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33 Cards in this Set
- Front
- Back
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Name four techniques to analyze and forecast the economic environment.
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1. scanning
2. monitoring 3. forecasting 4. assessing |
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Describe scanning.
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A study of all segments in the general environment.
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Describe monitoring.
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A study of environmental changes identified by scanning to identify important trends.
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Describe forecasting.
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Developing probable projections of what might happen and its timing.
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Describe assessing.
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Determining changes in the firm's strategy that are necessary as a result of the information obtained.
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Name four different types of industries.
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1. perfect (pure) competition
2. pure monopoly 3. monopolistic competition 4. oligopoly |
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Describe perfect (pure) competition.
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A market characterized by a large number of small producers that sell a vertually identical product.
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How do firms compete in a perfectly competitive market?
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On the basis of price.
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Describe a pure monopoly.
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A market in which there is a single seller of a product or service for which there are no close substitutes.
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Name four reasons for a monopoly.
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1. increasing returns of scale
2. control over the supply of raw materials 3. patents 4. government franchise |
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Describe a natural monopoly.
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When economic or technological conditions permit only one efficient supplier.
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How long will monopolists continue to produce and sell products?
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As long as average variable cost is less than marginal revenue.
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Describe monopolistic competition.
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A market that is characterized by many firms selling a differentiated product or service.
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What are the strategies of firms in monopolistic competition?
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Focus on product or service innovations, product developments, and advertising.
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Describe oligopoly.
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A market characterized by significant barriers to entry.
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What is the nature of competition in an oligopoly?
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Nonprice competition is most common, but price competition can become fierce during economic downturns.
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Name the five industry forces used in analyzing the industry.
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1. competitors
2. potential entrants into the market 3. equivalent products 4. bargaining power of customers 5. bargaining power of input suppliers |
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Name three techniques for industry analysis.
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1. competitor analysis
2. price elasticity analysis 3. target market analysis |
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Describe competitor analysis.
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Involves gathering information about competitors' capabilities and using the information to understand the competitors' behavior.
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Describe price elasticity analysis.
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Involves using historical information to determine the price elasticity of demand for the firm's product.
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Describe target market analysis.
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Obtaining a thorough understanding of the market in which the firm sells its products.
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How is a SWOT analysis used in developing business strategies?
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Identifies strengths, weaknesses, opportunities and threats.
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Name the two basic business strategies that firms generally pursue.
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1. product differentiation
2. cost leadership |
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Describe product differentiation.
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Involves modification of a product to make it more attractive to the target market or to differentiate it from competitors' products.
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Name three ways in which products can be differentiated.
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1. physical characteristics
2. perceived differences 3. support service differences |
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Describe cost leadership.
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Involves focusing on reducing the costs and time to produce, sell, and distribute a product or service.
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Name five techniques that may facilitate cost reductions.
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1. process reengineering
2. lean manufacturing 3. supply chain management 4. strategic alliances 5. outsourcing |
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Describe process reengineering.
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Redesigning existing processes.
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Describe lean manufacturing.
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Identification and elimination of all types of waste in the production function.
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Describe supply chain management.
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The sharing of key information from the point of sale to the final consumer back to the manufacturer, the manufacturer's suppliers, and the supplier's suppliers.
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What is the objective of supply chain management?
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To reduce time, defects, and costs all along the supply chain.
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Describe stategic alliances.
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Involve collaborative agreements between two or more firms.
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Describe outsourcing.
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Involves contracting for the performance of processes by other firms.
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