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CHAPTER 5

CHAPTER 5. ENVIRONMENTAL FORCES. ENVIRONMENTAL FORCES. Demographic Economic Political Cultural Technology. DEMOGRAPHIC ENVIRONMENT. Population Cohort Groups Family Structures. POPULATION TRENDS. U.S. Population State Population Age Population Rural/Urban Population.

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CHAPTER 5

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  1. CHAPTER 5 ENVIRONMENTAL FORCES

  2. ENVIRONMENTAL FORCES • Demographic • Economic • Political • Cultural • Technology

  3. DEMOGRAPHIC ENVIRONMENT • Population • Cohort Groups • Family Structures

  4. POPULATION TRENDS • U.S. Population • State Population • Age Population • Rural/Urban Population

  5. U.S. POPULATION ESTIMATES Category20002050 White 69% 50% Hispanic 13% 25% Asian-American 4% 8% Black 13% 15% Other 1%2% 100% 100%

  6. STATE POPULATION CHANGE 2000 - 2010 State% Changes Texas 18 % New York 3 % California 12 % Ohio 2 % Nevada 35 %

  7. AGE POPULATION GROWTH RATE2000 - 2010 Age Group% Growth Rate 5 - 17 + 8 18 - 24 + 8 25 - 44 + 3 45 - 64 +35 65+ +56

  8. RURAL/URBAN POPULATION Area19602000 Cities 32% 30% Suburbs 31% 50% Rural 37% 20%

  9. % OF US POPULATION LIVING ON FARMS 1900 39% 2010 2%

  10. HOUSTON CITY REDEVELOPMENTS • Montrose • Galleria • Heights • Mid-Town

  11. MAJOR HOUSTON SUBURBS • Woodlands • Kingwood • Katy • Pearland • Sugarland

  12. COHORT GROUPS • Baby Boomers 1946 – 1964 • Generation X 1965 – 1979 • Generation Y 1980 – 1995 • Generation Z After 1995

  13. BABY BOOMERS • Employment is for life • Job status is important • Many workaholics

  14. GENERATION X • Latchkey kids era • Less interested in status symbols • Lack of company loyalty

  15. GENERATION Y • Comfortable with diverse ethic groups • Not very brand loyal • Little company loyalty

  16. GENERATION Z • Want instant action and satisfaction • Communicate through social media • Always had iPads and smart phones

  17. SUPPORT FOR SAME SEX MARRIAGE Category20032013 Baby Boomers 33% 38% Gen X 41% 49% Gen Y 51% 70%

  18. FAMILY STRUCTURES • Traditional Family Household • Married Couples Working • Married and Unmarried Households

  19. TRADITIONAL FAMILY HOUSEHOLDS • Working Father • Stay-at-home Mother • School-age Children % of Households 1950 70% 2010 5%

  20. MARRIED COUPLES WORKING YearSingle EarnerMultiple Earners 1960 68% 32% 2000 34% 66%

  21. MARRIED AND UNMARRIED HOUSEHOLDS • Average age of first marriage • Changes in marriages • Diversity of unmarried households

  22. AVERAGE AGE OF FIRST MARRIAGE Sex19602010 Female 22 28 Male 24 30

  23. CHANGES IN MARRIAGES Category19602010 Adults Married 72% 52% Adults Divorced 5% 14% High School or Less Married 72% 48%

  24. DIVERSITY OF UNMARRIED HOUSEHOLDS • Cohabitation • Longer Life Spans • Increased Divorces

  25. ECONOMIC ENVIRONMENT • Two Important Economists • Role of Competition • Major Anti-Trust Laws • Creative Destruction

  26. TWO IMPORTANT ECONOMISTS • Adam Smith • Joseph Schumpeter

  27. ADAM SMITH • Self-interest of sellers will lead to the greatest economic wealth. • Competition keeps sellers from making excessive profits.

  28. ROLE OF COMPETITION • Government Viewpoint: Maintain a healthy, competitive economic system • Seller Viewpoint: Achieve a sustainable competitive advantage • Buyer Viewpoint: Wants perceived value for their money

  29. MAJOR COMPETITION • Direct Rivalry Kroger vs. HEB • Buyers McDonald’s vs. Bakery • Suppliers Randalls Cola vs. Coca Cola • New Entrants Google vs. Apple

  30. DIRECT RIVALRY COMPETITIONIN 2014 • Apple • Google • Facebook • Amazon

  31. MAJOR ANTI-TRUST LAWS Sherman Act - 1890 • Monopoly is illegal • Restraint of trade is illegal Clayton Act - 1914 • Predatory pricing and tying agreements are illegal if they substantially reduce competition

  32. CLAYTON ACT - 1914 Various activities are illegal if they substantially reduce competition • predatory pricing • tying agreements • exclusive dealings • merge companies

  33. ANTI-TRUST ACTIVITY EXAMPLES • Beer industry • Airlines • Facebook • E-Book pricing

  34. JOSEPH SCHUMPETER • Innovative and creative products will destroy or replace many existing products. • This economic process is called “creative destruction”.

  35. CREATIVE DESTRUCTION MANAGERS • Jeff Bezos • Sergey Brin & Larry Page • Steve Jobs • Mark Zuckerberg

  36. CREATIVE DESTRUCTION PROCESSES • On-line retailing • On-line services • Cloud computing

  37. CREATIVE DESTRUCTION EXAMPLES • Kodak • Post Office • Polaroid

  38. POLITICAL ENVIRONMENT • Political Levels • Political Conflicts • Political Consequences

  39. POLITICAL LEVEL • Local • State • Federal • International

  40. LOCAL POLITICAL ENVIRONMENT • Health Department Regulations • City Zoning Laws • NIMBY Concept

  41. NIMBY EXAMPLES • Houston garbage in Ford Bend • Zoning regulation in Houston • Keeping Walmart out of a Houston Heights

  42. STATE POLITICAL ENVIRONMENT • Licensing for Professional Services • State Automobile Laws • Triple Distribution for Beer and Liquor

  43. AUTOMOBILE LAWS IN TEXAS • New cars cannot be sold directly over the internet in Texas • GM cannot sell a new car directly in Texas • No new cars can be sold in Texas on Sunday

  44. FEDERAL POLITICAL ENVIRONMENT • Federal Drug Administration • Federal Reserve Board • Federal Trade Commission

  45. INTERNATIONAL POLITICAL ENVIRONMENT • Tariff Restrictions • NAFTA • International Treaties

  46. POLITICAL CONFLICTS • Business vs. Government • Business vs. Business • Business vs. Consumers • Federal Government vs. State Government

  47. BUSINESS VS. GOVERNMENT • FTC regulates false and misleading advertising • OSHA, EPA, and the FDA are charged with regulating health and safety areas • Federal Reserve Board makes monetary and fiscal policy decisions

  48. BUSINESS VS. BUSINESS • Sunday Blue Laws - many retail goods could not be sold on both Saturday and Sunday • Banking, Insurance, and Brokerage firms could not own each other • Out-of-State Wine Shipping Laws

  49. BUSINESS VS. CONSUMERS • A home buyer has 72 hours to reject a sale made in the home • A law requires banks to clear consumer checks within a number of days • A law requires credit card companies to give credit to women under similar conditions as men

  50. FEDERAL GOVERNMENT VS. STATE GOVERNMENT • State Internet Sales Taxes • Medicare Payments • Education Grants

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