Chapter 1 Flashcards
Business environments (24 cards)
SWOT Analysis
The SWOT analysis is a tool to used conduct an environmental scan.
Micro environment
The micro environment is the internal environment of the business and it includes all the factors inside the business that could affect the source of failure of the business.
Strength
A strengths of the business are the characteristics that give the business an advantage over others.
Weakness
Weaknesses of a business are the characteristics that place the business at a disadvantage relative to others
Opportunities
The opportunities of a business are the elements in the environment that the business could exploit to their advantage.
Threats
The threats of a business are the elements that could cause trouble for the business.
Porter’s 6 Forces
It is a method used to breakdown and understand the competitive nature of an industry or business.
Market environment
The market environment consists of elements immediately outside of the business.
Threat of new entrants
Refers to how easy it is to enter and leave the market.
Rivalry amongst existing competitors
It is where the existing competition uses tactics such as price competition, product introduction, and advertising campaigns.
Threat of substitutes
When companies are forced to compete with industries producing substitute products or services.
Bargaining power of suppliers
Refers to the pressure that suppliers can put on companies by raising their prices, lowering their quality or reducing the availability of their product.
Bargaining power of buyers
The customer’s ability to drive the prices of a product or service, compel brands to improve quality and nudge them to offer better customer service.
PESTLE Analysis
Assessing the macro environment with the use of PESTLE helps align the business to forces of change that could affect the business.
Macro environment
The external environment of an organisation that they have no control over.
Political
Political factors centre on the role of government in shaping the business.
Economic
Economic factors are the determinants of the economy’s performance.
Social
Social factors are influences on consumer behaviour.
Technological
Technological factors refer to the way new practices and equipment can affect the business.
Technological
Technological factors refer to the way new practices and equipment can affect the business.
Environmental
Environmental factors make up the physical and social environment in which people live and conduct their lives.
Legal
Legal factors pertain to any legal forces that define what a business can or cannot do.
Conclusion
This report suggests that the business…
Complementary
The effect of complementary goods on an industry’s profitability generally depends on how reliant the product or service is on the compatible product.
