3.1

Question 1

Evaluation of using SWOT analysis?

Answer 1

:) - Assists strategic thinking in a structural way
- Low - cost, simple approach
- Can be combined with other decision-making models, such as PESTLE

:( - Subjective - depends on opinions of managers
- Does not offer clear solutions
- Classification may depend on perspective

Question 2

Factors affecting corporate objectives?

Answer 2

External factors:
- actions of competitors
- economic conditions
- social change
- technological change
- global prices

Internal factores:
- poor performance
- new leadership
- business ownership
- business culture
- business growth

Question 3

Evaluation of market penetration?

Answer 3

:) - low risk
- product and market familiar to business
- limited investment required
:( - possibly limited growth potential
- business becomes vulnerable if it does not innovate

Question 4

Evaluation of product development?

Answer 4

:) - familiar with customers
- builds on/innovates current products
- responds to customer needs

:( - takes time and can be expensive
- product cannibalisation (pulling demand away from existing products)

Question 5

Evaluation of market development?

Answer 5

:) - potential for growth
- no need for expensive product development
:( - limited understanding of new customers’ needs
- competing against established businesses

Question 6

Evaluation of diversification?

Answer 6

:) - spreads the business risk by engaging in different markets
- business can utilise some of it’s core competencies and apply them to a new context
:( - high risk (if product fails lots of investment lost)
- no reputation or expertise in the marker

Question 7

How to achieve cost leadership strategy?

Answer 7

• operate at a scale that keeps average costs low
• achieve economies of scale through growth
• have unique access to technology
• have unique access to raw materials or skills
• control the supply of a product

Question 8

Eval of cost leadership?

Answer 8

:) - help to achieve high profit margins as cost per unit kept low
- can lower price and acquire market share
- appeal to price elastic customers
- good if inflation increases

:( - few businesses can operate as the cost leader within a market as multiple businesses cannot directly compete on cost
- hard for small business to gain economies of scale
- requires lean management approach - ethical considerations lower down list of priorities

Question 9

How to achieve differentiation strategy?

Answer 9

• ensuring quality
• customer service
• brand personality
• customer experience
• after-sales service
• speed and efficiency
• meeting the unique needs of a specific market niche

Question 10

Eval of differentiation strat?

Answer 10

:) - makes business stand out
- unique brand image - loyalty - reduce PED
- adds value therefore higher prices can be charged
- may be able to meet ethical obligations more easily

:( - could be copied by other businesses at lower prices
- takes time and investment
- other factors need to be considered (economic factors, market position etc)

Question 11

Factors to consider when choosing a strategy?

Answer 11

• expected cost
• anticipated return
• risk aversion
• stakeholders
• external environment (e.g. legislation)
• core competencies

Question 12

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