BU111 Study Guide - Midterm Guide: Pest Analysis, Bill Drayton, Switching Barriers

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28 Feb 2013
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BU111 Full Course Notes
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BU111 Full Course Notes
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Document Summary

The relationship between the firm and its external environment. Economic growth gdp and standard of living. Information technologies affect information access, inter-firm cooperation, cycle times. Computer technologies have changed our products and how we design and build. Results in price competition and increased costs. Many competitors of equal size and capability. Puts ceiling on price that can be charged. Pressure increase as price of substitutes an switching costs decline. Few or concentrated buyers, standardized products, low switching costs, discretionary purchases = increased bargaining power. Fewer suppliers or high switching costs means = increased bargaining power. Ease of entry = more intensity, technology, know-how, regulatory approval, brand loyalty etc. Process of scanning and evaluating the external environment. How managers determine opportunities (positive external trends or changes) and threats (negative external trends or changes) Pest model considers political, economic, social/demographic, and technological factors. Porters five forces analyze five important sources of competitive pressure and intensity; predicts profitability.