Unit 1.4 (the Business Environment Analysis)

Question 1

List the two types of factors that influence business

Answer 1

Internal Factors and External Factors

Question 2

Define Internal Factors (internal environment)

Answer 2

Conditions and forces within the organization, can be controlled.

Question 3

Define the External Factors (external environment)

Answer 3

Uncontrollable, occur outside the organization (e.g. COVID, recession)

Question 4

Outline how an external environmental analysis is done.

Answer 4

1.) Monitor the external factors (economic, gov/legal, competition, social/cultural, technological) so gather data on PESTEL factors

2.) Develop decisions based on gathered data

Question 5

Define the acronym of PESTEL analysis

Answer 5

Political, Economic, Social, Technological, Environmental, Legal
- a macro-analysis of the external factors

Question 6

Outline the use of the PESTEL analysis

Answer 6

To identify dangers and opportunities for the company

Question 7

Explain the Political Factor of PESTLE

Answer 7

Account for the political landscape of a country, region and the world that may change the business environment

• Gov. changes
• political conflict
• Foreign pressure
• Peace and order
• Trade agreements
• Market regulations (e.g. import costs)

GPFPTM

Question 8

Explain the Economic Factor of PESTLE

Answer 8

Anything to do with economy/finance

• Disposable income
• Unemployment levels
• Foreign exchange rates
• Trade tariffs
• *Interest rates
• Inflation rates
• Other monetary issues*

Question 9

Define disposable income

Answer 9

Money that can be used for things that are non-essential to our survival

Question 10

Explain the Social Factors of PESTLE

Answer 10

Focus on the company’s customers and consumers.

• Ethnic/Religious Factors
• Major World events
• Demographics
• Consumer opinion and attitudes
• Trends, fads
• Purchase patterns
• Fashion and Role Models

Question 11

Explain the Technological Factor of PESTLE

Answer 11

Looks into technology that can directly and indirectly effect the business

(e,g. AI)

Question 12

Explain the Environmental Factor of PESTLE

Answer 12

Looks into the environment

• Ecological
• Environmental Issues
• Environmental Regulations
• Conservation issues
• Waste management
• Bio degradability concerns

(e.g. smog)

Question 13

Explain the Legal Factor of PESTLE

Answer 13

Laws and regulations prevailing within an economy

• Employment laws
• Consumer protection (protecting local businesses)
• Industry-specific regulations
• Competitive regulations
• Environmental laws

Question 14

COMMON INFLUENCES OF PESTEL FACTORS (paste from managebac)

Question 15

Define the acronym of the 6 M’s

Answer 15

Man, Money, Machinery, Method, Measurement and Market

Question 16

Define Man - Manpower in the 6 M’s

Answer 16

Referred to as human resource and how the organization manage them
- Training
- Compensation
- Evaluation and Development
- Organizational behavior and coordination
- Morale and motivation

Question 17

Explain Money - Finance In the ^ M’s

Answer 17

Refers to the finances of the company and its management

• Sourcing
• Condition and situation
  etc.

Question 18

Explain Machine in 6 M’s

Answer 18

Regards the physical capital/tools to create the goods/services

Question 19

Explain the Material in 6 M’s

Answer 19

BASIC INGREDIENT USED TO produce a product or give services

Question 20

Explain Method in the 6 M’s

Answer 20

The process to produce goods/services

Question 21

Explain the Market in the 6 M’s

Answer 21

The composition of consumers of the product that the org is focusing on

Question 22

Define a “share”

Answer 22

part of the company — could be shared thus “share”

Question 23

Define stakeholders.

Answer 23

any party/person that has:
- an interest in an organization/linked to the company (pos or neg? see pres. duterte and abs cbn matrix)
- e.g.: study cafes during transition to online learning (not related to schools, but depend on the schools aka interest)
- can be affected by the organization (they have stakes for their interest in the company)
they could be:
- organizations

Question 24

Define and explain the two types of stakeholders

Answer 24

1.) Primary stakeholders - directly linked to business, part of economic transactions
(- employees
- customers
- suppliers
- owners
- creditors)
2.) Secondary stakeholders - affected indirectly — affected by or affect the business in some way
(e.g. government, stock investors)

Question 25

Outline the internal stakeholders

Answer 25

Employees, bosses, *investors*, board of directors

Question 26

Outline the interest of external stakeholders

Answer 26

Costumers - best product and service Suppliers - beneficial relationship between themselves and the firm Financiers/creditors - returns of their investments Government - focus on the conduct of the business within the business environment Local community - focuses on various aspects of the locality Pressure groups - how business has impact on their areas of concern Media - impact of business

Question 27

Explain stakeholder conflict

Answer 27

stakeholders oppose the interest of one another.

Question 28

Explain how mistrust between departments could affect a business

Answer 28

Because of their interests, they may target a specific department/grp/person. With that, they focus on bringing that department down with them than actually serving the business well.

Question 29

Explain stakeholder analysis

Answer 29

It is the **process of examining how certain stakeholders could get affected by a proposed action.** - Can be done once or on a regular basis.

Question 30

EXPLAIN THE STAKEHOLDER MATRIX’s POWER INTEREST GRID

Answer 30

Question 31

Distinguish internal and external stakeholders

Answer 31

**Internal stakeholders** - people within the company (e.g. managers, CEOs, employees, shareholders.) **External stakeholders** - people outside the company (e.g. suppliers, customers, creditors, government, etc.)

Question 32

Define the term “shareholders”

Answer 32

Shareholders are people who own a share/part of the company. (different from stakeholders though they are stakeholders! all shareholders are stakeholders but not all stakeholders are shareholders!!!)

Question 33

Outline some of the interests of internal stakeholders (Recheck?)

Answer 33

Mainly to gain some sort of profit. - e.g. salary/adequate compensation, for investors to see the returns of their investments, etc;

Question 34

What is the formula of price?

Answer 34

cost + markup

Question 35

Describe what a SWOT analysis is.

Answer 35

A method of analysis that combines the 6 M’s (internal) and external (PESTEL) - relates to the product - stands for “Strength Weakness Opportunity Threat”

Question 36

Explain the concepts in the SWOT matrix.

Answer 36

**Internal (can be controlled by the company):** - *Strength*: Core capabilities of the company — edge over competition - *Weaknesses*: Points of improvement **External (cannot be controlled by company)**: - *Opportunities*: *environmental condition that can improve an organization’s competitive placement* - *Threats* = any environmental condition that could harm the business

Question 37

Outline and describe the two types of strengths

Answer 37

- **Tangible strengths** (can be sensed and is/or quantifiable) - *plant and equipment* - *uniqueness of product* - *cost advantages (produced cheaper)* - **Intangible Strengths** - Strong recognized brands - your reputation (related to above) - patents or proprietary products - managerial experience

Question 38

Outline and describe the two types of weaknesses

Answer 38

- **Tangible weaknesses** - old plant and equipment - narrow product line (depends) - insufficient finance - **Intangible weaknesses** - weak brand - poor customer relationship - lack of industry knowledge

Question 39

Outline and describe the two types of opportunities

Answer 39

- **Industry opportunities** - expand product range - diversify - vertical integration (forward or backward) - Export or increase geographic cover - **Macro opportunities** - favourable legislative changes - positive economic outlook

Question 40

Outline and describe the two types of weaknesses

Answer 40

- **Industry threats** - low cost imports - substitute prodycts - market decline - **Macro threats** - exchange rates - demographic changes - increasing regulation

Question 41

Define brand equity

Answer 41

how people see a business

Question 42

Define a market as a business term

Answer 42

About the consumers and their demands

Question 43

Define backward, forward, horizontal integration and vertical integration

Answer 43

**Backward integration** = resources - called “backward” cuz it goes back in the former areas of the supply chain **Forward integration** = retail - forward because it goes forward to the later areas of the supply chain **Horizontal integration** = acquiring competition to eliminate them (working for them — still there) - same level and same industry - you have to take into account how it would fit in your own company (e.g. if forward, backward…) - integrating = putting something in the company **Vertical integration** = acquisition strategy of other companies and the responsibilities. - usurped company retained identity but operates under the mother company - *Not necessarily acquiring competition.*