BUSI 4940 EXAM 1 REVIEW QUESTIONS
General Environment - Answers - Factors in the external environment that can affect the
company, but the company can not directly affect back.
Or, dimensions in the broader society that influence an industry and the companies
within it. In general, firms cannot directly control or significantly impact the segments of
this environment.
For example, the U.S. economy is so big that one company can't do much to impact it.
However, the U.S. economy can impact any given company within it.
Industry Environment - Answers - Factors that directly affect the company's competitive
actions and responses. But the company CAN have a significant effect back on them as
well.
Think the threat of new entrants, the power of suppliers and buyers, the threat of
substitutes, and rivalry among competing firms.
There are some actions suppliers can take that will affect your company, but there are
also actions you can take to affect your suppliers. Furthermore, customers can also
affect you, but you can also affect your customers.
Competitor Analysis - Answers - How companies gather and interpret information about
their competitors is called ______________________.
General Environment - Answers - The following are external factors that are Segments
and Elements of the _______________.
1. Political/Legal
2. Economic
3. Sociocultural
4. Technological
5. Demographic
6. Environmental
7. Global
We want to know if these will change and how they will affect our firm in the next 5
years.
Opportunity - Answers - A condition in the general environment that, if exploited
effectively, helps a company reach strategic competitiveness.
Threat - Answers - A condition in the general environment that may hinder a company's
efforts to achieve strategic competitiveness.
,External Environment Analysis - Answers - This process is _____________________,
1. Scanning: Identifying early signals of environmental changes and trends
2. Monitoring: Detecting meaning through ongoing observations of environmental
changes and trends.
3. Forecasting: Developing projections of anticipated outcomes based on monitored
changes and trends.
4. Assessing: Determining the timing and importance of environmental changes and
trends for firms' strategies and their management.
Demographic - Answers - Segment of General Environment concerned with statistics
regarding:
1) Population Size;
2) Age Structure;
3) Geographic Distribution;
4) Ethnic Mix;
5) Income Distribution
*Remember P. E. S. T. /D. E. G.
Economic - Answers - Segment of General Environment that refers to the nature and
direction of the economy in which a firm competes or may compete; Interest rates,
inflation rates, GDP, Budget deficits/surpluses, personal savings rates, unemployment.
*Remember P. E. S. T. /D. E. G.
Political/Legal - Answers - Segment of General Environment that refers to tax policies,
trade restrictions, tariffs, subsidies, stability of the government, antitrust, health & safety,
discrimination, child labor.
Likely the most impactful potential issues a firm may face come from this segment.
*Remember P. E. S. T. /D. E. G.
Sociocultural - Answers - Segment of General Environment concerned with a society's
attitudes and cultural values; Women in the workforce, diversity, shifts in preferences
regarding product/service, work-life balance attitudes.
*Remember P. E. S. T. /D. E. G.
, Technological - Answers - Segment of General Environment that includes the
institutions and activities involved in creating new knowledge and translating that
knowledge into new outputs, products, processes, and materials; Technological
innovations, Industry 4.0 (smart factories), Industry 5.0 (robotics), service delivery, new
medicines.
*Remember P. E. S. T. /D. E. G.
Global - Answers - Segment of General Environment that focuses on the extent to
which PEST-DEG type factors in other countries affect America or the locations where
your firm operates.
*Remember P. E. S. T. /D. E. G.
Environment - Answers - Segment of General Environment that refers to potential and
actual changes in the physical environment (Natural disasters, weather) and business
practices that are intended to positively respond to those changes in order to create a
sustainable environment. (pollution, energy consumption)
*Remember P. E. S. T. /D. E. G.
Industry - Answers - A group of firms producing products that are close substitutes or
are related based on their primary business activities.
Basically, a group of companies that compete by providing similar goods, services, or
both.
Five Forces - Answers - Michael Porter's _______________ Model is mostly concerned
with external Powers and Threats from the perspective of a company in an industry.
Barriers to Entry - Answers - The following are _____________________.
1. Economies of Scale
2. Product Differentiation
3. Capital Requirements
4. Switching Costs
5. Access to Distribution Channels
6. Cost Disadvantages Independent of Scale
7. Government Policy
Economies of Scale - Answers - The cost of producing each unit declines as the
quantity of a product produced during a given period increases. This implies that larger
companies had a cost advantage over smaller companies.
A new entrant is unlikely to quickly generate the level of demand for its product that in
turn would allow it to develop these improvements.
General Environment - Answers - Factors in the external environment that can affect the
company, but the company can not directly affect back.
Or, dimensions in the broader society that influence an industry and the companies
within it. In general, firms cannot directly control or significantly impact the segments of
this environment.
For example, the U.S. economy is so big that one company can't do much to impact it.
However, the U.S. economy can impact any given company within it.
Industry Environment - Answers - Factors that directly affect the company's competitive
actions and responses. But the company CAN have a significant effect back on them as
well.
Think the threat of new entrants, the power of suppliers and buyers, the threat of
substitutes, and rivalry among competing firms.
There are some actions suppliers can take that will affect your company, but there are
also actions you can take to affect your suppliers. Furthermore, customers can also
affect you, but you can also affect your customers.
Competitor Analysis - Answers - How companies gather and interpret information about
their competitors is called ______________________.
General Environment - Answers - The following are external factors that are Segments
and Elements of the _______________.
1. Political/Legal
2. Economic
3. Sociocultural
4. Technological
5. Demographic
6. Environmental
7. Global
We want to know if these will change and how they will affect our firm in the next 5
years.
Opportunity - Answers - A condition in the general environment that, if exploited
effectively, helps a company reach strategic competitiveness.
Threat - Answers - A condition in the general environment that may hinder a company's
efforts to achieve strategic competitiveness.
,External Environment Analysis - Answers - This process is _____________________,
1. Scanning: Identifying early signals of environmental changes and trends
2. Monitoring: Detecting meaning through ongoing observations of environmental
changes and trends.
3. Forecasting: Developing projections of anticipated outcomes based on monitored
changes and trends.
4. Assessing: Determining the timing and importance of environmental changes and
trends for firms' strategies and their management.
Demographic - Answers - Segment of General Environment concerned with statistics
regarding:
1) Population Size;
2) Age Structure;
3) Geographic Distribution;
4) Ethnic Mix;
5) Income Distribution
*Remember P. E. S. T. /D. E. G.
Economic - Answers - Segment of General Environment that refers to the nature and
direction of the economy in which a firm competes or may compete; Interest rates,
inflation rates, GDP, Budget deficits/surpluses, personal savings rates, unemployment.
*Remember P. E. S. T. /D. E. G.
Political/Legal - Answers - Segment of General Environment that refers to tax policies,
trade restrictions, tariffs, subsidies, stability of the government, antitrust, health & safety,
discrimination, child labor.
Likely the most impactful potential issues a firm may face come from this segment.
*Remember P. E. S. T. /D. E. G.
Sociocultural - Answers - Segment of General Environment concerned with a society's
attitudes and cultural values; Women in the workforce, diversity, shifts in preferences
regarding product/service, work-life balance attitudes.
*Remember P. E. S. T. /D. E. G.
, Technological - Answers - Segment of General Environment that includes the
institutions and activities involved in creating new knowledge and translating that
knowledge into new outputs, products, processes, and materials; Technological
innovations, Industry 4.0 (smart factories), Industry 5.0 (robotics), service delivery, new
medicines.
*Remember P. E. S. T. /D. E. G.
Global - Answers - Segment of General Environment that focuses on the extent to
which PEST-DEG type factors in other countries affect America or the locations where
your firm operates.
*Remember P. E. S. T. /D. E. G.
Environment - Answers - Segment of General Environment that refers to potential and
actual changes in the physical environment (Natural disasters, weather) and business
practices that are intended to positively respond to those changes in order to create a
sustainable environment. (pollution, energy consumption)
*Remember P. E. S. T. /D. E. G.
Industry - Answers - A group of firms producing products that are close substitutes or
are related based on their primary business activities.
Basically, a group of companies that compete by providing similar goods, services, or
both.
Five Forces - Answers - Michael Porter's _______________ Model is mostly concerned
with external Powers and Threats from the perspective of a company in an industry.
Barriers to Entry - Answers - The following are _____________________.
1. Economies of Scale
2. Product Differentiation
3. Capital Requirements
4. Switching Costs
5. Access to Distribution Channels
6. Cost Disadvantages Independent of Scale
7. Government Policy
Economies of Scale - Answers - The cost of producing each unit declines as the
quantity of a product produced during a given period increases. This implies that larger
companies had a cost advantage over smaller companies.
A new entrant is unlikely to quickly generate the level of demand for its product that in
turn would allow it to develop these improvements.
