Chapter 4 Flashcards
(16 cards)
What are the three sub environments within the business environment
- Macro-environment or mega trends environment
- Market environment or task environment
- Micro-environment
Which environments do SWOT come from
S and W come from the micro-environment
O and T come from both the market and macro-environments
Characteristics of the business environment
- Interrelatedness of factors
- Increasing instability and change
- Environmental uncertainty
- Complexity of environment
What does the micro-environment consist of
Vision, mission, objectives, business functions, resources (tangible, intangible, organisational), strategies
Influence the market environment through the strategy employed to maintain/increase share in the market
What does the market environment impact
It determines the nature and strength of competition in the industry
What sub-environments fall under the market environment
- Consumers - buying power, behaviour is central to business, reason for existence
- Competitors - new and potential maintaining and improving market share
- Labour market/labour unions - skilled labour available, labour strikes
- Intermediaries - compete to distribute product
- Suppliers - who does/doesn’t supply raw materials, products/services, finance to business
What are the competitive forces in a market
- Threat of new entries
- Buying power of clients/consumers
- Strength of suppliers
- Number of competitors
- Threat of substitutes
What do competitive forces determine
They help determine if new products will be profitable
They can also be used to determine the strengths and weaknesses of a business
What sub-environments fall under the macro-environment
- Technological - constant change and innovation
- Economic - inflation, exchange rates, recessions, monetary/fiscal policy
- Social - lifestyles, habits and values, consumerism
- Physical - minerals, flora and fauna, electrical supply, sanitation, roads, bridges, ovrpopulation, food and water, energy and climate - cost of energy, cost of pollution, environmentalism, scarce resources
- Institutional - government, political, legislative
- International - local and foreign politics and social trends
What is environmental scanning used for
continuos monitoring of competition provides the basis for the development of a strategy. It emphasises the strengths and weaknesses and focuses on industry trends in terms of opportunities and threats
What is consumerism
Consumerism is the social force that protects the consumer by exerting legal, moral, economic and political pressure on management. It protects the rights of consumers
What rights are protected through consumerism
The right to safety
The right to be informed
The right to freedom of choice
The right to be heard
Define an environmental opportunity
A favourable condition or trend in the market environment that can be exploited to the business’s advantage by a deliberate management effort
Define an environmental threat
An unfavourable condition or trend in the market environment that can, in the absence of a deliberate effort by management, lead to the failure of the business, its products or its services
Why is environmental scanning important
- Environment is continually changing
- Determines what factors/patterns pose threats to the current business strategy
- Determine which factors present opportunities
- Systematic scanning means more successful
Extent of environmental scanning is determined by
- Basic relationship between business and environment
- Nature of environment = more unstable = more sensitive
- Source and extent of change
