilities
since govt views as one entity you pay business profit as personnel income
unlimited liability (unless limited partner)

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19
Q

general partnership

A

Partners are actively involved in decision making and in the business
all partners have joint and several liabilities
joint liability – together share liability
several liabilities – 1 may be liable for all
no distinction between my assets and business assets, if business is doing badly whoever business owes money to can actually go after owners (unlimited liability in who can tax you)

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20
Q

limited partnership

A

limited partners liability = investment
Can only lose what you invested
limited partners cannot be active in management
at least one general partner

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21
Q

corporation

A

separate entity from owners (shareholders)
taxes, debts and liabilities are not shared between business and owner
Business goes bankrupt, owner doesn’t necessarily (since they are 2 separate entities)

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22
Q

types

A
  • public
  • private
  • crown
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23
Q

public

A
  • starts with IPO (initial public offering)

- shares are publicly traded

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24
Q

private

A
  • shares are not publicly traded

- shareholders in third pillar (big family owned businesses)

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25
Q

crown

A
  • owned by the government

- canada post, lcbo

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26
Q

private vs public

  • private
  • ease of formation
  • regulations
  • control over profits/decisons
  • resources
  • taxation
  • liability
A
  • 1-49
    straight forward to form
    regulations are simple
    control over decisions/ profits are shared between share holders
    resources and capabilities are whatever the owner brings
    taxed separately from shareholders, lower than personal income tax rates
    limited liability (limited to the assets they brought into the business)
27
Q

public vs private

  • public
  • ease of formation
  • regulations
  • control over profits/decisons
  • resources
  • taxation
  • liability
A
  • amount of people is unlimited
    expensive and complicated too form
    many regulations (stock market, audits)
    board of directors have control over profits and decisions
    resources and capabilities are whatever they can afford to buy
    taxed seperatly from shareholders and slightly higher than private
    limited liability –> only lose what you invested
28
Q

social enterprise

A
  • help overcome market inequalities/failure (inefficient allocation of resources) (areas of health, environment)
  • social value is the primary objective but financially sustainbilty is imperative (donor and government funding is not reliable)
29
Q

social enterprise implications

A
  • economic value not required priority

- dual stakeholders- those served and those supporting

30
Q

social enterprise examples

A

sos- students offering support

31
Q

traditional vs social

- traditional

A

value- financial roi, finances are primary
social benifit- secondary
serve- paying customers and investors
organizational form- for-profit

32
Q

traditional vs social

- social

A

value- social roi, financial sustainability only
social benifit- primary
serve- underserved populations- can’t afford/ access service; supporters/investors
organizational form- various forms

33
Q

globalization

A

The world becoming a single interdependent system → products are exported all over the world

34
Q

driving forces

A
  • cost and market benefits
  • technology makes it easier, faster and cheaper
  • competitive pressure
35
Q

cost and market benefits

A

Suppliers available abroad may allow companies to lower their costs by finder cheaper/better sources of supply
Doing business with foreign buyers → market benefits of you diversifying the markets, achieves efficiencies

36
Q

technology

A

Can sell abroad without having to travel

Easier, faster, cheaper to find and sell products abroad

37
Q

internal

A 
Knowledge/
Capabilities 
What do I know about exporting my product or building my product in that foreign market, selling my product to foreign consumers? 
Production 
Do I have the production capabilities? 
Preference 
A lot of risk
Takes a lot of new knowledge 
Finances
The amount of money you have determines the options that you have 
What’s the return on investment (ROI)
38
Q

external

A

pest

39
Q

political

A

Trade barriers: created by quotas, tariffs, subsidies

Protectionism: an attitude or mindset within a particular country of preferring domestic producers, compared to foreign producers
More difficult for foreign producers to succeed (supporting domestic)
Can extend to the laws, quotas, tariffs, subsidies

Local content laws: the percentage of a good that must be produced locally/domestically
Ex. canadian radio, automobiles, chinese company partnerships
Business Practice Laws

Bribery accepted?
What does competition look like?

40
Q

social and cultural

A

Customer needs: begins with understanding the customer

Customer “values”
- Culture is a big part of who we are as customers → generational cohorts, mindset, lifestyle habits, language
Create barriers that companies need to think about

Language
Some labels/names might have to change

Social norms
Norms of behaviour

41
Q

economic

A

Exchange rates
The canadian dollar compared to the currencies that your doing business with
Value of Canadian currency as opposed to others, could be cheaper/more expensive

Affects your costs and how competitive your prices are in comparison to the domestically produced products

Foreign GDP: the more wealthy the nation is, the more money there is in the hands of consumers → the more opportunity you have to sell your G/S there
How rich the company is
How much disposable income the country has

42
Q

technological

A

IP Laws: how carefully are your IP for your patents, tech → how well are they going to be protected

Tech standards
Being compatible with foregin countries (Something with a plug would have to change since Europe has different outlets)

43
Q

external -porters 5 forces

A
  • distribution network
  • customers
  • competition
  • suppliers
  • substitutes
44
Q

distribution network

A

how easy is it to break into? → big barrier to entry

45
Q

customers

A

how much buyer power do they have? Ar they reachable/winnable?
Are customers locked in?

46
Q

competition

A

saturation, big vs small companies, gaps you can fill, easy for differentiation,
What it takes to differentiate

47
Q

suppliers

A

supplier power, accessibility to supplies

48
Q

substitutes

A

how good are they, how appealing are they to consumers, how much of a hard time are you going to have winning consumers away from substitutes in the market

49
Q

factors when considering going international –> country comparison

A
  • population
  • average spending (E)
  • customer reachability
  • competition
  • liability of foreigners (S)
  • distance
  • administrate barriers (P)
50
Q

population

A

features - Large; large market segment

significance - more= better

51
Q

average spending

A

f-Average income/high spending on this type of product

s-Have money and spend it on our product

52
Q

customer reachability

A

f-No lock-in, dominant habit or brand; physical reachability

s-Can be persuaded; able to switch; can easily get the product

53
Q

competition

A

f-Little; no one addressing your niche fragmented; no dominant player; opportunity to differentiate
s-Uncontested market easy to win; competitors won’t or can’t shut you out

54
Q

liability of foreignness

A

f-Cultural distance of customers and doing business; existing networks and capabilities
s-Bigger= greater risk; must learn to design product, reach and win customer, build distribution network

55
Q

distance

A

f-How far do I have to ship and move?

s- Further= more costs

56
Q

administrative barriers

A

f-Importing bureaucracy; trade barriers; lots of regulations

s-more time, more hassle, more change, more barriers

57
Q

foreign entry strategies

A

Strategies range from having very low control over marketing and very low investment requirements to high control over marketing and production

  • indirect export
  • sales agent or distributor
  • licensing and franchising
  • joint venture
  • sales office
  • foreign subsidiary
58
Q

indirect export

A

requires the least amount of investment, has least amount of control
What it is: Sell to a third-party export merchant in your own country. Export company identifies where to sell and takes care of shipping and obtaining payment
Takes care of exporting product, doing paperwork, getting to distributors and consumers

Why use it:
No additional cost
No market knowledge, export experience or new infrastructure needed
Smaller companies
No risk from foreign market political volatility

Risks/costs:
No customer contact
Knowledge is power → understanding and anticipating customer wants is what allows you to guide innovation and build quality products, builds brand name
No control over destination
no control over pricing
No control over promotion or foreign distribution strategy

Capabilities and resources needed: None

59
Q

sales agent or distributor

A

What it is: Hire an agent or distributor to sell your product using their local network and you manufacture domestically and ship abroad

Why use it:
You aren’t familiar or have the network resources to easily tap into the foreign market
Limited understanding of foreign market
Helps you understand the market better

Risks/costs:
Share attention with other organizations
Sell other brands too → more motivated to sell brands that do better
Limited marketing control
Counting on sales agent/distributor to foster relationships and sell your products
Subject to trade barriers
Still exporting to foreign markets

Capabilities and resources needed: Manufacture in sufficient quantity to satisfy agent/distributor; adjust product; some understanding of foreign market and exporting

60
Q

licensing and franchising

A

What is it?
- Giving local organization the right to use your intellectual property (brand, patent, copyright) in exchange for royalties; another company produces goods or services using your intellectual property in exchange for royalties

Why use it?

  • Faster and larger expansion with fewer financial resources, no need to understand the market, export, produce, distribute, etc.
  • No need to overcome trade barriers or acquire additional resources

Risks/costs
- Damage to intellectual property

Capabilities and resources needed-
- Intellectual property of value that other company can’t easily acquire

61
Q

joint venture

A

What it is:
Partner with a local firm for mutual benefit; partnership can take many forms – mutual distribution, sharing of knowledge, investment
Need to be a mutually agreeable approach
Need to manage relationships to ensure partners are working properly

Why use it:
Political or trade barriers
overcome market barriers with lower investment or risk
overcome production constraints

Risks/costs:
Time, personnel, money
Partnership doesn’t work – partner doesn’t deliver, doesn’t deliver as expected or promised or is difficult to work with (incompatibilities); Not easy to break up

Capabilities and resources needed:
something of value for partner, capability to negotiate, supervise and work in partnership; resources as determined by partnership

62
Q

sales office

A

What it is:
Establish your own sales office but manufacture in your domestic market and ship abroad
Still producing domestically but your going to have your own office established in that foreign market that takes responsibility for taking delivery of goods, developing distribution networks, working with marketing, forging consumer relationships

Why use it:
Retain marketing control
Insufficient volume to justify facility
Have excess capacity in domestic facility
Don’t have resources to build foreign facility
Don’t want to take risk (yet)

Risks/costs:
Trade barriers, market knowledge, investment to establish foreign sales capabilities

Capabilities and resources needed:
Understanding of foreign market, ability to pay for and supervise foreign office, investment in foreign office, ability to modify product

63
Q

foreign subsidiary

A

What it is:
Manufacture and sell in foreign market

Why use it:
Overcome trade barriers
Control of intellectual property and marketing

Risks/costs:
Cost of facility and establishment of operations; sometimes need permission of foreign government

Capabilities and resources needed:
Sales volume justifies investment; understanding of foreign market and access; distribution capabilities

64
Q

choosing by applying the diamond-e

A
  • risk tolerance
  • experience
  • market knowledge/network
  • management capability/org structure
  • sales volume
  • intellectual property
  • financial, hr, resources

BU111 FINAL (5 decks)

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