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IB Business Management > Unit 1.4 (the Business Environment Analysis) > Flashcards

Unit 1.4 (the Business Environment Analysis) Flashcards

1
Q

List the two types of factors that influence business

A

Internal Factors and External Factors

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2
Q

Define Internal Factors (internal environment)

A

Conditions and forces within the organization, can be controlled.

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3
Q

Define the External Factors (external environment)

A

Uncontrollable, occur outside the organization (e.g. COVID, recession)

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4
Q

Outline how an external environmental analysis is done.

A

1.) Monitor the external factors (economic, gov/legal, competition, social/cultural, technological) so gather data on PESTEL factors

2.) Develop decisions based on gathered data

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5
Q

Define the acronym of PESTEL analysis

A

Political, Economic, Social, Technological, Environmental, Legal
- a macro-analysis of the external factors

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6
Q

Outline the use of the PESTEL analysis

A

To identify dangers and opportunities for the company

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7
Q

Explain the Political Factor of PESTLE

A

Account for the political landscape of a country, region and the world that may change the business environment

  • Gov. changes
  • political conflict
  • Foreign pressure
  • Peace and order
  • Trade agreements
  • Market regulations (e.g. import costs)

GPFPTM

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8
Q

Explain the Economic Factor of PESTLE

A

Anything to do with economy/finance

  • Disposable income
  • Unemployment levels
  • Foreign exchange rates
  • Trade tariffs
  • *Interest rates
  • Inflation rates
  • Other monetary issues*
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9
Q

Define disposable income

A

Money that can be used for things that are non-essential to our survival

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10
Q

Explain the Social Factors of PESTLE

A

Focus on the company’s customers and consumers.

  • Ethnic/Religious Factors
  • Major World events
  • Demographics
  • Consumer opinion and attitudes
  • Trends, fads
  • Purchase patterns
  • Fashion and Role Models
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11
Q

Explain the Technological Factor of PESTLE

A

Looks into technology that can directly and indirectly effect the business

(e,g. AI)

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12
Q

Explain the Environmental Factor of PESTLE

A

Looks into the environment

  • Ecological
  • Environmental Issues
  • Environmental Regulations
  • Conservation issues
  • Waste management
  • Bio degradability concerns

(e.g. smog)

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13
Q

Explain the Legal Factor of PESTLE

A

Laws and regulations prevailing within an economy

  • Employment laws
  • Consumer protection (protecting local businesses)
  • Industry-specific regulations
  • Competitive regulations
  • Environmental laws
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14
Q

COMMON INFLUENCES OF PESTEL FACTORS (paste from managebac)

A
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15
Q

Define the acronym of the 6 M’s

A

Man, Money, Machinery, Method, Measurement and Market

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16
Q

Define Man - Manpower in the 6 M’s

A

Referred to as human resource and how the organization manage them
- Training
- Compensation
- Evaluation and Development
- Organizational behavior and coordination
- Morale and motivation

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17
Q

Explain Money - Finance In the ^ M’s

A

Refers to the finances of the company and its management

  • Sourcing
  • Condition and situation
    etc.
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18
Q

Explain Machine in 6 M’s

A

Regards the physical capital/tools to create the goods/services

19
Q

Explain the Material in 6 M’s

A

BASIC INGREDIENT USED TO produce a product or give services

20
Q

Explain Method in the 6 M’s

A

The process to produce goods/services

21
Q

Explain the Market in the 6 M’s

A

The composition of consumers of the product that the org is focusing on

22
Q

Define a “share”

A

part of the company — could be shared thus “share”

23
Q

Define stakeholders.

A

any party/person that has:
- an interest in an organization/linked to the company (pos or neg? see pres. duterte and abs cbn matrix)
- e.g.: study cafes during transition to online learning (not related to schools, but depend on the schools aka interest)
- can be affected by the organization (they have stakes for their interest in the company)
they could be:
- organizations

24
Q

Define and explain the two types of stakeholders

A

1.) Primary stakeholders - directly linked to business, part of economic transactions
(- employees
- customers
- suppliers
- owners
- creditors)
2.) Secondary stakeholders - affected indirectly — affected by or affect the business in some way
(e.g. government, stock investors)

25
Q

Outline the internal stakeholders

A

Employees, bosses, investors, board of directors

26
Q

Outline the interest of external stakeholders

A

Costumers - best product and service

Suppliers - beneficial relationship between themselves and the firm

Financiers/creditors - returns of their investments

Government - focus on the conduct of the business within the business environment

Local community - focuses on various aspects of the locality

Pressure groups - how business has impact on their areas of concern

Media - impact of business

27
Q

Explain stakeholder conflict

A

stakeholders oppose the interest of one another.

28
Q

Explain how mistrust between departments could affect a business

A

Because of their interests, they may target a specific department/grp/person. With that, they focus on bringing that department down with them than actually serving the business well.

29
Q

Explain stakeholder analysis

A

It is the process of examining how certain stakeholders could get affected by a proposed action.
- Can be done once or on a regular basis.

30
Q

EXPLAIN THE STAKEHOLDER MATRIX’s POWER INTEREST GRID

A
31
Q

Distinguish internal and external stakeholders

A

Internal stakeholders - people within the company (e.g. managers, CEOs, employees, shareholders.)

External stakeholders - people outside the company (e.g. suppliers, customers, creditors, government, etc.)

32
Q

Define the term “shareholders”

A

Shareholders are people who own a share/part of the company.
(different from stakeholders though they are stakeholders! all shareholders are stakeholders but not all stakeholders are shareholders!!!)

33
Q

Outline some of the interests of internal stakeholders (Recheck?)

A

Mainly to gain some sort of profit.
- e.g. salary/adequate compensation, for investors to see the returns of their investments, etc;

34
Q

What is the formula of price?

A

cost + markup

35
Q

Describe what a SWOT analysis is.

A

A method of analysis that combines the 6 M’s (internal) and external (PESTEL)
- relates to the product
- stands for “Strength Weakness Opportunity Threat”

36
Q

Explain the concepts in the SWOT matrix.

A

Internal (can be controlled by the company):
- Strength: Core capabilities of the company — edge over competition
- Weaknesses: Points of improvement

External (cannot be controlled by company):
- Opportunities: environmental condition that can improve an organization’s competitive placement
- Threats = any environmental condition that could harm the business

37
Q

Outline and describe the two types of strengths

A
  • Tangible strengths (can be sensed and is/or quantifiable)
    • plant and equipment
    • uniqueness of product
    • cost advantages (produced cheaper)
  • Intangible Strengths
    • Strong recognized brands
    • your reputation (related to above)
    • patents or proprietary products
    • managerial experience
38
Q

Outline and describe the two types of weaknesses

A
  • Tangible weaknesses
    • old plant and equipment
    • narrow product line (depends)
    • insufficient finance
  • Intangible weaknesses
    • weak brand
    • poor customer relationship
    • lack of industry knowledge
39
Q

Outline and describe the two types of opportunities

A
  • Industry opportunities
    • expand product range
    • diversify
    • vertical integration (forward or backward)
    • Export or increase geographic cover
  • Macro opportunities
    • favourable legislative changes
    • positive economic outlook
40
Q

Outline and describe the two types of weaknesses

A
  • Industry threats
    • low cost imports
    • substitute prodycts
    • market decline
  • Macro threats
    • exchange rates
    • demographic changes
    • increasing regulation
41
Q

Define brand equity

A

how people see a business

42
Q

Define a market as a business term

A

About the consumers and their demands

43
Q

Define backward, forward, horizontal integration and vertical integration

A

Backward integration = resources
- called “backward” cuz it goes back in the former areas of the supply chain

Forward integration = retail
- forward because it goes forward to the later areas of the supply chain

Horizontal integration = acquiring competition to eliminate them (working for them — still there)
- same level and same industry
- you have to take into account how it would fit in your own company (e.g. if forward, backward…)
- integrating = putting something in the company

Vertical integration = acquisition strategy of other companies and the responsibilities.
- usurped company retained identity but operates under the mother company
- Not necessarily acquiring competition.

IB Business Management (18 decks)

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