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Midterm

BU111 Study Guide - Midterm Guide: Raj Patel, Corporate Social Responsibility, Roaring Twenties


Department
Business
Course Code
BU111
Professor
Leanne Hagarty
Study Guide
Midterm

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BUSINESS 111 FALL 2012
MIDTERM REVIEW GUIDE
Midterm Date: SATURDAY, OCTOBER 20th, 2012
Midterm Time: 9:00 A.M. TO 11:30 A.M.
Writing Locations to be posted on course website.
Important Notice: Anyone who is not able to write the exam on the scheduled date must
provide documentation validating his/her absence, i.e. doctor’s note confirming illness and
inability to write exam dated the day of the exam. Once documentation is received and
approved by your professor, the value of your midterm will be added to your final exam. If
valid documentation is not provided, the midterm mark will be a zero.
Approximate mark allocation:
20 Multiple Choice questions = 20 marks
21 Short Answer questions, 2 to 5 marks each = 60 marks
TOPICS TO BE COVERED:
1. The relationship between the firm and its external environment
- Course model and critical success factors:
- Critical Success Factors
-what they are:
oachieving financial performance
omeeting customer needs
obuilding quality products and services
oencouraging innovation and creativity
ogaining employee commitment
ocreating a distinctive competitive advantage
-why they are important: because all 6 factors come together to determine the
success of your company and the highest success you can achieve
-how they connect to each other: to create a distinctive competitive advantage they
need to gain employee commitment, so they need to encourage innovation and
creativity which builds quality products and services to meets customer needs to
achieve financial performance
-Diamond-E model:
-key variables:
omanagement preferences
oorganization
ostrategy
oresources
oexternal: environment
-impact of internal variables on strategy
oyou want alignment like management preference and resources and
organization to match up in your strategy; your strategy need to be consistent
and follow those principles, it needs to be realistic
-principal logic and examples:
-Principal logic:
oconsistency or alignment of the Diamond-E internal variables (first task
focuses on external)

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oexamples:
P&G (inconsistent)
Ikea (Consistent)
2. External analysis
- what it is: scans and evaluates the external environment and mangers determine
opportunities (positive external trends or changes) and threats (negative external
trends or changes)
- how to conduct one:
oPEST (General Environment)
oPorter's Five Forces (Specific Environment)
Objectives/values:
determines profitability of the industry
ease of entry/barriers to entry
how to and if it can carve out a niche (attractive industry)
*niche = small target market (specific)
-general vs. specific environments:
oPorter's 5 = analyzing one specific industry (your specific industry) thus it is
the specific environment external analysis
oPEST = general external environment which will only determines the general
trends and changes of all businesses in all industries
-benefits and challenges of conducting an external analysis:
oBenefits: makes managers proactive, provides information used in planning,
helps organization get needed resources, helps organization cope with
uncertainty (ie. To prevent strikes) and improves consistency and performance
oChallenges: forecasts and trend analysis is imperfect (not working with
facts all the time), rapidly changing environment is hard to keep up with
(everything is changing at a rapid pace) and it is time consuming.
-PEST factors:
oPolitical-Legal:
laws and regulations (how they operate)
taxes (gives incentive)
trade agreements or conditions
political system (dictates the level of protection for domestic goods)
political stability (capitalistic or socialistic is an example)
ie. banking industry is concentrated by the big 5 banks due to Bank
Act (example of regulation = bank act)
oEconomic
economic growth – GDP and standard of living
economic stability – inflation, unemployment
trade balance – importing vs. exporting
national debt – govn't borrowing
interest rates
exchange rates
-impact on business
oPolitical-Legal: govn't can create incentives, constraints, on supportive/bail
out when needed; affects uncertainty, risk, and costs faced by firm
-Porter’s five forces model:
- explanation of each force’s impact on industry profitability:
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oideally you want more bargaining power over suppliers (ie. Lululemon is
dominant in the yoga industry (niche) that suppliers can't lose you, thus they
have more bargaining power)
oif switching costs are low, you have more bargaining power than your
suppliers because they know you can easily substitute them
oif you have a high switching costs (then your supplies know you can't switch)
-methods of reducing the impact of each force:
oSuppliers:
don't give a one single supplier too much power (diversify), be a big
customer like Lululemon (big client)
oPotential Entrants: (ie. Green Gym and Bank Act):
govn't standards, regulations
oBuyers:
- industry examples
3. Entrepreneurship*
- what it is:
oEntrepreneurship: identifying an opportunity and accessing resources and
capitalizing on it
oSmall Businesses: less than 100employees, 97.8% of all businesses in Canada
are small and makes up 26% of annual GDP
oNew Venture: recently formed commercial organization that sells
goods/services
- what the key elements are:
o
- and how the entrepreneurship process works
oInfluenced by PEST (an entrepreneur must use PEST to screen the external
environment to ensure that opportunity and resources match up and this will
ultimately lead to success)
oSuccessful only when entrepreneurs, opportunity, and resources match (we
define success if they can capitalize on it)
oBegins with entrepreneur identifying an opportunity then accessing resources
- how to screen and evaluate opportunities for viability and competitive advantage
oHow to screen: (screening weeds out bad ideas, ensure viability and
competitive advantage)
oBenefit: saves time and money in the long-run
ouse PEST to access environment – if the external environment is supportive of
the idea/opportunity? (see if the industry is attractive to go into)
ouse PORTER'S 5 to determine
check barriers/ease of entry
profitability
should they enter the industry/good position within the industry/ease of
entry in industry
oPEST AND 5 FIVES FOR MARKET EXPLORATION: ensure if idea is
good, unique?
oResearch of Marketing (ex. Library database)
evaluate market size see where it is in the market cycle (growing or
shrinking), it helps you analyze the consumer pool or target market
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