Business Finance Homework Help

1. External Analysis – Mount Saint Vincent University

Students will have to conduct an external analysis for Mount Saint Vincent University. Students should know the Mount and are expected to complete some research on the current organizational environment.

Students should approach this assignment like they are the President of the Mount, submitting to the Board. Before completing the project, students should ask themselves, “How will twelve senior managers view my work? Will thy think I worked hard based on the submission?” Since we are preparing you for a management job, expectations for you are much like managers’ expectations. You will have to solve and conduct research independently. When you are working, you are not always told how to do things but instead expected to have the skills to find the correct answers.

In the analysis, students will complete the following:

• PEST Analysis

• Porters Five Forces

• Competitor Analysis

PEST analysis stands for:

P – Political, Legal Analysis & Regulatory Factors

E – Economic Analysis

S – Social and Culture Analysis (Includes Demographics, and Environment)

T – Technology

What you will do is create a table. On one side of the table, you will list factors in the PEST, and on the other side of the table, you will note the impact on the Mount and other companies in the environment.

The table will resemble the following:

Political: •	Impact: •
Economic: •	Impact: •

Now, what we are looking for are facts. In a proper PEST, you state real facts on one side of the table and impacts on the other. For example:

Economic: • In July 2020, Canada’s unemployment rate was 10.7%, which is down from 13.4% in May 2020. The unemployment rate is relatively high compared to last year due to COVID as it was 5.67% in 2019.

Impact: • Since unemployment is relatively high, people will be inclined to go back to school to upgrade their skills if they have lost their jobs or cannot find work.

The example above would by no means be the only thing to consider under the economy but represents just one point.

Students who do poorly would submit a PEST which resembles the example below:

Economic: • Unemployment • GDP • Stock Market Returns

Impact: • If employment is good; people don’t need to go to school. If the economy is poor, people will return to school.

The above example would result in a score of zero and really indicate a complete lack of effort.There are no facts. If you brought this to a Board as President or to anyone, they would not think you invested time in the assignment.

Students should realize, it took me less than 20 seconds on Google to find the unemployment facts I noted above. If someone who works for me told me they did not or could not find the information required in this assignment, I would be quite disappointed in their performance.

Your textbook provides a table illustrating all the facts to consider in a PEST. You do not have to consider them all, but you do have to consider the significant points. It is up to you to determine what is substantial. The table is titled: “The Six Components of the Macro-Environment”

Some key questions to consider when completing a PEST include:

1. Are there any government policies, laws, and regulations that impact the company?

2. Are there expected to be any changes?

3. Is the government stable? Likely to change?

4. What is the current state of the economy (GDP, GNP, unemployment, inflation, interest rates, stock market returns, savings rates)? How does the state of the economy compare to historical norms?

5. Is the state of the economy forecasted to change? Why?

6. How does the economy’s performance impact the company?

7. What are society’s attitudes towards the company/industry? Are there any changes?

8. What cultural trends impact the company/industry? Are there any changes?

9. How do demographic trends impact the company/industry? Are there any changes?

10. How does the current technology impact the company/industry? Are there any changes forthcoming?

11. How have recent changes in technology impacted the company/industry?

To complete your Porters Five Forces Analysis, you can view three videos on the subject on Moodle. I would also offer the following to be helpful.

1. Always use point form in your Porters

2. The best way to display Porters is to state:

The Threat of New Entrants – Select a rating as either high/moderate/low

Then underneath in point form list the factors that strengthen the rating and then the factors that weaken the rating. It would be best if you answered all the questions in the textbook under each threat.

3. Draw conclusions

New Entrants:

The threat of new entrants is dependent on two broad factors – barriers to entry and the reaction of existing firms.

When completing new entrants, you should always consider:

• Economics of scale that deters new entrants

• The cost advantage of existing firms – do existing firms have cost advantages based on experience or learning

• Do existing firms have – preferential access to materials, costs savings due to patents, favorable locations and/or low fixed costs

• Strong brand and high loyalty

• Strong network effect

• Capital requirements

• Is it challenging to build a network of distributors

• Restrictive government policies

After reviewing all of this, you then have to consider:

• How rapid is the market growing?

• How attractive is the market? A highly attractive market can attract firms despite the constraints above.

• Consider if there a potential pool of entrants.

The threat of Rivals/Competition:

As a point of interest, the rivalry is strong when:

• Buyer demand is growing slowly

• Sellers have excess capacity

• Switching costs are low

• Products are commodities or weakly differentiated

• Firms have high fixed costs

• Competition is numerous and roughly equal in size and strength

• Rivals have different objectives

• Rivals are foreign – vested commitment

• Emotional stake in the Business

The rivalry is weaker when:

• Buyer demand is growing rapidly

• Switching costs are high

• Products are very different

• Fixed and storage costs are low

• Sales are concentrated amongst a few large sellers

• Industry members are very similar

• Exit barriers are low

The Threat of Substitutes:

The important questions you should ask yourself are as follows:

• Are substitutes readily available

• Whether buyers view the replacements as attractively priced concerning their quality, performance, and other attributes

• Switching costs

Note that substitutes are not rivals.Substitutes are alternate products.

For example, one type of beer is not a substitute for another. A replacement for beer could be wine, rum, vodka, non-alcoholic beverages.

Buyer and Supplier Power:

The primary question to ask yourself when considering buyer and supplier power is in and around negotiations and how much can either party influence price and/or other conditions relating to the sale of goods. For example, a consumer has zero buying power if you complete a Porters for the soft drink industry. They really cannot go into a grocery store and start to negotiate the price of goods they will pay.

The following factors influence Supplier Power:

• Supply – short in short supply

• Can a supplier differentiate their inputs to enhance the quality of products

• Whether the item is a commodity

• Switching costs

• Substitutes

• Whether the company purchasing the supplies is a large and important buyer

• Size of suppliers and level of competition

• Integration – does it make sense? Yes or no

The following factors influence Buyer Power:

• The degree that buyers are price sensitive

• Switching costs

• Are goods standard or differentiated

• Buyers have more power when they are large and few

• Buyer Power increases when demand is weak

• Buyers can gain leverage if they are well informed

• Buyer power is more significant when they can integrate

• Buyer power grows when they can delay purchase

• Price sensitivity

I will not inform you how to complete a competitor analysis. I will leave that for you to determine.I will offer your text walks you through the steps.

When you finish your PEST, Porters, and Competitor analysis, you have to conclude if the industry offers the Mount with prospects to earn a profit. I will not re-type in the factors to do this as they are more than adequately covered in your text.