The Micro, Market And Macro Environments Flashcards
What are the benefits of environment scanning?
- identifies threats beforehand
- identifies possible opportunities
- allows entrepreneur to make short and long term strategies to protect the business
What does an entrepreneur look at when scanning the environment?
- viability of product
- strength of competitors
- size of potential market
- stability of resources
What is a strategy?
A specific plan of action that defines the process used to achieve a desired outcome
What is a trend and what is a crises?
Trend: predictable changes the business can plan for to some extent
Crises: unexpected and unplanned
What are the advantages of strategies?
- gives direction to the business
- ensures consistency in decision making
- anticipates external and internal changes
- differentiates management roles and areas of responsibility
What is a growth/intensive strategy?
Intended to increase market share/turnover/ sales volume
Existing products+existing market=?
New products+existing market=?
Existing products+new market=?
New products+new market=?
Existing products+existing market= market penetration
New products+existing market= product development
Existing products+new market= market development
New products+new market=diversification
What are decline/defensive strategies?
Definition: When a business decides to downscale
This can be done through:
- retrenchment
- divestiture (selling some assets in under-utilised parts of the business)
- harvesting (termination of investments in a specific product/product line)
- liquidation
What is the low cost strategy?
Having low costs in the industry by:
- access to cheap raw materials
- low cost manufacturing
- discontinue costly activities
What is the differentiation strategy?
Providing a unique product/service to ensure customer loyalty. Business can then charge a premium price
What is the focus strategy?
- all efforts aimed at a specific market segment
- based on what makes that segment unique
What is Total Quality Management?
Process where everyone in the business is committed to thinking about how all actions impact on quality of all tasks and overall customer satisfaction.
Quality is determined by:
- inspection
- sampling
