2 Flashcards
What are some of the factors that should be reviewed in terms of OT in order to determine the attractiveness of the market?
- size of the market
- growth of the market
What is the competitive structure of the market?
- competitor hostility
- supplier power
- threat of substitutes
- buyer power
- threat of new entry
- the cyclicality of the market
- market risks
Which factor should be reviewed in terms of SW in order to determine the differential advantage of an organization?
- cost factors
- differentiation factors
What has a greater impact on corporate value - competitive advantage or market attractiveness?
Competitive advantage.
Research shows that the variation of profitability within an industry exceeds variation between industries.
Which competitive advantage is more vulnerable - cost advantage or differentiation advantage?
Some argue that a cost advantage is more vulnerable. But I disagree: both are sustainable over the long term.
Based on the SWOT, what should the strategic market objective be?
Traditionally, strategic objectives have been conceptualised and organized in “capital rationalizing models”, based on the premise that capital is a scarce resource.
Traditional models include:
- Boston Consulting Group Matrix
- GE- McKinsey Matrix
- Arthur D. Little Model
What are the five objective of the GE- McKinsey Matrix? Explain them.
- Grow: investing resources. It’s an advantageous position.
- Enter
- Harvest: strategy is weak. don’t invest.
- Divest: sell the business unit. Lack of grow potential.
- Maintain
What does the assignment of the five matrix objectives depend on?
The assignment depends on whether investment in the market is likely to generate positive net present value for the firm.
What are the strategic determinants of the assignment of the five matrix objectives?
- market attractiveness
- differential advantage
Which market attractiveness/differential position constellation is most problematic?
A firm with a highly attractive market but weak differential position.
These situations are often termed as “double or quit” - a firm has to invest heavily over a long period of time o remedy its competitive weakness, or get out because of its weakness.
What are the two principal strategic market focuses?
- Increase sales volume
- Increase productivity
How do I know which focus belongs to which objective?
The focus depends on the strategic objective.
If the objective is to enter or grow, then best practise research supports a focus on increasing sales volume.
Is the objective is to maintain, harvest, or divest, then best practise research supports a focus on increasing productivity.
Which marketing tasks are involved with a volume focus?
- Convert non-users
- Enter new market segments
- Increase the usage rate
- Win competitor’s customers
Which marketing tasks are involved with a productivity focus?
- Reduce costs
- Increase prices
- Enhance product mix
