PESTEL model correct answers A framework that categorizes and analyzes an important set of external factors (political, economic, sociocultural, technological, ecological, and legal) that might impinge upon a firm. These factors can create both opportunities and threats for the firm.
Political F...
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PESTEL model correct answers A framework that categorizes and analyzes an important set of
external factors (political, economic, sociocultural, technological, ecological, and legal) that
might impinge upon a firm. These factors can create both opportunities and threats for the firm.
Political Factors correct answers result from the processes and actions of government bodies that
can influence the decisions and behavior of firms
growth rate correct answers a measure of the change in the amount of goods and services
produced by a nation's economy
interest rate correct answers the amount creditors are paid for the use of their money and the
amount that debtors pay for that use, adjusted for inflation
price stability correct answers the lack of change in price levels of goods and services
currency exchange rate correct answers determines how many dollars one must pay for a unit of
foreign currency
sociocultural factor correct answers capture a societys cultures, norms, and values
Technological Factors correct answers capture the application of knowledge to create new
processes and products
ecological factors correct answers factors involve broad environmental issues such as the natural
environment, global warming, and sustainable economic growth
Legal Factors correct answers include the official outcomes of political processes as manifested
in laws, mandates, regulations, and court decisions—all of which can have a direct bearing on a
firm's profit potential.
Scanning correct answers This step involves identifying early signals of changes in key segments
of the general environment.
monitoring correct answers This second step involves detecting meaning through careful
observation over time.
Forecasting correct answers The third step in the process involves developing projections of
outcomes and determining their probabilities. The most probable outcome is then selected for
further analysis.
, assessing correct answers The final step in the process involves determining the significance of
identified changes and the most probable future outcome for the firm's business. At this step,
executives must also determine any actions they may take to take advantage of opportunities or
allay threats that emanate from the general environment.
Porter's Five Forces correct answers threat of entry, threat of substitute, supplier power, buyer
power, and competitive rivalry
rivalry correct answers - competition threatens profit the most
- impact could be attributed to price based competition
Industry Growth correct answers Affects intensity of rivalry among competitors
During periods of high growth:
-Consumer demand rises
-Price competition among firms decreases
--They focus on capturing new customers
--They are not focused on taking profitability away from each other
During periods of negative growth:
-Rivalry is fierce
-Rivals can only gain at the expense of one another
HHI correct answers a commonly accepted measure of market concentration. The HHI is
calculated by squaring the market share of each firm competing in the market and then summing
the resulting numbers.
Buyer Bargaining Power correct answers The ability of your customers to negotiate price and
terms with your firm. Often a measure of their dependence upon your product.
elasticity correct answers A measure of how much one economic variable responds to changes in
another economic variable.
Threat of Substitutes correct answers The threat posed to a company when buyers can choose
alternatives that provide the same item or service, often at attractive savings. This is one of
Porter's five competitive forces.
Threat of Suppliers correct answers The extent to which firms that make critical resources
available have leverage over the industry
Threat of new entrants correct answers a measure of the degree to which barriers to entry make it
easy or difficult for new companies to get started in an industry
economy of scale correct answers a proportionate saving in costs gained by an increased level of
production.
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