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Intro to Business > The Business Environment > Flashcards

The Business Environment Flashcards

1
Q

What are your 3 main options when starting a business?

A
  1. Start a business from scratch
  2. Buy an establishes business
  3. Buy a Franchise
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2
Q

What are the main advantages of buying franchise?

A
  • Start-up is faster and easier
  • Existing operating procedures
  • Already linked suppliers and supplies
  • Established brand and reputation
  • Loyal customer base
  • Promotional support
  • Training management coaching
  • Access to financing
  • Less risky
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3
Q

What are the main disadvantages of buying franchise?

A
  • Tied to a national brand’s decisions
  • Purchase fee
  • On-going royalties on sales
  • Marketing fees for publicity
  • Less creative
  • Obligation to follow standard procedures
  • Subject to constant performance evaluation
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4
Q

In buying a franchise, what is the role of the FRANCHISEE?

A

Signs a contract to use the brand name, trademark and operating formula of the franchisor. He must follow strict operating standards.

Pays a franchise fee and royalties

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5
Q

In buying a franchise, what is the role of the FRANCHISOR?

A

Offers support such as training, marketing and other services.

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6
Q

There is a analytical test that you can apply to your franchise to evaluate its parameters. What is it called?

A 
S.W.O.T. analysis
S: strengths
W: weaknesses
O: Opportunities
T: Threats
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7
Q

In a S.W.O.T. analysis, give examples of strengths.

A

Potential internal strengths:

  • Premium brand name
  • Proven management team
  • Lower costs/higher margins
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8
Q

In a S.W.O.T. analysis, give examples of weaknesses.

A

Potential internal weaknesses:

  • Low employee satisfaction
  • Inadequate financial resources
  • Poor location
  • Satisfaction and level of service
  • Online presence
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9
Q

In a S.W.O.T. analysis, give examples of opportunities.

A

Potential external opportunities:

  • Higher consumer demand
  • Complacent competitors
  • Growth in foreign markets
  • Health consciousness
  • Home delivery
  • Vegan options
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10
Q

In a S.W.O.T. analysis, give examples of threaths.

A

Potential external threats:

  • A powerful new competitor
  • A deep recession
  • New government regulations
  • Saturated market
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11
Q

Nowadays, the business environment is changing. What are new challenging elements of the business env?

A

-Relationship management (gathering knowledge of customer needs to get close to the customer)
depends mostly on technology

  • Partnerships are formed to create a competitive advantage for the businesses involved
  • Workers have to be reliable, efficient and technically savvy to keep pace with the rapidly changing business world
  • Managers: intelligent, highly motivated people with the ability to create and sustain a vision for the organization
  • Critical thinking and creativity
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12
Q

What should be the capacities of managers nowadays?

A
  1. Vision: perceive marketplace needs and what an organization must do to satisfy them
  2. Critical thinking and creativity: analyze and assess information to pinpoint problems or opportunities and develop novel solutions
  3. Ability to lead change: guide employees and organizations through changes
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13
Q

What makes a company admired?

A
  • Solid profits
  • Stable growth
  • Safe and challenging work environment
  • High-quality goods and services
  • Business ethics and social responsibility
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14
Q

What are the external spheres affecting the business environments, external meaning they are out of the company’s control.

A
  1. Socio-cultural
  2. Political & legal
  3. Economic
  4. Competitive
  5. Technological
  6. Natural
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15
Q

Describe the socio-cultural env.

A

Culture, values, beliefs, demographics (age, gender) and related trends that can impact customer preferences

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16
Q

Describe the political & legal env.

A

Laws and regulations and the stability of the political climate can affect product design, demand, manufacturing techniques.

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17
Q

Describe the economic env.

A

Economy strength affects product demand, availability of labor, the cost of borrowing money, the cost of raw materials

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18
Q

Describe the competitive env.

A

Level of competition (perfect competition, oligopoly, monopolistic competition, monopoly) determines pricing and business strategies

19
Q

Describe the technological env.

A

Availability and use of technology can impact customer preferences and product design, manufacturing techniques, working methods, promotional strategies…

20
Q

Describe the natural env.

A

Weather and natural disasters can affect location, product demand, cause operational problems and generate important financial losses.

21
Q

Name economic indicators that influence the economic environment of a business.

A
  • GDP
  • CPI
  • Employment rate
  • Average income
  • Inflation rate
  • Interest rate
  • Consumer confidence
22
Q

What are the internal spheres affecting the business environments, what the business controls (functional areas of a business).

A
  1. Human resources
  2. Accounting and finance
  3. Operations
  4. Sales and Marketing
  5. Management and organizational structure
23
Q

What is the difference between macro and micro economy

A

Macro: overall major economic decisions of countries and governments regarding industries.

Micro: individual and business decisions regarding the allocation of resources and prices of goods and services.

24
Q

Define stakeholder.

A

Stakeholderis a party that has an interest in a company and can either affect or be affected by the business.
The primarystakeholdersin a typical corporation are its investors, employees, customers and suppliers.

25
Q

Describe the external environment.

A

Anexternal environmentis composed of all the outsidefactorsor influences that impact the operation of business. The business must act or react to keep up its flow of operations.

26
Q

Describe the internal environment.

A

Internal environmentrefers to the culture, members, events and factors within an organization that has the ability to influence the decisions of the organization, especially the behaviour of its human resource.

27
Q

Give examples of businesses and industries that have been transformed by the internet.

A
  • Sears went out of business by not keeping up with the Internet.
  • Books now being bought on line.
  • Amazon pioneered shopping on-line’
  • Facebook changed the way we communicate.
  • Mail is now online mostly
28
Q

Competition is part of the external environment of a business. What are the 4 levels of competition?

A
  1. Pure Competition (theory of perfect conditions, low prices driven by consumer demand, many choices)
  2. Monopolistic Competition (still a lot of competitors but try to differentiate themselves but similar product)
  3. Oligopoly (few competitors, high barriers of entry)
  4. Monopoly (one company owns the market)
29
Q

In the functional areas of business, define marketing.

A
  • Designing, delivering, and promoting goods and services for a target market
  • Managing long-term customer relationships
  • The 4 P’s: Product, Place, Price and Promotion
30
Q

In the functional areas of business, define human resources.

A
  • Recruiting talent, promoting career development, and boosting organizational effectiveness
  • Recruiting, selecting, training, evaluation, compensation, separation
31
Q

In the functional areas of business, define operations and production.

A
  • Choosing effective and efficient methods to produce and distribute products
  • Supply chain management, Quality control
32
Q

In the functional areas of business, define accounting and finance.

A

-Recording, analyzing and communicating financial information. -Acquiring and using funds to maximize company value

33
Q

In the functional areas of business, define management and organizational structure.

A
  • Structure of company -Corporate culture
  • Stakeholder interests
  • Planning, organizing, controlling, leading
34
Q

Better define the 4 elements of the internal environment “management and organizational structure”.

A
  1. Planning (setting long & short term goals & strategies)
  2. Organizing (operation efficiency & effective use of resources)
  3. Controlling (Keep on track – meet goals, take corrective action when required)
  4. Leading (practical as well as symbolic ways)
35
Q

What is the general equation for calculating profit?

A

Revenues - expenses = profits

36
Q

Identify the internal env involved:

Based on consumer research indicating that preference for large screen cell phones was increasing, the screen size of the new Samsung mobile phone model was increased.

A

Marketing

Manufacturing

37
Q

Identify the internal env involved:

Various employees had to be recruited to staff the new store that Forever 21 opened in Quebec City.

A

Human resources
Marketing
Finance

38
Q

Identify the internal env involved:

Due to increased use of robotics, car manufacturers are modifying their production facilities, which will lead to the reduction of hundreds of assembly jobs in the factories but additional jobs related to technology.

A

Operations/Manufacturing

Human resources

39
Q

Identify the external env involved:

The decreased strength of the Canadian dollar in the past years has made it easier for Canadian companies to export their products.

A

Economic (currency)

40
Q

Identify the external env involved:

The popularity of organic food has increased in recent years, since many consumers are concerned about pesticides, hormones and other chemicals used in the production of traditional foods.

A

Socio-cultural

41
Q

Identify the external env involved:

The increased use of social media by consumers has in turn influenced certain companies to adopt them to promote their products, which has resulted in less demand for advertising in the traditional media, such as television and magazines.

A

Technology

42
Q

Identify the external env involved:

Forest fires in western Canada and the United States will affect the forestry industry, tourism, and increase insurance claims which could mean increased insurance costs for businesses and individuals.

A

Natural

43
Q

Identify the external env involved:

Energy drink manufacturers fear that the government is considering regulation that would require them to attach warning labels to their products aimed at young consumers.

A

Legal

44
Q

Identify the external env involved:

The taxi industry in many cities is being challenged by a new entrant, Uber, that offers an alternative that may be less expensive, more convenient or offer better service.

A

Competition, technology

Intro to Business (13 decks)

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