Bu111 Exam Review Social Factors Demographics - Cohorts - Homogenous groups within the larger population - Factor influence characteristics which lead to implications (the following charts) Factors Characteristics Implications Economics Value & priorities How to attract, retain & motivate Technology Lifestyle What makes a product appealing World events Habits (digital & other) How to attract as consumers Parenting Mindset How much they spend and what they spend it on Factors Characteristics Implications Boom vs. Depression? Debt? Interest rates Security, possessions, convenience What is our message (Job security, benefits) Comfort level; Tech-savvy? Frugal, extravagant Bang for buck vs features CSR, environment Budget, tendencies Discount vs quality Strict, lenient (helicopter parents, bulldozer parents) How we approach things (spending, consuming) Essential vs luxuries Example Questions: Q: Identify three factors that Gen Z values. What does that mean for employers trying to attract new talent? List two strategies they should use to attract Gen Z employees? A: Three factors: meaningful work, work-life balance, competitive wages What does it mean: Employees should integrate work activities, schedules, and culture which can integrate these factors Strategies: flexible schedules, interesting & challenging work, opportunities for growth Q: A trend within the Canadian labour force has been that there are fewer incoming workers than outgoing. Identify whether this is an opportunity or threat and explain the implications of this trend and 2 actions you can take as a hiring manager of your company. A: This is a threat as this will result in a reduced workforce, opposed to stable or growing, resulting in potential labour shortages. An increase of issues involving seniors such as the demand for healthcare and pensions. To attract talent, marketing the companies values and mission will be important, as well as including meaningful and flexible work. Another action is to take could be lobbying for immigration and making sure that the workplace is open for immigrants. *Know implications: Relate to P5F/Pest Technological Factors What is Technology? Information Technology Advancements Internet Devices & software for creating, storing, exchanging and using information - Google docs Powerpoint Equipment and Material Advancements Substitute / magnify human effort; reduce cost, improve performance, increase flexibility - Tangible Technology Key Concepts Installed base ● # of users ○ Instagram has 1 billion users Complementary Goods ● Add-ons that add value to the main product ○ Video games + console ○ Coffee and creamer Technology Standards ● Enable compatibility of complementary goods ○ IOS software enables compatibility of iPhone and apps Network Effort ● The value increases as the # of users increases ○ Facebook ○ Bars & clubs Lock-in ● The extent to which a customer is committed ○ Purchase Xbox, games, controllers ○ Learn to play ○ progress in-game Switching Costs ● Costs of moving to a different technology ○ Cost of PS4 ○ Time it will take you to learn new system Disruptive vs Sustaining Innovation Netflix Disney Characteristics Disruptive Technology Sustained Technology Value Innovation is a game-changer (dramatic) Changes are incremental (lower price, performance improved, etc.) *Know implications: Relate to P5F/Pest Target Market New niche market Existing market, innovation is anticipated, mainstream (high-margin market) Speed Maybe slower at first, then quickly exceeds sustained technology Stable changes Market Predictability Market is unpredictable Market is predictable Business Methods Traditional methods fall Traditional methods are sufficient Large Firms Reasons why large firms fail ● Organizational size and capabilities slow response times ● Focus on satisfying mainstream customers ● Avoid small, uncertain, unfamiliar markets How Large Firms Avoid Failure ● Monitor outside of industry ● Partner with young firms ● Establish venture units ● Design by the job, not customer ○ Focus on what the product does, rather than the customer to predict trends and other industries Large Firms How Small Firms Compete ● Enter with a product or market that large firms don’t care about ○ Not mainstream ○ Not what they're good at ○ Small margins/market Example Questions: Q: Explain why Airbnb is a disruptive technology? Provide one reason why hotels may have failed to compete against Airbnb? What could hotels have done to prevent this? 1) Explain: Airbnb is a disruptive technology because they entered the accommodations market with a radically new service and targeted a niche group of consumers. Whereas typical hotels owned all of the rooms they were renting out. Airbnb allowed people with empty rooms to rent out their homes, therefore, owning no property. They initially targeted a nice group of consumers who were travelling on a budget and didn’t care for luxury accommodations. 2) Provide: Hotels may have failed because their organizational structure and capabilities slowed their response time. As they already owned the properties they rent out, it is very difficult for them to maneuver and start renting out un-owned property. Furthermore, they have capabilities in providing luxury experiences in their hotels rather than creating platforms for property sharing. *Know implications: Relate to P5F/Pest 3) What: To prevent this from happening, hotels should establish venture units that explore new and upcoming technologies in the hotel industry to ensure they are staying competitive in the new market Is technology an opportunity or a threat? Common Opportunities Common Threats Products (more innovation) Imitation Improved information use/sharing New technologies/entrants Can be competitive advantage Information overload Lower barriers to entry Security Customization Disconnected employees/customers Should also know opportunities & threats for each KSF Sample questions Q: Identify and explain one-way technology can be an opportunity to build employee commitment and one way it can pose a threat to building employee commitment A: (identify) Technology can help build employee commitment as it can offer them greater freedom and autonomy, which are highly valued by today’s employees, through opportunities to work from home. (explain) technology may cause a threat to employee commitment as, if they are working in the office, they may feel less connected and committed to the organization Political Factors How can businesses influence the government? ● Lobbying ● Advertising ● Collaborating/Providing Input Government impact on business Factor Method/Example Service Provider → Canada Post Business Support → Subsidies/Trade agreements Laws/regulations → Competition, Consumer Protection, Pollution, etc. Taxation Agent → Income Tax, Sales Tax, Property Tax, etc. *Know implications: Relate to P5F/Pest Practice Question: Imagine Canada has just struck a trade deal with Belgium. This new agreement allows Canadians to import chocolate from their country free of duties and tariffs. Name one Canadian industry this deal may have an impact on. Identify one of the Five Forces it will affect and explain how it will impact industry profitability. Answer: 1) Name: One industry this deal may have an impact on is the Canadian baked good industry 2) Identify: This change will decrease supplier power as Canadian bakeries now have a larger number of suppliers to choose from as they can bow buy their chocolates from Canadian suppliers or Belgian suppliers without tariffs or duties 3) Explain: As bakeries now have more options of suppliers, chocolate companies will need to lower their prices to compete for the bakeries’ business. As a result, the cost of inputs will decrease, thereby increasing industry profitability. Economic Factors Things to remember: - Retirement problems will always be PVOA and FVOA (only those two formulas) *Know implications: Relate to P5F/Pest
