Glossary
C Examine the Environment in Which the Business Operates
BTEC Level 3 Business Studies. Unit 1: Exploring Business
5Cs analysis - A framework for analysing opportunities for success and risk factors in a business's operating environment by investigating the company, collaborators, customers, competitors and context.
Competition - Rival businesses selling the same or similar goods and services.
Competitive advantage - Factors that allow a business to produce goods or services more efficiently, at a higher quality, or at a lower cost than competitors.
Competitive environment - The intensity of the range of rival businesses selling the same or similar goods and services.
Corporate culture - People within an organization's attitudes toward their work, relationships with one another, and interactions with external stakeholders. It is motivated by a set of common beliefs and values.
Corporate ethics - A set of moral beliefs that guide the implementation of organisational policies such as discrimination and bribery.
Corporate social responsibility - Plans that businesses incorporate into their strategies to benefit the community or the environment.
Cost control - Competitive advantage where a business has been able to reduce costs across their business activities to improve profitability or enable them to reduce prices.
Differentiation - A type of competitive advantage in which customers perceive one company's product to be superior to rivals.
Economic environment - Economic growth (GDP), inflation, unemployment, interest rates, exchange rates, fiscal policy, monetary policy, supply side policy etc
Environmental factors - The physical surroundings of an organisation that can affect its operations. E.g. climate, climate change, availability of resources and pollution.
External Environment - Factors beyond the business's control that can have an impact on its operations. These include political, economic, social, technological and environmental.
Internal environment - The components of a business that give it an individual feel. E.g. Management practices, employees, equipment and processes.
Legal factors - The framework of rules that organisations in an economy must adhere to in order to comply with the law. E.g. consumer protection laws and employment law.
Market leadership - Competitive advantage where a business with the largest market share has high brand loyalty and price-setting ability.
Market share - Competitive advantage where a business has high sales compared to rivals and benefits from economies of scale and can gain power over suppliers.
PESTEL analysis - A tool used to analyse the external environment by exploring political, economic, social, technological, environmental and legal factors.
Political environment - Government decisions that can have an impact on individuals and organisations. E.g. Tax rates, legislation, membership of trade blocs and war.
Porter's Five Forces - A framework for analysing a company's competitive environment, which includes existing rivalry, the threat of new entrants, the threat of substitutes, customer power and supplier power.
Pricing policies - A type of competitive advantage where customers perceive one company to be superior to another based on the price they set. This could be premium pricing or discount pricing depending on the market.
Relationships with customers - Competitive advantage where a business has created and maintained positive experiences for the customer leading to customer loyalty and repeat purchases.
Relationships with employees - Competitive advantage where a business has developed a motivated and productive workforce.
Relationships with suppliers - Competitive advantage where a business has developed and maintained arrangements with their supplier for desirable prices, products and payment terms.
Reputation - Competitive advantage where customers perceive the goods and services of one business to be superior to those of it's rivals.
Situational analysis - A set of techniques for analysing the internal and external factors that influence business operations and success.
Social Factors - Factors affecting habits and spending of members of the community such as attitudes to spending and saving, demographics, fashions and trends and attitudes towards ethics.
SWOT analysis - A tool used to analyse both the internal and external environment of a business. It examines the strengths, weaknesses, opportunities and threats.
Technological change - Innovations in practices, processes and equipment in society that can affect the way in which businesses operate and the types of products customer desire. E.g. automation, e-commerce, mobile communications and social media.
Technology - Competitive advantage where a business has improved efficiency through the implementation of innovative developments.
