L6 SWOT and strategic options

Question 1

Models for pulling together all your analysis?

Answer 1

SWOT (AKA CORPORATE APPRAISAL)

Question 2

What does the SWOT (CORPORATE APPRAISAL) diagram do?

Answer 2

a study undertaken by an organization to identify its internal strengths and weaknesses, as well as its external opportunities and threats.

IT TAKES ALL THE ANALYSIS DONE AND HELPS YOU COME UP WITH A STRATEGY.

Question 3

What does the SWOT diagram look like?

Answer 3

Question 4

How do you use the swot diagram?

Answer 4

From the internal analysis, identify the strengths and weakness and put them in the box.

From the external analysis, identify the opportunities and threats and also place them in their relevant boxes.

SWOT diagrams can be especially useful when trying to decide whether or not to embark on a certain strategy by visualizing the pros and cons.

Question 5

What would internal analysis include?

Answer 5

Competences and value chain analysis.

Question 6

What would extrernal analysis include?

Answer 6

SPENT and Porters 5 forces

Question 7

What is the TOWS matrix?

Why is it different from SWOT?

Answer 7

TOWS emphasises the external environment (so looking at opportunities and threats) and therefore has them on the y-axis, and looks at how the interact with the stre

Question 8

Problems with SWOT?

Answer 8

1. There is no prioritisation. Doesn’t tell you which s/w or o/t are most important.
2. Bias. Especially with S/W
3. Easy to miss isues. (bounded rationalle)
   4.

Question 9

benefit of SWOT?

Answer 9

Benefit is it pulls everything together that you have looked at in external and internal analysis.

Question 10

how to answer swot Q?

Answer 10

• Heading for strengths, weaknesses, opportunities and threats.
• Some could go under diff headings, just justify your points.
• 1 mark per valid point.

Question 11

KEY for answering SWOT questions?

Answer 11

YOU NEED TO JUSTIFY WHY ITS UNDER EACH HEADING.

Question 12

Models for using SWOT and using this to generate strategies for our business?

Answer 12

1. -TOWS
2. -Gap analysis
3. -Generic strategies
4. -Bowman’s clock
5. -Ansoff

note all these models are essentially lists, and ideas about what you could do in your business.

Question 13

What is the TOWS model?

Answer 13

This uses SWOT as a way to come up with strategies.

It looks at the opportunities/threats (O/T) as possible strategies and then assesses them using the strengths/weaknesses from the SWOT DIAGRAM.

Question 14

what does the tows diagram look at?

Answer 14

Question 15

What is gap analysis?

Answer 15

Gap analyis tries to formally get you to figure out the gap between where you want to be in an ideal world, and where you will end up if you don’t enact strategies

Question 16

what does the gap analysis diagram look like?

Answer 16

Will have profit on y axis and time on x axis.

You can then have two lines showing the outcomes of where you want for profits to be and the profits you make if you dont do anything and you keep going as you are going.

THE DIAGRAM WILL SHOW THE GAP IN PROFITS BETWEEN NOT DOING ANTHING AND THE DESIRED STATE YOU WANT TO BE AT.

Question 17

What are the three ways the gap analysis suggests you can close the gap in the desired state and where you are without performing a strategy? (the gap on the graph)

What is key for these strategies?

Answer 17

1.Efficiencies – look for efficiencies you can make in the production process. E.g. id waste and eliminate it. This may close some of the gap. Don’t do anything differently just look to be more efficient.

2.Expansion – This means to do the same thing as before, but look for ways to sell more of them. Try and expand sales and production. E.g. enter new geographical market.

3.Diverisfication – This involves moving in to something new completely. i.e. New markets and new products. This is high risk but may be the only way you can get to the desired state.

NOTE the above strategies must be done in order!! (in the least risk to most risky way) (i.e. 1, 2 and then 3.) go through each till you hit the desired state.

Question 18

Benefits and drawbacks to GAP analysis?

Answer 18

Benefits:

-Deals with low risk things first

Drawbacks:

-Lots of estimates regarding your desired states and strategies to close gap, so good chance it could be wrong.

Question 19

What is porters generic strategies?

Answer 19

Porter suggested with his generic strategies is that the goal of the business is to gain a competitive advantage and as a result there is only 3 strategies that will let you beat your competitors.

Question 20

What are the three strategies porter suggested to beat your competitors?

Therefore, what does the diagram look like?

Answer 20

1. cost leadership
2. cost focus
3. differentiation (this breaks in to two).
   
   • Differentiation
   • Differentiation focus.

Question 21

What is the cost leadership strategies of porters generic strategies?

Answer 21

This is all about leading on the cost front, and being the lowest cost producer in your market whilst still having a product as good as your competitiors.

Question 22

Two ways to get competitive advantage from cost leadership strategy from porters generic strategies?

Answer 22

1. lower prices as result of lower costs and therefore increase sales volume.
2. Set price same as competitors and recieve larger profit per unit as have lower costs which can be used to invest in order to grow.

Question 23

How can you achieve cost leadership?

(porters generic strategies)

Answer 23

Can achieve through:

• Economies of scale
• Latest technology
• Productivity improvements
• Reduced overheads
• Efficient use of the value chain

Question 24

Problem with cost leadership from undercut pricing?

Answer 24

• Problem with this is there wil come a point where competitors will have to offer a lower price too in order to survive. This will result in a price war.

Question 25

Solution to the possible problem of a price war resulting from the cost leadership strategy?

Answer 25

If you are a cost leader you may then choose to sell at the same price as your rivals. So you make product more cheap and sell at comparable price and therefore make more profit per unit which you can use for investment in the form of new stores, advertisign etc.

Question 26

e.g. of cost leader?

Answer 26

Aldi

Question 27

Cons of the cost leadership strategy?

Answer 27

1. Pin success on being cheaper than rivals. If someone's manages to be cheaper than you you have no selling point and you will lose customers to someoen doing it cheapre. Technology also increases the risk of this. 2. You also assume that products may be poor quality if it is cheaper. This can also put customers off.

Question 28

What is porters diversification generic strategy?

Answer 28

Differentiation suggests that you find a way of making your product actually better or perceived to be better than its rivals.

Question 29

How can you achieve differentiation?

Answer 29

1. Improved image/reputation/brand 2. Additional features (R&D/design) 3. Value added

Question 30

What does differentiation usually allow for and why?

Answer 30

Differentiation normally allows premium pricing so you can make more profit on unit than your rivals. As a result of making your product stand out due to brand or it being better

Question 31

Risks of differentiation?

Answer 31

1. **Rivals may just copy the extra features you put in place** and may even go beyond yours. So its possible the likes of apple could be surpassed by samsung who copy them and then go beyond then 2. Diff also has **high costs** due to brand awareness etc 3. Also **very risky thing to do if the market suffers.** People may not be able to pay the prices you charge for your better more expensive goods. So you may be more exposed to market influences.

Question 32

What is the focus strategies of the porters generic strategies?

Answer 32

This looks at **cost focus** and **differentiation focus.** Focus suggests that you target a small section of the market with products tailored to their needs.

Question 33

What are the two ways of performing the cost focus strategy? Explain.

Answer 33

1.**Cost focus.** * **Here a business seeks a lower-cost advantage in just one or a small number of market segments.** * This is the idea you target a niche section of the market but you bulk buy products for them. So you try and provide products that are tailored to them but that you can offer very cheaply. E.g. Claire's. It targets young girls/teenagers and try to sell jewelry to this small subset of the population, by buying them in bulk and selling cheaply by passing on the cost savings. **2.Differentiatied focus.** * **This is when you tailor your product and services to the group they are trying to focus**. E.g. Saga. Sell a range of goods and service for well off and old. Such as travel insurance, holidays etc. But the products/services they offer are tailored to this group of people. As they are tailored to this group they are willing to pay more as it is exactly what they wanted. So companies can charge a lot more for their product.

Question 34

How do you achieve the focus strategies (differentiation and cost)?

Answer 34

In order to perform this strategy you need to understand your niche in the market. So you need to understand your **market well through market research** to find out what the product is they want.

Question 35

Benefit of the focus strategies?

Answer 35

If you only target a small segment of the market the big players aren’t likely to try and force you out the market. They may be more willing to keep you in the market.

Question 36

Problems of the focus strategies from porters generic strategies?

Answer 36

1. Market segment you focus may be small. So you may not be able to do anything in bulk so costs would be high 2. Also face a chance that the segment shrinks or is too small. i.e. if economy fails or change you may have less to target and therefore not enough to target and make a profit. 3. Other firms may also enter the market after you prove you can be successful by targeting a specific niche market. So not guaranteed you can keep the niche.

Question 37

What did porter describe you as if you are not one of the generic strategies and what is the problem with this?

Answer 37

Porter said if you are not one of the three strategies you are known as **“stuck in the middle”** i.e. you cannot do more than one at once. You have to adopt one of the three or you will find it almost impossible to compete. And if you are stuck in the middle you might be okay for a while but after that someone will come in and steal market share from you as you don’t have a unique selling point.

Question 38

What is bowmans clock? what is the difference to porters generic strategies? which does the diagram show 8?

Answer 38

Says there are 5 strategies you can use. Differs to bowman as Bowman tried to categories the different strategies by the perceived value of the product to the customer, compared to the price charged for the product. 6,7, and 8 unrelasitic as other companies will sell the same good for lower price so cannot survive.

Question 39

which numbers are the same as porters generic strategies? *Remember bowmans clock is an extension of porters generic strategies.*

Answer 39

2. "cost leadership" - same product as competitors but low price as result of low costs. 4 & 5 same as differentiation parts.