Marketing Leadership Chapter 2

Technological environment

-all the ways a company creates value for its customers - knowledge, work methods, physical equipment, etc. Includes •Research & Development (R&D) -provides new ideas for products services and processes -basic r&d and applied r&d

Organizational Boundaries

-that which separates the organization from its environment

Measuring economic growth - GDP & GNP

Gross National Product (GNP) - -value of all goods and services produced by a national economy within a given period regardless of production location Gross Domestic Product - value of all goods and services produced by a national economy within a given period with domestic factors of production

Emerging challenges & opportunities contd

Outsourcing - paying suppliers and distributors to perform certain business processes •The Growing Role of Social Media -an integral part of daily communication •Business Process Management -moving away from department-oriented organizations toward process-oriented teams

The Business Environment - Industry Environment

Porter's 5 Forces are used to analyze competitive situations in an industry - Threat of New Entrants - Bargaining Power of Consumers - Threat of Substitutes - Bargaining Power of Suppliers - Industry Rivalry

External Environment

-factors beyond an organization's boundaries that cannot be controlled (i.e. competition), but that might affect the organization/business

Redrawing corporate boundaries - Subsidiary and Parent Corporations

-subsidiary corporation owned by another corporation -parent corporations own subsidiary corporations

Key economic goals

Economic growth, economic stability, increased/full employment

Redrawing corporate boundaries - Acquisitions/Mergers & Divestitures/Spin-offs

Acquisitions & Mergers - horizontal, vertical or conglomerate mergers -friendly or hostile takeovers •Divestitures and Spinoffs -selling part of existing business or setting it up as a new corporation

Balance of Trade & National Debt

Balance of Trade - Value of all exported products minus imported products National Debt - amount of money that a government owes its creditors -increases/decreases based on the budget deficit/surplus

Managing the Canadian Economy

Done through stabilization policies which include fiscal policies (taxes/spending) and monetary policies (money supply rates) High interest rates = tight monetary policy Low interest rates = easy monetary policy Stabilization Policies: fiscal and monetary policies used to stabilize prices and to smooth out fluctuations in output and unemployment Fiscal policies: determine how the government collects and spends its revenues Monetary policies: determine the size of a nation's monetary supply

Economic stability and threats

Economic Stability - condition when amount of money available and quantity of goods/services produced grow at about the same rate Threats - Inflation (Occurrence of widespread price increases throughout an economic system.) Consumer Price Index is used to measure inflation Deflation - A period of generally falling prices. Unemployment ( Level of joblessness among people actively seeking work in an economic system. Can be seasonal, structural, frictional or cyclical)

Types of organizational environments

Economic, Technological, Political/Legal, Socio-cultural, Global, Business, Emerging challenges and opportunities (outsourcing, growing role of social media, business process management

Environmental protection laws, interest rates, societal values, and the emergence of new technologies can significantly impact the profitability of a firm. These types of issues can't be controlled by a business as they are considered to exist in the ________.

external environment

total amount of money country owes to its creditors

national debt

Simon would like to buy a Valentines gift for his girlfriend as a sign of his affection. To his disappointment he discovers that roses cost $75 a dozen. Luckily, he can buy chocolates for $20. According to Porte's Five Forces Model, chocolates are a less costly _________.

substitute

The federal government manages the Canadian economic system through two sets of policies: fiscal and monetary. Fiscal Policy refers to:

the government's approach to its spending and taxation

Business cycle

the typical pattern of short-term ups and downs in an economy (peak, recession, trough and recovery)

Economic Environment - Aggregate output, standard of living, productivity

•Aggregate Output -measure of economic growth -total quantity of goods and services produced by an economic system during a given period •Standard of Living -total quantity and quality of goods and services that a country's citizens can purchase with their currency •Productivity -measure of growth that compares the output of an economic system with the resources that are needed to produce the output -standard of living improves through increases in productivity

Socio-Cultural Environment

•Customs, values, attitudes and demographic characteristics of the society in which an organization functions •Customer preferences and tastes -vary across and within national boundaries •Ethical compliance and responsible business behaviour

Redrawing corporate boundaries - Employee-owned corporations and strategic alliances

•Employee-Owned Corporations -employee stock ownership programs (ESOP) •Strategic Alliances - -two or more companies temporarily join forces -often called a joint venture

Redrawing corporate boundaries - friendly or hostile takeover

•Friendly Takeover -the acquired company welcomes the acquisition, (needs cash or other benefits) •Hostile Takeover - the acquiring company buys enough of the other company's stock to take control - a poison pill is a defense tactic that management can adopt to make a firm less attractive

Political/Legal Environment

•Reflects the relationship between business and government (e.g., regulations) -pro- or anti-business sentiment -political stability -international relations

Emerging challenges and opportunities in business environment

•The most successful firms are getting leaner by focusing on their core competencies or the skills and resources with which an organization competes best and creates the most value for owners