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52 Cards in this Set
- Front
- Back
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Elements |
Laws and Regulations Taxes Political System Political Stability Trade Agreements and Regulations |
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Governments Influence (Tech Economic Social) |
Government has a lot of influence Social: Government expects a certain level of CSR Technology: Government involved with patents and regulation Economic: Government regulates banks and investment bankers
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How Government Influences Businesses |
Customer- Government is a large and stable customer that will help with brand reputation Competitor- Government can create crown corporations which act as competitors to for profit organizations
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How Government Influences Businesses Cont. |
Taxation Agent- All 3 levels of government collect taxes, 3 types of taxes: progressive, regressive and restrictive Provider of Incentive and Financial Support- tax breaks, subsidies, research funding etc. |
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How Government Influences Businesses Cont. |
Provider of essential services: highways, health care, national defence Regulator/ Law Maker- Government regulates business activity- promotes competition and protects customers |
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Intellectual Property Rights |
Information and innovation is costly and time consuming but once developed is cheap and easy to copy, therefore little incentive to innovate |
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Intellectual Property Rights Cont. |
Government provides IPR's as incentive to innovate: Provide a competitive advantage Protect new businesses from more established businesses taking there ideas and implementing them |
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Trademarks |
Placed on symbol, shape and/or words Shapes/ symbols used to identify brand reputation therefore this establishes protects brand reputation Lasts 15 years with option to renew |
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Patents |
Exclusive rights to innovation Placed on products, composites, apparatuses and improvements on theses Must be new, useful and ingenious Last 20 years |
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Copyright |
Placed on original work of art Provides credit and royalties to owner Subject to copyright immediately when created (no registery) Last life time + 50 years
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Governments Link to Porters 5 Forces (Rivalry Among Existing Competitors) |
Rivalry Among Existing Competitors- Government can create crown corporations which act as competitors to for profit organizations These corporations are large and not profit driven Government can control firms power in an industry (i.e. prevent mergers) |
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Governments Link to Porters 5 Forces (Buyers) |
Buyers Government itself is a large, influential buyer Government can effect number of buyers in market due to tax they place on product |
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Governments Link to Porters 5 Forces (Potential Entrants) |
Potential Entrants Government can create barriers to entry as it gets to choose who can and cannot enter an industry Government can support entered of small businesses through tax breaks and advice |
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Governments Link to Porters 5 Forces (Substitutes) |
Substitiutes Government can offer substitutes to private goods Over lower cost because government is not profit driven I.e.- public transportation |
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Governments Link to Porters 5 Forces (Suppliers) |
Suppliers Government signs and forms trade agreements which provides more access to more suppliers decreasing domestic supplier bargaining power Government itself supplies essential services i.e. healthy and educated workers |
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How Businesses Influence Government |
Lobyist- hired to represent the interests of a company or group Trade Alliances- fragmented industries gathering (collaborating)- increases bargaining power
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How Businesses Influence Government Cont. |
Advertisements- Corporations with a large consumer base can use advertisements to influence voters Industry Contract- Provides expert opinions on industry |
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Sole Proprietorship
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Owner managed business Owner and business are one legal entity Taxed as a personal income |
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Advantages of Sole Proprietorship |
Easy to form Complete control over decisions and profit Little Regulation
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Disadvantages of Sole Proprietorship |
Lack of resources Hard to obtain outside funding Unlimited Liability Lack of continuity |
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Partnership |
2 or more owners Business and owners still one legal entity Different types of partners- general and limited
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Advantages of Partnership |
Easy to form- partnership agreement Lack of regulation Greater pool of resources (know how and money) |
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Disadvantages of Partnership |
Hard to switch ownership Still hard to obtain outside funding Unlimited liability for general members
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Corporations |
3 types of corporations: Crown, Public and Private Many owners Decisions made by board of directors Owners and business are separate entities |
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Public Corporation |
Shares are available to public (publicly traded) with many shareholders Easy to transfer onwership Flat tax, Limited liability Easy to transfer ownership Easy to obtain outside funding Costly and complex to form High regulation, Double taxation
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Private Corporation |
Shares are not available to public, select group of shareholders Relatively flat tax- lower than public Easy to obtain outside funding Complex High Regulation |
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Crown Corporation |
A business that is started and run by a country's state or government |
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Globalization |
Countries have become increasingly more dependent on each other |
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Forms or Competitive Advantage |
Absolute Advantage: cheaper/better than any other country Comparative Advantage: cheaper/ better than other products; lower opportunity cost |
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Forms or Competitive Advantage |
National Competitive Advantage (4 factors) 1) Demand Conditions 2) Factor Conditions 3) Supplementry / Related Industries 4) Rivalry, Firm Strategy, Structure
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Demand Condtions |
Domestic demand- if high then business will develop know how and experience economies of scale |
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Factor Conditions |
Availability, quality and price of inputs |
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Related/Supplementary Industries |
Proximity to end users, complementary industries and suppliers |
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Barriers to Going International |
Cultural and Social Differences- Different cultures/ societies have different needs and expectations that must be recognized by business Economic Differences- Exchange rate Political Differences- trade barriers |
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Government's Influence on Businesses Achieving 6 CSF (Achieving Financial Performance) |
Governments can raise taxes, decreasing disposable income therefore decreasing a businesses profits Governments impose IPR's which encourage innovation leading to greater financial performance |
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Government's Influence on Businesses Achieving 6 CSF (Meeting Customer Needs) |
Government provides necessary services including healthcare and education essential in meeting customer needs |
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Government's Influence on Businesses Achieving 6 CSF (Building Quality Goods and Services) |
Government provides funding for research and development to help develop better quality goods |
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Government's Influence on Businesses Achieving 6 CSF (Engouraging Innovation and Creativity) |
Government provides Intellectual Property Rights |
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Government's Influence on Businesses Achieving 6 CSF (Encouraging Worker Commitment) |
Government expects/ enforces a certain level of CSR as its primary responsibility is to protect the needs of its people |
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Government's Influence on Businesses Achieving 6 CSF (Creating a Distinct Competitive Advantage) |
Intellectual Property Rights |
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Strategy's to Enter International Market |
(In order from low to high risk) License / royalties, local agent, branch office, local firm alliance, foreign subsidiaries |
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License / Royalties |
Giving rights to another producer to produce your good Cant control volume produced |
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Local Agent |
Hiring a local sales person who is knowledgable about the local culture |
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Branch Office |
Will service customers in that country (no manufacturing will occur in office) |
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Local Firm Alliance |
Joint venture 50/50 division of production |
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Foreign Subsidiary |
Establishing full operations in another country |
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How International Business Affects Achieving 6 CSF (Financial Performance) |
Financial Performance Business are able to gain greater profits due to larger market available If tariff is attached to product this will diminish profits |
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How International Business Affects Achieving 6 CSF (Meeting Customer Needs) |
Meeting Customer Needs Different cultures/ societies have different expectations/ needs that business have to adjust to |
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How International Business Affects Achieving 6 CSF (Building Quality Goods and Services) |
Building Quality Goods and Services Greater access to resources that are potentially cheaper Increase competitiveness forces firms to provide quality goods to remain competitive |
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How International Business Affects Achieving 6 CSF (Encouraging Innovation and Creativity)
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Encouraging Innovation and Creativity Increased competition therefore must innovate to remain competitive
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How International Business Affects Achieving 6 CSF (Fostering Employee Commitment) |
Fostering Employee Commitment Employees and local agents must receive incentive to help success in foreign countries |
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How International Business Affects Achieving 6 CSF (Creating Distinct Competitive Advantage) |
Creating Distinct Competitive Advantage International business must have advantage over domestic businesses |
