10. Market Analysis and Competitive advantage

Question 1

What is Porters 5 forces used for

Answer 1

Analysing the business domain
The pressures from within a business domain that an organisation faces
Identification of the domain is important

Question 2

What are the 5 forces of Porters 5 forces

Answer 2

Industry competitors
New entrants
Substitute products - Services
Buyers
Suppliers

Question 3

How do the 5 forces influence each other?

Answer 3

The five forces shape industry competition

Question 4

5 forces - When thinking about Industry competitors what should we consider?

Answer 4

Level of competitiveness within domain
How many competitors there are
Who has market share or Power within domain

Question 5

5 forces - When thinking about new entrants to an industry domain what should be considered?

Answer 5

The threat of new entrants
How easy it is for a new entrant to enter the market
What barriers there are to entry
- Whether new barriers can be erected

Question 6

5 forces - When thinking about Substitute products what should be considered?

Answer 6

The threat of the new products or services
Are substitutes for the product available
Competing with suppliers of substitute products as well as competing products
Lack of control over creation of new products by competitors (excluding copyrights and patents)

Question 7

5 forces - When thinking about Buyers what should be considered?

Answer 7

What is their bargaining power
How easily can they switch to another competitor
How many customers
How strongly are they tied to you
Power to increase your price - Who has the power to increase/decrease your price?

Question 8

5 forces - When thinking about Suppliers what should be considered?

Answer 8

The bargaining power of suppliers
How many suppliers there are
What is freedom of choice
How can we avoid being tied in to a supplier
Their power to increase the price

Question 9

What is the Boston Box used for?

Answer 9

To analyse the portfolio of a Business

Used to assess an organisations products and services according to market share and prospects for Market growth

Question 10

What are the 4 options in the boston box?

Answer 10

Wild Cat - High Market Growth, Low Market Share

Star - High Market Growth, High market share

Dog - Low Market growth, Low market share

Cash Cow - Low market growth, High market share

Question 11

What is a Star product/service is the Boston box?

Answer 11

something with high growth and a high market share
could become a cash cow over time when market growth slows if share maintained
Can be profitable
May need investment to maintain position

Question 12

What is a Wild cat product/service is the Boston box?

Answer 12

A problem child - There is high market growth, however we have low market share

Often new products that we are unsure how they will perform, if not new consider what is causing low market share

May require substantial investment to develop market share (importance on marketing and market analysis)

Organisation needs to decide which Wild cats to invest in to become STARS

Question 13

What is a Cash cow product/service in the Boston box?

Answer 13

A service with high market share in a low growth or declining market

Mature, successful and established, needing little investment to maintain

Cash cows provide the funding to turn Wild cats into stars

Question 14

What is a Dog product/service is the Boston box?

Answer 14

Products with low market share in a low growth or declining market

Is it breaking even? Will it be in the future?

Little potential for growth, not worth investment

options - Withdraw or update product

• Careful consideration of investment required
• Improve market share
• move to new market and become wild cat

Question 15

When might a company keep a Dog product/service

Answer 15

Some companies will keep a dog in order to keep market share and encourage other products e.g. Nestle Machines to keep pods alive

Question 16

What are the basic rules after applying the Boston box

Answer 16

Choose the WILD CAT while investing in the STARS, milking the CASH COWS and shooting the DOGS

Question 17

What methodology could be utilised when looking at how we deliver value?

Answer 17

Porter’s value chain analysis

Question 18

What is Porter’s Value chain (PVC) used for

Answer 18

To structure thinking and identify the processes that bring value to our customers

Shows how different organisational activities and grouped together to provide value to our customers

Aids looking at an Organisation in a process led way rather than an antiquated departmentalised way

Question 19

What are the different sections of PVC?

Answer 19

Value adding activities - e.g. Logistics, Sales (primary business processes)
Value enabling activities - e.g. Procurement, HR (Support processes)
Value proposition

Question 20

In PVC what is Value proposition

Answer 20

The customer perspective of the organisation - Definition of product or service that shows the organisation can understand and satisfy customer needs

What differentiates them from the competition

• Efficiency
• Product differentiation
• Customer service

Reasons for buying the product, why choose this supplier over another, especially in a competitive market

Question 21

What is the use of Value proposition analysis

Answer 21

Value proposition analysis is used to highlight what an organisation, or part of one, is required to deliver to its customers

Question 22

Name a value adding and a value enabling activity

Answer 22

Value adding;
Inbound logistics
Operations
Outbound logistics
Marketing and sales
Servicing

Value enabling
IT
HR
Procurement

Question 23

Which of the following is not considered by Porter 5 forces?

• Market growth
• New entrants to the market
• Substitute products
• Suppliers

Answer 23

Market growth (Analysed against portfolio using the boston box)

Question 24

What is the central force in Porter’s 5 forces?

Answer 24

Rivalry among existing competitors

Impacting on the rivalry is;
Bargaining power of suppliers
Threat of new entrants
Threat of substitute products or services
Bargaining power of buyers