Unit 6/7- Strategy Implementation Flashcards

Question

# Porter Five Forces Threat of subsitutes

Answer 1

This concerns the availability of alternative products or services that customers could switch to. The more available the weaker the position of the business. The factors include: * Rate of change in technology * Availability of capital for investement * Switching costs for customers * Level of substitution effect * Existence of patents and licences

Answer 2

This can vary between pure monopoly to perfect competiton. The lower the competition the higher the profit. The factors that affect it include: * The level of collusion in the market * Maturity in the market * Industry concentration * Product differentiation * Strengths of brands * If horizontal intergration

Answer 3

1. New entrants finding difficulty setting up 2. Few strong competitors 3. Weak suppliers 4. Lack of competition from subsitute products

Answer 4

1. Many subsitutes 2. Lack of barriers to entry 3. Strong well established competitors 4. Powerful suppliers

Answer 5

This is a strategic market planning tool that links business marketing strategy to its general strategic direction. It considers whether it is targeted at existing customers or new customers and if exisiting products should be used as an alternative or if new products should be developed

Answer 6

1. Existing products+ Existing Markets: Market penetration 2. Existing products+ New Markets: Market Development 3. New products+ Existing Markets: Product development 4. New Products+ New Markets: Diversifictaion

Answer 7

This is the method of conecntrating sales of existing products to existing markets. The methods to do this includes: * Attracting customers who have not yet become regular users * Attacking competitor sales * Increasing consumption amongst existing users

Answer 8

This involves developing new products for existing markets. The business will attempt to increase profitability and growth by introducing new products targeted at the existing customer base

Answer 9

This involves finding and developing new markets for existing products. They can do this by: * Identifiying users in different markets with similar needs to existing customers * Identifying new customers who would use a product in a different way

Answer 10

This involves developing new products and new markets. This can be attempted if a business sees a new oppurtunity and has the investment funds avaliable . This has the greatest level of risk. But it can also spread risk as it allows for lower reliance in the markets that they are already in

Answer 11

This is referred to as internal growth and is the expansion of the business by selling more of its products. The most used method is the opening of more factories to increase capacity. Other methods include: * Expanding product range * Targeting new markets * Expanding the distribution network * Benefiting from economies of scale

Answer 12

Benefits: * Less risky form of growth as it most likely funded with retained profit * Less threat of brand dilution * Allows for greater consistency * Growth can be steady * There is is less loss of control Drawbacks: * Oppurtuinites may be missed from acquisitions * Potential for growth may be more limited * There could be a lack of shared expertise * A lack of competitiveness could result due to a lack of economies of scale

Answer 13

This is also reffered to as inorganic growth and is acheived by takeovers or mergers this is also quicker than organic growth

Answer 14

This is the acquisition of one business by another, either on an agreed or hostile basis. This will take place when a business sells more than 50% of its shares

Answer 15

This is the process in which two businesses become one. They are normally equal in size and will agree on the share ownership of the new business

Answer 16

This is when the business merges with or takes over another in the same industry at the same stage of the production process. The benefits of this include: * The removal of some of the competition * May increase economies of scale * Increases market power to compete with market leaders * Synergy may occur * Increased capital of merged businesses * Opportunity to cut costs Drawbacks of this include: * Large initial cost. * Possible culture clashes in management. * Diseconomies of scale. * Investigation from the CMA. * Problems with the high street such as reduction in customer numbers or high fixed costs.

Answer 17

This is when business merges or takes over another business at the previous stage in the production process within the same industry. ( Taking over supplier)

Answer 18

This is when a business mergers or takes over another business at the next stage in the production process.( Takes over the customer)

Answer 19

* Security of supplies and control of supplier prices * Improves supply chain co-ordination * Can guarantee the quality of its raw materials * Can determine standard of outlets/shops * Use of outlets to determine brand image * Keeps all profits and removes middlemen * Control over quality * Possible economies of scale

Answer 20

This is when a business merges or takeovers another business with no connection to the product or the market. ( Totally unrelated business activites)

Answer 21

The is the legal right to use the brand name, Proudcts and buiness style of an existing product. It is a method of achieving growth and is often quick as the business model is replicated by the selling rights to other people to run the business.

Answer 22

* Fast growth * Economies of scale can happen quickly * Increased income from franchise fees * Extra commitment from the franchises

Answer 23

* Loss of control * Not all profits return to the franchisor * Potential loss of reputation * Disputes could occur * Does not have complete * Diseconomies of scale

Answer 24

* They may be supported by national advertising/ promotion * Reduced risk of failure * Support is offered by franchisor * Retaining degree of indepnednce

Answer 25

* Not be able to operate with the same level of freedom as an ordinary business * Can not sell the business without permission * Franchisor can end the franchise without reason or compensation * Regular payments need to be made to franchisor

Answer 26

This is where a business reorganises its production in order to increase its productivity and efficiency. Reasons can include: * Restructuring the business to increase efficiency * To turn around poor performance * To focus on core business * To sell off less profitbale parts of business to improve overall performance

Answer 27

* Closing of branches * Transferring of production * Trimming of production ranges * Incorporation of IT systems to replace paper systems

Answer 28

* External economies of scale * Costs * Availability of goverment grants * Target market * Qunatitiatve techniques * Corporate objectives and strategy * Ethical/Enviromental considerations * Infastructure

Answer 29

This is the process of moving business functions. Reasons to do this include: * The ability to take advantage of lower costs * Higher productivity as a result * Can be easier to enter new markets * Businesses can take advantage of talent pools

Answer 30

This is where businesses who have previously moves business function offshore bring it back to the country of origin. Reasons for this can include: * Cost savings are no longer as significant * It is easier to control quality issues * Infringement to intellectual property * Shorter lead times as an result * May be able to take advantage of goverment incentives

Answer 31

1. Access to markets 2. Cost and nature of factors of production 3. Social reasons 4. Historical reasons

Answer 32

1. Maximising economies of scale 2. Access to international markets 3. Tax advantages 4. Freedom from restrictions

Answer 33

This is delagting one or more business process to an an external provider who then owns manages and administers the selected processes to an agreed standard

Answer 34

* Significantly reduced staffing costs * Well trained staff provided by the outsourcing company will reduce HRM costs such as training * Existing workload and stress levels reduced, this is very important if a business is operating near or at full capacity * Less investment risk * Capital needed reduced

Answer 35

* The potential of poor customer service with communication made difficult because of cultural differences * Exisiting employees may feel demotivated if they belive their jobs are at risk * Quality of production/product cannot be guarenteed * More difficult to implement JIT systems * Loss of security data