The Business Environments Flashcards
What are the factors of the Micro environment
-it’s an internal environment
- uses the Business functions and the Strengths and Weaknesses of the SWOT analysis for environmental scanning
What are the factors of the Macro environment
- is an external environment
- Uses PESTLE and the Threats and the Opportunities of the SWOT analysis for environmental planning
What are the factors of the Market environment
- is an external environment
- Uses Porter’s Six model analysis for environmental scanning
What is environmental scanning
The process of obtaining information about events that may have an impact on the performance of the business
What are the functions of environmental scanning
- ensures that the business is ready for developments in all environments
- realigns resources to take advantage of opportunities and overcome threats
What is a crisis
A quick and unexpected change
What are trends
Changes that occur over a period of time
Give examples of strengths
Competitive price
Location
Patents
Business culture
Good marketing and strong brad
Access to financing
Operational efficiency and good quality
When can Location be considered as a Strength in a business
-When the business and it’s products are easily accessible to the target market
-When it’s close to the source of raw materials used to produce goods/ render services
Why can patents be considered as a Strength
Because they limit potential competitors
Why is Businesses Culture be a possible strength
Because it gives consumers confidence in the ability and reliability of the business
Why are operational efficiency and good quality strengths
Because they help differentiate businesses from their competitors and therefore enabling greater profitability
What are Opportunities
External factors which present the business with the chance to outperform their competitors
What are Threats
External factors which could hamper the success or growth of the business
What can be Used to identify Threats and Opportunities
PESTLE and Porter’s six Forces
What is Porter’s Six Force Model Analysis used for
To assess the attractiveness of a market
What does at attractive market have
-High level of profits
- High barriers to enter
- Free substitute products/ services
- Low level of competition
- Weak supplier bargaining power
- Weak buyer bargaining power
What are the characteristics of an unattractive market
- Low level of profits
- Low barriers to enter
- Many substitute products/ services
- high level of competition
- Strong supplier bargaining power
- Strong buyer bargaining power
What are the factors of Porter’s Model
- Threat if new entrants
- Rivalry amongst current competitors
- Threat of substitute products
- Power of the supplier
- Bargaining power of the buyers
- Complementary products
What are possible barriers that may make it hard to enter a market
- The need of a high capital contribution
- Strong Trade Marks of existing businesses
- High customer switching costs
When is the rivalry amongst current competitors high
-When there’s too many competitors
-When there’s a low level of customer loyalty
What are substitute products
Different products that satisfy the same need
What are examples of substitute products
Any other school instead of Midstream
They both satiety the need for education
When is the power of the supplier high
-When there are few suppliers
-When it is difficult to forward integrate
Why is the power of suppliers high when there are few suppliers
Because supplier may not be available to deliver products at the time they are needed, this causes lack of stock and therefore loss of profitability for the business because consumers don’t have products to buy since the supplier didn’t pitch
When is the bargaining power of buyers strong
-When the buyer buys in bulk
- when few buyers exist
- when it’s difficult to integrate backwards
Why is the bargaining power of buyers strong when buyers are few
Because the business would rather have those little buyers than no buyers at all , so the business feels the need abide to any requests of the buyers even if their requests are unethical
What is the function of complimentary products and give an example of a complimentary product
Complimentary products complement and increase the demand of the original product to encourage more profitability
Air-pods are a complementary product that complements IPhone 11
What are the PESTLE elements
Political
Economical
Social
Technological
Legislation/ Legal
Environmental
