Lecture 2 - Chapter 4

Question 1

Two components of the macro environment and their model?

Answer 1

-Environmental analysis (PESTEL)
-Competitive advantage of nations (Porters Dimond).

Question 2

Explain the porters Diamond?

Answer 2

Focuses on why countries specialise in making certain goods - Reference to a country’s PPF curve. the model explains the reason as to why countries choose to specialise in a particular product.

Question 3

What do we mean by PESTEL?

Answer 3

-Political: Political issues are actions of the government.

-Economic: Economic conditions that may influence your business.

-Social: fashion trends that may influence the elasticity of demand for the product or service you supply.

-Technological: the availability of technology that may improve production methods.

-Environmental: sustainability

-Legal: Industry regulation.

Question 4

what are the four key determinants according to the Porter Diamond?

Answer 4

-Demand conditions
-factor conditions
-related and supporting industries
-strategy, structure and rivalry

Question 5

Explain the factor conditions - supply side:

Answer 5

the availability of the factors of production which influences a countrys manufactures.

Question 6

Explain the demand conditions

Answer 6

Demanding local consumers force the firms to be more professional

Question 7

Explain the benefits of related and supporting industries

Answer 7

leads to:

• Easy access to components, with reduced lead times and carriage costs
  -Encourages knowledge and sharing which increases innovations.

Question 8

List some of the benefits of Strategy, structure and rivalry:

Answer 8

-Strong domestic rivalry forces local firms to be more efficient

-the strategies and structure that have become prevalent in a particular notion may give advantages in particular industries.