T4 Flashcards
Porter’s Five Forces Analysis
- Bargaining power of suppliers
- Threat of new entrants
- Rivalry among current competitors
- Threat from substitute products
- Bargaining power of customers
Industry life cycle
Introduction, Growth, Maturity/shakeout, Decline
Dimentoins
Products, Competitors, Buyers, Profits, Objectives and Strategy
Value chain analysis
- Support Functions
- Firm infrastructure
- Human Resource Management
- Technology development
- Procurement
Value chain analysis
- Primary Activities
- Inbound logistics
- Operations
- Outbound logistics
- Marketing and sales
- Service
Product life cycle
- Introduction
- Growth
- Maturity
- Decline
- Senility
Grenier’s stage model of growth
1. Growth through Creativity Crisis of LEADERSHIP 2. Growth through Direction Crisis of AUTONOMY 3. Growth through Delegation Crisis of CONTROL 4. Growth through COORDINATION Crisis of read RED TAPE 5. Crisis of ? 6. Growth through COLLABORATION
Basic organisational structures
1) Functional (U form)
- Departments identified by function
2) Multi-divisional (M form)
- Divided into autonomous regions/product businesses
3) Holding company
- Extreme multi-divisional. Div’s are separate entities
4) Matrix
- co-ordinates across functional lines via dual authority.
5) Team based
- Extends matrix structure by utilising cross-functional teams
6) Project based
- Similar to project but with finite life
7) Transnational
- Attempts to reconcile global scope and scale with local representatives.
Competitive strategies
Cost leadership
- Aim to be the lowest cost producer in the industry as a whole
Differentiation
- Aim to exploit a product or service perceived as unique within the industry as a whole
Focus
- Activity is restricted to a particular segment of the market. Either cost leadership or differentiation strategy is then pursued. Such concentrated effort can be more effective, but the segment may be attacked by a larger firm.
Generic strategies and the five competitive forces
Competitive force:
- New entrants
- Substitutes
- Customers
- Suppliers
- Industry rivalry
Five forces
- New entrants
Advantages: - Cost leadership Economies of scale raise entry barriers - Differentiation Brand loyalty and perceived uniqueness are entry barriers
Five forces
- Substitutes
Advantages:
- Cost leadership
Firm not as vulnerable to the threat of substitutes as its less cost-effective competitors
- Differentiation
Customer loyalty is a weapon against substitutes
Five forces
- Customers
Advantages:
- Cost Leadership
Customers cannot drive down prices further than the next most efficient competitor
- Differentiation
Customers have no comparable alternative
Brand loyalty should lower price sensitivity
Disadvantages:
- Cost Leadership
Very internally focused. Ignores customers’ needs
- Differentiation
Customers may no longer need the differentiating factor
Sooner or later, customers become price sensitive
Five forces
- Suppliers
Advantages: - Cost Leadership Flexibility to deal with cost increases - Differentiation Higher margins can offset vulnerability to supplier price rises Disadvantages: - Cost Leadership Increase in input costs can reduce price advantages
Industry rivalry
Advantages:
- Cost Leadership
Firm remains profitable when rivals collapse through excessive price competition
- Differentiation
Unique features reduce direct competition
Disadvantages:
- Cost Leadership
Technological change will require capital investment, or make production cheaper for competitors
Competitors learn via imitation
Cost concerns ignore product design or marketing issues
- Differentiation
Imitation narrows differentiation
Differentiating factors may be undermined if rivals develop significantly better technology.
Product marketing strategies
- Ansoff
Four possible growth strategies in the growth vector matrix
Ansoff
- Growth vector matrix
Product/Market
- Existing Prod./Existing Mkt
- Market penetration
- New Prod/Existing Mkt
- Product development
- Existing Prod./New Mkt
- Market development
- New Prod./New Mkt
- Diversification
- Related
- Horizontal
- Vertical
- Forward
- Backward
- Related
- Diversification
Horizontal integration
Competitive or complementary activities CONGLOMERATE diversification - spreads risk - may obtain synergy However - unfamiliar with new segments increases risk more opportunities to go wrong cultural and management integration mismatches
Methods of Growth
Organic v. Mergers and acquisitions
Joint ventures, alliances, franchising
JV: arrangements between firms to pool interests on a project
Alliances: longer term, aim to complement technology, geography, mkts etc.
Other co-operative methods:
- Licensing
- Franchising
- Sub-contracting
Divestment
- Concentrate resources on core activities where current business combination is destroying value rather than creating it
- To sell subsidiaries at a profit
- To profit from buying and selling companies
To ‘get out while the going is good’
To raise funds to invest elsewhere
Change management
- principle theories
1) Lewin’s 3 stage (ice cube) model
2) Force field analysis
3) Kotter and Schlesinger’s six approaches to resistance
Lewin’s 3 stage model
UNFREEZE - Remove individuals from accustomed routines - Consult team members - Confront perceptions/emotions - positive re-inforcement CHANGE - Learn new concepts - Encourage staff participation/involvement - Identification with new role models - Internalisation of new behaviours REFREEZE - Embed new behaviours - Establish new standards - Habituation effects - Positive reinforcement (eg rewards/bonus scheme)
Problems with Lewin’s three stage model
1) Assumes change is structured process rather than continuous or multi-directional process
2) Danger that managers interpret it as ‘plan -> implement -> review’
3) underplays requirement for people to feel and appreciate the need to change
Force field analysis
Forces driving change
- improving quality
- improving efficiency
- potential savings
- legislation/legal requirements
Status quo
Forces holding back change:
- individual concerns
- Fear of the unknown
- Dislike of uncertainty
- Potential loss of power
- Potential loss of rewards
- Potential lack or loss of skills
- cost/budget constraints
- existing system sufficient
