Name a product or a company that you are familiar with. Discuss how environmental forces (social, economic, technological, competitive, and regulatory) will impact that product/company over the next five years.


Answer 1


The name of the product is Coke and this is a Pestel Analysis.

PESTEL is short for Political, Economic, Social, Technological, Environmental, and Legal. All representing factors that can and will impact the operations of any business.


Coca-Cola is a global company with is in the business of providing refreshments to its customers by the sale of Soda or soft drinks. Because of the nature of the product, the industry in which they play is heavily regulated and they must use the best technology in order to stay relevant, competitive, and dominant in the market.  


Political factors

One of the regulators to whom Coca-cola must dance to its tune is the Food and Drugs Administration (FDA) a Federal Agency of the Department of Health and Human Services in the US. All Coca-cola product must meet their requirements as stipulated by law. If the laws enforced by FDA changes it could adversely affect the distribution, taxes, accounting, and all other operations of Coca-Cola.  


Economical factors

Some economic factors that may affect a business like Coca-cola are:

Interest rates, exchange rates, recession, Inflation, Taxes, Demand / Supply.

One critical factor in this group which the company must be on the lookout for always is changes in taste and demand. Consumers are making a shift globally towards more healthy alternatives to soda. This is because, as the world becomes more sedentary due to shifts in global economic patterns as induced by the pandemic, risk factors relating to health care on the increase. Hence consumers want to ensure that they cut down on foods and beverages that increase their predisposition to conditions such as obesity, cancer, high blood pressure, etc.

To stay relevant and competitive, the company has to seek out healthy drinks that speak to all the various localities (which are over 200 countries).

Social factors

Examples of social factors that can affect a business are:

e-commerce adaptation, purchasing habits, ease of adoption of technology, changes in customer service expectation, the education level of consumers.

The purchasing habit for Coca-cola is changing in lots of countries. People are becoming more predisposed to buying products online. How will that affect the demand for the company's products? Will it increase as online food orders increase? can the company position itself to take advantage of the trend? If yes, then it is making taking advantage of its changing social environment.

Technological factors

Adoption of best-in-class machinery is one of the strategies that has enabled Coca-Cola to achieve higher quality and quantity of its products. Speed of delivery, processes that are optimized for the lowest costs and highest outputs are now being made possible with advances in technology. Coca-cola is taking advantage of technology especially in regions such as Europe.  

Legal factors

Product liability, third-party liability, employer-employee (labor) relations, compliance, and regulatory factors are all within the scope of Coca-Cola's legal universe.  Constantly managing this space of its operations will keep it from experiencing avoidable erosion of its bottom line and brand equity.

Environmental factors

Companies no longer compete on the basis of profitability alone. Global companies are the target of onslaughts from those who campaign against the degradation of the environment. One way they do so is to discourage the consumption of the goods of a company whose activities are harming the environment.

So companies all over the world are not competing based on the triple bottom line criteria: People, Planet, Profit.

This answers the questions whether

  1. Coca-cola is in compliance with international best practices as far as labor law is concerned;
  2. How does the company handle its effluents and wastes? is it just discharging them into the earth without treatment? or is it creatively converting them into economic products? how responsible is the company socially?
  3. then of course there is the issue of keeping the books in the black


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Pinewood Corp. used to have a strict hierarchical structure. Information was only given to those who required it. The new CEO, however, set up a flat organizational structure. The new system eliminates any barriers to information flow. Information that was previously available to managers alone is now given to employees as well. He also assigned mentors to new employees to help them in their jobs and enable them to perform better. Pinewood Corp. can now be described as a(n) ________ organization.



The correct answer is boundaryless.


A boundaryless organization is an association in which management has managed to eliminate the barriers between internal levels, work functions and departments, as well as reduce external barriers between the association and those with whom it works. The development of a business in an organization without limits could include the creation of a more horizontal management structure, the promotion of interdepartmental projects and the empowerment of staff members.

Ribb Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling Price $190 100% Variable Expenses 57 30% Contribution Margin $133 70% Fixed expenses are $913,000 per month. The company is currently selling 9,000 units per month. Management is considering using a new component that would increase the unit variable cost by $6. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 400 units. What should be the overall effect on the company's monthly net operating income of this change?



Decrease in operating income     $3,200  


The computation is shown below:

Particulars  Old method  New method

Sales                 $1,710,000       $1,786,000

                      (9,000 units × $190)    (9,400 units × $190)


Variable expenses  $513,000           $592,200

                       (9,000 units × $57)    (9,400 units × $63)

Contribution margin $1,197,000       $1,193,800


Fixed expenses   ($913,000)         ($913,000)

operating income   $284,000          $280,800

Decrease in income     $3,200  

We simply take an difference of operating income under both methods that reflects the decrease in operating income

3. If the average price of an airline ticket on a certain route rises from $200 to $250, the number of tickets sold drop from 800 to 600. Calculate the price elasticity of demand. Is the demand elastic or inelastic?



-Price elasticity of demand=0.77

-The demand is inelastic because the elasticity is 0.77 and this number is less than 1.


The formula to calculate the price elasticity of demand is:

Price elasticity of demand=% change in the quantity demanded/% change in the price

To use this formula you have to calculate the % change in the quantity demanded and % change in the price:

% change in the quantity demanded=(Q2-Q1/((Q2+Q1)/2))*100

% change in the quantity demanded=(250-200/((250+200)/2))*100

% change in the quantity demanded=(50/(450/2))*100

% change in the quantity demanded=(50/225)*100

% change in the quantity demanded=22.22%

% change in the price=(P2-P1/((P2+P1)/2))*100

% change in the price=(600-800/((600+800)/2))*100

% change in the price=(-200/(1400/2))*100

% change in the price=(-200/700)*100

% change in the price=-28.57%

Now, you can replace the values in the formula to to calculate the price elasticity of demand:

Price elasticity of demand= 22.22%/-28.57%

Price elasticity of demand=0.77

The price elasticity of the demand is 0.77. An elastic demand is when the elasticity is greater than 1 and an inelastic demand is when the elasticity is less than one. So, according to this, the demand is inelastic because the elasticity is 0.77 and this number is less than 1.

By the late 1800s, soft coal miners earned a higher hourly wage than other industrial workers of similar skill levels. The mining wage is an example of a. wage discrimination. b. a monopsony market. c. a compensating wage differential. d. an efficiency wage.


Answer: c. a compensating wage differential

Explanation: since different jobs in the labour market are characterised by different wages, workers do have different preferences as do firms who employ these workers have different conditions wherein they work. Soft coal miners earned a higher hourly wage than other industrial workers of similar skill levels due to compensating wage differentials. This is the additional amount of income that a worker must be offered in order to motivate them to accept a given job (often undesirable and collectively known as nonwage characteristics of the job), relative to other jobs that the same worker could perform.

For unpleasant jobs, firms often offer higher wages in order to attract workers. The reverse is also true.

Many demographers predict that the United States will have zero populationgrowth in the twenty-first century, in contrast to average population growth of about 1percent per year in the twentieth century. Use the Solow model to forecast the effect ofthis slowdown in population growth on the growth of total output and the growth ofoutput per person. Consider the effects both in the steady state and in the transition between steady states



Check the explanation


  • The foremost thing is to first consider steady states. The Sluggish population growth rate swings in the line representing population growth and depreciation to the downward trend.
  • The new stable rate has a superior level of capital per worker thereby having a higher level of output per worker.
  • In Steady state, the entire output develops at rate n, whereas the output rate per worker grows at figure 0. Hence, slower population growth will hamper the figure of total output growth, but the rate of per-worker output growth will be the same.
  • Now reflect on the transition. We know that the constant-state level of output per worker is higher with little population growth. Hence, for the period of the transition to the new steady state, output per worker should grow at a rate faster than 0 for a sometime.

Maddy purchases 2 pounds of beans and 3 pounds of rice per month when the price of beans is S2 per pound. She purchases 1 pounds of beans and 4 pounds of rice per month when the price of beans is $3 per pound. Maddy's cross- price elasticity of demand for beans and rice is A. -0.71, and they are complements B. 0.71, and they are substitutes. C. 1.4, and they are substitutes D. -1.4, and they are complements


Final answer:

Maddy's cross-price elasticity of demand for beans and rice is -1, and they are complements.


The cross-price elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good. It is calculated as the percentage change in the quantity demanded of one good divided by the percentage change in the price of the other good. In this case, Maddy's cross-price elasticity of demand for beans and rice can be calculated using the formula:

Cross-Price Elasticity = ((Q2 - Q1) / (Q1)) / ((P2 - P1) / (P1))

Calculating the values:

Q1 = 2 pounds of beans per month

Q2 = 1 pounds of beans per month

P1 = $2 per pound of beans

P2 = $3 per pound of beans

Substituting the values into the formula:

Cross-Price Elasticity = ((1 - 2) / (2)) / ((3 - 2) / (2)) = -0.5 / 0.5 = -1

The cross-price elasticity of demand for beans and rice is -1, which indicates that they are complementary goods. When the price of beans increases, the quantity demanded of beans decreases, and as a result, Maddy purchases less rice as well.

Learn more about Cross-price elasticity of demand here:


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