2 Business Environment and Strategy Flashcards
(15 cards)
What is Strategy?
A roadmap for achieving goals.
What is Business Environment?
The collection of internal and external factors that influence a company’s operations, decision-making processes, and overall success. These factors interact dynamically, requiring businesses to remain agile and adaptive.
Why is understanding Business Environment important?
- Adaptability: Helps businesses respond proactively to market changes
- Opportunity Recognition: Helps identify trends and gaps in the market
- Risk Mitigation: Allows businesses to analyze and minimize potential threats
What are the three main components of business environment?
- Internal Environment
- External Microenvironment
- External Macroenvironment
What is Internal Environment?
Includes internal elements that are directly controllable by the business:
- Employees
- Management
- Organizational structure
- Company culture
What is Microenvironment (External)?
Comprises entities with direct impact on the business:
- Suppliers: Ensure consistent production
- Customers: Their needs are critical for success
- Competitors: Must be monitored to stay competitive
What is Macroenvironment (External)?
Broader external forces indirectly influencing business:
- Political Factors: Government regulations and policies
- Economic Trends: Inflation, exchange rates, economic cycles
- Technological Advancements: Industry-shaping innovations
What are the key elements of Internal Business Environment?
- Organizational Culture: Shared values and norms
- Leadership: Drives innovation and strategic clarity
- Resources: Human, financial, and technological
- Processes: Internal systems and workflows
What are the components of Internal Organizational Resources?
- Human Resources: Skilled employees and leadership
- Financial Resources: Capital, cash flow, investments
- Physical Assets: Facilities, machinery, inventory
- Technological Resources: IT systems, software, patents
- Intangible Resources: Brand reputation, IP, company culture
What is PESTLE Analysis?
A framework for analyzing external business environment factors:
- Political: Regulations, trade policies, political stability
- Economic: Inflation, unemployment, exchange rates
- Social: Demographics, cultural norms, consumer behavior
- Technological: Innovation and industry evolution
- Legal: Laws, regulations, IP rights, labor laws
- Environmental: Sustainability, climate change, waste management
What is SWOT Analysis?
A strategic tool to evaluate:
- Strengths: Internal factors providing competitive advantage
- Weaknesses: Areas where company faces challenges
- Opportunities: External trends or market gaps
- Threats: External risks that may hinder success
What is Porter’s Five Forces?
A model analyzing competitive forces in an industry:
- Industry Rivalry: Competition among existing players
- Threat of New Entrants: Ease of market entry
- Bargaining Power of Suppliers: Supplier influence on pricing
- Bargaining Power of Buyers: Customer influence on pricing
- Threat of Substitutes: Availability of alternatives
What are key considerations for Strategic Decision-Making in IT Businesses?
- Set Clear Objectives: Define measurable goals
- Leverage Data Analytics: Identify market trends
- Invest in Training: Update employee IT skills
- Enhance Agility: Adopt scalable IT solutions
What are the sources of Competitive Advantage?
- Cost Leadership: Offering lower prices than competitors
- Differentiation: Providing unique features or superior quality
- Innovation: Introducing groundbreaking products or services
What makes a successful business strategy?
- Clear Vision and Mission: Defined long-term objectives
- Thorough Market Analysis: Understanding of customers and competition
- Effective Resource Allocation: Optimal use of resources
- Regular Performance Monitoring: Tracking progress through KPIs
