lecture 3 - Chapter 7 Flashcards
(19 cards)
what is SWOT analysis used for?
used to perform a corporate appraisal to perform internal and external analysis
gap analysis ?
the comparison between an entity’s ultimate objective and expected performance from projects.
when performing gap analysis what questions can be raised?
-why the gap exists
-how to close the gap using relevant strategies.
what does porter say about achieving sustainable competitive advantage?
he suggests that sustainable competitive advantage arises form the selection of generic strategies and then organising value-added activities to support the chosen activities.
what could porters generic strategies include?
-cost leadership
-product differentiation
-focus - this evolves around selecting the above in a narrow profile of market segments.
Focus?
-focus on a segment of the market rather than the whole market
how to achieve focus strategy?
-identify a segment of consumers with similar needs
-choose whether you go for the cost leadership or product differentiation.
-develop products or services that meet the Niche.
-Develop a marketing strategy to reach the chosen segment
Market penetration and how to achieve it?
-competitive pricing
-improving competitive advantage through adjustments in the value chain.
how to achieve product development?
-invest in R&D.
-exisiting distribution channels may be used.
how to achieve market development?
-new geographical markets or segments
-the use of. distribution channels.
two types of diversification?
-related diversification (concentric)
-unrelated diversification (conglomerate)
what does related diversification involves?
related diversification involves integrating activities In the supply chain (vertical integration) or leveraging technology (horizontal integration).
vertical integration?
when a company becomes its own supplier (backward) or distributor (forward)
benefits of vertical integration?
-economies of internal control and co-ordination
-economies of combined operation
-economies of avoiding the market
-tap into tech
-guaranteed demand and supply.
disadvantage of vertical integration?
-reduced flexibility to change suppliers if the in-house team messes up
-capital investments needed
-differing managerial requirements: skills may not be as easily transferable.
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horizontal integration involves utilising existing competencies by entering into:
-complementary markets
-competitive markets
horizontal integration (unrelated markets)?
one key characteristic is that there is no common thread, achievable through:
-Management skills
-Brand name
advantages of unrelated diversification?
-can use more cash surplus
-utilise brand image
-risk spreading
-can enter more attractive markets
Disadvantage of unrelated diversification?
-lack of management expertise
-failure in one market could lead to disruption in brand name
