MBA 705 Exam 1 UPDATED ACTUAL Questions And Correct Answers
C
Terms in this set (61)
PESTEL Analysis 6 segments of general environment, use to identify how these factors influence
industries and the firms within them
P - Political
E- Economic
S- Socio- Cultural
T - Technological
E- Environmental
L - Legal
Political Factors -include tax policies, changes in trade restrictions and tariffs, and stability of
governments
- example : immigration policy, clean energy policies
Economic Factors - include elements such as interest rates, inflation rates, gross domestic product,
unemployment rates, levels of disposable income and general growth or decline
of economy
- example: Covid crisis of 2020
Unemployment Rate percentage of labor force looking for employment over the last 4 weeks
Housing Starts number of houses, apartments and condos on which new construction has been
started
- includes concrete, steel, wood, plumbing, and banks as suppliers, carefully
watched measure of economic condition
Gross Domestic Product (GDP) - market value of goods and services within a country produced in a given time
period
-rough indicator of a country's standard of living
Federal Reserve System ("The Fed") US's central banking system, attempts to strengthen economy, ie by setting short-
term interest rates
Discretionary Income amount of money individuals have to spend after all bills are paid
Socio-cultural factors -capture a society's cultures norms, societal values and trends
- trends in demographics such as population size, age, ethnic mix, as well as
attitudes toward obesity and consumer activism
Hemline Theory -women's skirt lengths predict stock market increases and decreases. Raised skirts
when times are good, lowered skirts in tough economic times
, Technological Factors -centers on improvements in products and services that are provided by science
-ie changes in product development, increases in automation and advancements
in service industry delivery
Moore's Law performance of microcircuit technology roughly doubles every 2 years
Environmental or Ecological Factors - physical/ecological conditions within which an organization operates
-includes factors such as natural disasters, pollution levels, global warming and
weather patterns
Legal Factors - centers on how courts and laws influence business activity
- ie employment laws, health and safety regulations, discrimination and anti-trust
laws
Intellectual Property A product of the intellect, such as an expressed idea or concept, that has
commercial value.
-ie pixar movie or adobe program, piracy of it would be illegal
Sherman Antitrust Law of 1890 limits cartels and monopolies in US
Industry group of firms that produce competing products/services
Industry Effects -firms within the same industry often have the same suppliers and buyers
- firm performance is due to the structure of the industry in which the firm
competes
- makes up 20% of a firm's performance
Firm Effects - firm performance due to actions strategic leaders take
- makes up 55% of a firm's performance
Other Effects of a Firm's Performance - business cycles, effects, unexplained variance
-makes up 25% of firm's performance
Porter's Five Forces 1. Threat of potential entrants
2. Bargaining power of suppliers
3. Rivalry of industry competitors
4. Bargaining power of buyers
5. Threat of substitutes
Threat of Potential Entrants firms not considered viable competitors in the industry but that may become
viable in the future
Bargaining power of buyers firms that buy directly from industry such as car dealerships
C
Terms in this set (61)
PESTEL Analysis 6 segments of general environment, use to identify how these factors influence
industries and the firms within them
P - Political
E- Economic
S- Socio- Cultural
T - Technological
E- Environmental
L - Legal
Political Factors -include tax policies, changes in trade restrictions and tariffs, and stability of
governments
- example : immigration policy, clean energy policies
Economic Factors - include elements such as interest rates, inflation rates, gross domestic product,
unemployment rates, levels of disposable income and general growth or decline
of economy
- example: Covid crisis of 2020
Unemployment Rate percentage of labor force looking for employment over the last 4 weeks
Housing Starts number of houses, apartments and condos on which new construction has been
started
- includes concrete, steel, wood, plumbing, and banks as suppliers, carefully
watched measure of economic condition
Gross Domestic Product (GDP) - market value of goods and services within a country produced in a given time
period
-rough indicator of a country's standard of living
Federal Reserve System ("The Fed") US's central banking system, attempts to strengthen economy, ie by setting short-
term interest rates
Discretionary Income amount of money individuals have to spend after all bills are paid
Socio-cultural factors -capture a society's cultures norms, societal values and trends
- trends in demographics such as population size, age, ethnic mix, as well as
attitudes toward obesity and consumer activism
Hemline Theory -women's skirt lengths predict stock market increases and decreases. Raised skirts
when times are good, lowered skirts in tough economic times
, Technological Factors -centers on improvements in products and services that are provided by science
-ie changes in product development, increases in automation and advancements
in service industry delivery
Moore's Law performance of microcircuit technology roughly doubles every 2 years
Environmental or Ecological Factors - physical/ecological conditions within which an organization operates
-includes factors such as natural disasters, pollution levels, global warming and
weather patterns
Legal Factors - centers on how courts and laws influence business activity
- ie employment laws, health and safety regulations, discrimination and anti-trust
laws
Intellectual Property A product of the intellect, such as an expressed idea or concept, that has
commercial value.
-ie pixar movie or adobe program, piracy of it would be illegal
Sherman Antitrust Law of 1890 limits cartels and monopolies in US
Industry group of firms that produce competing products/services
Industry Effects -firms within the same industry often have the same suppliers and buyers
- firm performance is due to the structure of the industry in which the firm
competes
- makes up 20% of a firm's performance
Firm Effects - firm performance due to actions strategic leaders take
- makes up 55% of a firm's performance
Other Effects of a Firm's Performance - business cycles, effects, unexplained variance
-makes up 25% of firm's performance
Porter's Five Forces 1. Threat of potential entrants
2. Bargaining power of suppliers
3. Rivalry of industry competitors
4. Bargaining power of buyers
5. Threat of substitutes
Threat of Potential Entrants firms not considered viable competitors in the industry but that may become
viable in the future
Bargaining power of buyers firms that buy directly from industry such as car dealerships
