Exam 3: Evaluating the External Environment

New entrants are more likely to join an industry if:

In the pharmaceutical industry, major companies have started offering coupons to keep people off of substitute generic drugs.

Buyers are more likely to be powerful relative to the firms from which they purchase goods and services if:

The likelihood of new entrants joining an industry is low if existing competitors enjoy economies of scale because:

A farmer realizes that he is not getting fair price from the agents who buy produce from him and sell it to the markets. As such, he decides to sell produce directly to the local market. This is an example of:

Which of the following segments of PESTEL analysis is the "Moore's Law" associated with?

Buyers are more likely to be powerful relative to the firms from which they purchase goods and services if:

Which of the following segments of PESTEL analysis includes elements such as tax policies and changes in trade restrictions and tariffs?

A generation ago, ketchup was an essential element of every American pantry and salsa was a relatively unknown product. The popularity of salsa exploded and has been attributed to trends in demographics such as population size, age, and ethnic mix as well as cultural trends such as attitudes toward obesity and consumer activism. What factor of PESTEL does this represent?

Attitudes toward obesity constitute a social factor in the PESTEL framework.

Describe PESTEL analysis.

The environment provides resources that an organization needs in order to create goods and services.

PESTEL analysis is an important tool for organizing factors within the general environment and identifying how these factors influence industries and the firms within them.

The likelihood of new entrants joining an industry is low if existing competitors enjoy economies of scale.

Piracy of intellectual property poses a threat to businesses that create such properties in order to profit from them. This example represents the _____ segment of PESTEL analysis.

Changes in legal factors can have a positive impact on the profit potential of many industries.

What does the environment of any organization consist of? How can a business influence the environment?

The political segment includes elements such as tax policies, changes in trade restrictions and tariffs, and the stability of governments.

During an economic crisis credit markets typically loosen their requirements.

Rivalry tends to be fierce among an industry's competitors if the competitors are well differentiated from each other.