Applied Eco Flashcards
relating to any activity of creating, buying or
selling any kind of commodities or even providing
services to prospect buyers or clients.
Business
the lifeblood of any country’s economy
Business
7 environmental
segments
Economic segments -include inflation rates, interest
rates, trade deficits or surplus, personal savings rate and
gross domestic product.
These segments are all related to determined how the economy performs.
Political/legal segments - covers antitrust laws, taxation
laws, deregulation philosophies, labor training laws, and
educational philosophies and policies.
The segments
relate to the functions of the government in monitoring
the different economic and business related activities.
Sociocultural segments- interests are women in the
workforce, workforce diversity, and attitudes about the
quality of work life.
This segment focuses on the role of
the human resources, its development and the society.
Technological segments- pertains to product innovations,
application of knowledge, focus of private and
government.
This segment supported R&D expenditures.
Global segments -are those related to important political
events, critical global markets, and newly industrialized
countries, different cultural and institutional attributes
the political, cultural, and economy of other countries in
order to compete in the international market
Physical Environmental segments concerns are energy consumption, practices used to develop energy sources,
Demographic segment- are the population size, age
structure, geographic distribution, ethnic mix, and
income distribution
A company’s power is affected by the force of new entrants
into its market. The
The threats of new entrants
EXAMPLE: In the cosmetic industry, Avon and Mary Kay
have been two of the famous make up brands in the country.
But the entry of cosmetics brands that use organic and natural
ingredients has brought noticeable changes in the landscape
of the makeup industry
The threats of new entrants
This specifically deals with the ability of the customers to
drive prices down.
The power of buyers
This force addresses how easily suppliers can drive up the
price of goods and services. It
Power of suppliers
the power to drive competition up they
threatening to increase their products or services’ prices or to
reduce the quality of the goods they pro
Suppliers
powerful when there is no competition with
substitute products and the products make up an important part
of their buyers’ businesses.
Supplier
Competitors substitutions that can be used in place of a products or services pose a threat.
The Threat of Product Substitute
If customers rely on a company to provide a tool
or service that can be substituted with another tool or service or by
performing the task manually, and this substitution is fairly easy
of low cost, a company’s power can be weakened.
The Threat of Product Substitutes
The importance of this force is the number of competitors
and their ability to threaten a company. The larger the number of
competitors, along with the number of equivalent products and
services they offer, dictates the power of a company
The Intensity of Rivalry Among Competitors
Coca-Cola Co. and Pepsi Cola Co. have been
famous rivals in the soft drinks market. In some industries, rivalry
dissipates the firms’ profits because of aggressive competition.
This drives down prices and often leads the rival firms to incur
losses.
The Intensity of Rivalry Among Competitors
involves the interaction of six factors:
concentration, diversity of competitors, product differentiation,
excess capacity, exit barriers, and cost conditions.
Aggressive rivalry
It pertains to the number and size of
distribution of firms.
Concentration
This factor identifies firms’
differences in goals, strategies, objectives, and costs
structures – elements can drive competition
Diversity of competitors
Firms need to make their
products unique so these will stand out in the market.
Product Differentiation
Refers to a firm’s ability to create more
products then what customers demand
Excess capacity
What high exit barriers do is that they
prevent a firm from exiting an industry.
Exit barriers
Excess capacity causes price
competition. When costs are high, e.g., fixed costs relative
to variable costs, companies can adjust their prices if
there are no other hindrances to do so.
Cost condition
PORTER’S FIVE FORCES OF COMPETITIVE POSITION
ANALYSIS.
Concentration
Diversity of Competitors
Product Differentiation
Excess Capacity
Exit Barriers
Cost Conditions
It was developed in 1979 by Michael E. Porter
PORTER’S FIVE FORCES OF COMPETITIVE POSITION
ANALYSIS.
Pestel stands for?
Political (e.g., government policies, stability of government,
taxes)
o Economic (e.g., interest rates, inflation, credit, forex)
o Social (e.g., culture, education, gender, wealth distribution)
o Technological (e.g., new innovations, technological
advancement, rate of technological obsolescence)
o Legal (e.g., product regulation, employment laws, patent,
health and safety regulations); and
o Environmental (e.g., geographical location, weather)
was created in the 1960’s by business
gurus, Edmund P. Learned, Roland Christensen, and Kenneth
Andrews in their book, Business Policy, Text, and Cases.
Swot analysis
