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Flashcards in Sac 6 Deck (13):
1

Driving forces

those forces affecting a situation that are pushing in a particular direction and are supporting the goal or
proposed change.

2

Restraining forces

personal and organisational resistance to change that acts against the driving forces and could involve management, employees, cost, legislation and competitors.

3

Globalisation

the process of increasing interdependence between countries. It involves the increasing integration of businesses and economies. It removes economic boundaries, which creates free international trade and movement of capital between countries.

4

Innovation

generally refers to changing or creating more effective processes, products and ideas, and can increase the likelihood of a business succeeding.

5

Organisational inertia

the lack of ability of a business to react to internal and external pressures for change as it tends to continue on its well entrenched way.

6

Competitive advantage

which establish whether the products are differentiated in any way, or if they are the lowest cost producer in
the industry.

7

Three steps to determine which generic approach to focus on

step one: carry out a SWOT analysis
step two: Porter’s five force analysis
step three: compare the SWOT analysis
with the results of the five force analysis

8

Step one: carry out a SWOT analysis

carry out a SWOT analysis (strengths, weaknesses,
opportunities and strengths) for each strategy.

9

Step two: porter's five force analysis

1. supplier power – a business should assess how easy it is for suppliers to drive up prices.
2. buyer power – this looks at how easy
it is for buyers to drive down prices.
3. competitive rivalry – this area focuses on the number and capability of competitors.
4. threat of substitution – this is affected by the ability of customers to find a product or service similar to the one provided by the business.
5. threat of new entry – a business’ influence and power is affected by the ability of other businesses entering the same market and competing.

10

Step three: compare the SWOT analysis
with the results of the five force analysis

when the two analyses are compared a business
should be considering the following:
• reduce or manage supplier power.
• reduce or manage buyer/customer power.
• come out on top of the competitive rivalry.
• reduce or eliminate the threat of substitution.
• reduce or eliminate the threat of new entry.

11

Cost leadership strategy

a strategy that allows a business to achieve a
competitive edge by reducing production or delivery costs. This can be achieved by:
-increasing profits by reducing costs and at the same time charging similar prices to competitors.
-increasing market share through charging lower prices but still making a profit due to savings made in reducing costs and other expenses.

12

Differentiation approach

differentiation emphasis of the difference between a particular product/service and those that are similar by developing the attributes that customers find appealing To implement a differentiation strategy a business
should ensure that it:
• develops effective marketing and promotion
strategies – define and emphasise the benefits of
the brand
• delivers high-quality products
• ensures there is a focus on ongoing research,
development and innovation.
Examples of businesses that have successfully
used a differentiation strategy include BMW, Apple
and Nike, which are known for their particular brand
and quality products.

13

Porter's generic strategy

porter’s Generic Strategies focus on low cost and differentiation. Both strategies allow a business to change to achieve a competitive advantage.