Chapter 2 Essentials Flashcards
Chapter 2 focuses on the what of a business?
Sizing Up
A size-up focuses on assessing the what and what of a business?
External Environment and Operation Decisions
SWOT Analaysis
Strength, Weaknesses, Opportunities, Threats
GDP
The sum of all goods and services produced in an economy
Includes assessing GDP, sector factors, inflation, interest rate, yield curve, stock conditions, etc.
Economy Size UP
Business Cycle
Gaps in actual output and capacity: Peak, Recession, Trough, Expansion
Recession
Two consecutive quarterly declines in real GDP
Inflation has had average of what but with wide fluctuations
3.3%
The what plots the different rates at which a government can borrow, with differing times to maturity
Yield Curve
Prior to recession the yield curve is often what?
Inverted
business cycle stage?
Relationship cycle and Busi rev?
Relationship cycle and Busi costs?
How important are changing interest rates?
current economy outlook?
Current interest rate outlook?
Easy to get financing?
Other variables that would affect?
Questions to Ask During an Economic Size-Up
Industry life cycle
Competitive environment
PEST Analysis
Industry Size Up Components
PEST Analysis
Political, Economic, Social, Technological
Key Outcomes of a Industry Size Up
Identify Key Industry Success Factors
1 start up
2 rapid growth
3 mature growth
4 stabilization/maturity
5 decline
Industry Life Cycle - Revenue Changes
Porter’s five forces governing competition and impacting profit margins
Intensity of Rivals, Threat of new Entrants, Bargaining Power of Customers, Threats of Substitutes, Bargaining Power of Suppliers
Key to sustainable advantage
Low Cost or Differentiation
Life cycle?
How profitable rn?
How competitive? 5 porters
Prospects for growth?
Key pest opportunities?
Key success factors in the industry?
Question to Ask During an Industry Size-Up
Assuming customer demand is strong, to what extent is the firm able to fulfill that demand by providing the service or making the product available to the customer?
Supply Risk
The 6 P’s of Operations
Product Quality, Process, Plant or Inventory, Parts or Inventory, People or Labour, Partners or Supply Network
- How important is quality to the customer?
- how does the firm attempt to determine and deliver quality?
Product Quality
- what process does the firm currently employ?
- how efficiently does it function?
- how critical are tech innovation and investments?
Process
- What is the firm’s facility capacity?
- how close is it to capacity?
Plant or Inventory
- what type of inventory do we have?
- how much is required to meet demand?
- where is it?
- how do we manage it?
Parts or Inventory
