BST Flashcards
Barriers to entry
Economies of scale Brand loyalty Capital requirements Access to distribution Patents Government subsidies
What makes a market attractive to new entrants?
High industry growth
High profit margins
Few existing competitors
Easy customer switching
Ansoff Matrix
Market penetration- more sales of existing product in existing market
Product development- Develop new product in existing market
Market development- fund new market for existing product
Diversification- new product and new market
Gearing ratio
Marketing strategy using the 4ps model
Price
Product
Place
Promotion
Swot analysis
Strengths - internal
Weaknesses - internal
Opportunities - external
Threats - external
EVALTUATE OPTIONS
Scenario planning
Provides long term view of strategy where key factors may influence success
Choices when industry changes occur:
Do nothing
Make short term forecasts
Use scenario planning to consider substantial shifts in the industry and its environment
Scenario planning involves looking 5-10 years down the like and asking ‘what if?’ And ‘what is the effect of?’ To determine how it can achieve a sustainable business model for the future
Allows earlier response to changes than competitors
Charities
Charities are a Not for Profit (NFP), organisation.
The Nolan principles set out 7 standards for public sector governance:
Selflessness Integrity Objectivity Accountability Openness Honesty Leadership
Governance = the trustees’ role in directing the charity in the long term
Main governance issues:
Stakeholders and public interest - balance conflicting interests.
Financial solvency - ensure sufficient funds to cover costs and provide services. Maximum benefit from limited resources.
Accountability and openness- proper stewardship of public finds, give reasons for the use of funds, be open to scrutiny.
Actions/interests of the board - decisions made in line with interests of charity and its beneficiaries - NEVER for financial gain.
Composition of the board - Are board members confident to challenge each other? A succession plan should be held to replace board members with strong candidates as and when needed
Risk management - battling events that would prevent a charity from carrying out its mission e.g. changes in gvt or policies. Risk should be managed, not always avoided
Conclusion
Non-financial performance measurement
Balanced scorecard approach -looks at 4 perspectives to provide operational control so that the organisation’s mission and objectives are met:
Financial
Measures economy and efficiency I.e. how limited resources are used to the greatest possible effect to add value to beneficiaries and fund providers
Customer -
How users feel about the services provided and the research conducted
Internal business process perspective -
What must the business excel at to achieve its financial and customer objectives e.g. number of marketing or fundraising events held, ratio of paid staff to volunteers
Learning and growth -
Business’ capacity to maintain and grow its position through development of new skills and services
Challenges to implementing change
Cultural barriers:
Structural inertia- cumulative effect of embedded systems and procedures.
Group inertia- changes to norms and skills needed.
Power structures- decision makers fear they will lose power.
Solution: Lewin argues: Unfreeze- challenge existing behaviour Move- make changes Refreeze- consolidate new system e.g. communicate the benefits obtained by new system
Personal barriers:
Habit, security, effect on earnings, fear of unknown, selective information processing, psychological contract
Solution:
Effective communication strategy,
Transparency, eduction on benefits, rewards for embracing change
If a question asks you to give a report :
Structure it like an email with a to, from l, date, and subject headerbat the top of the answer
Marketing strategy
Segmentation- identifying characteristics of different market segments.
Targeting- evaluating and selecting the most attractive segments.
Positioning- developing detailed marketing mix for each segment.
4 P’s of Marketing Mix
People
Product
Place
Promotion
Value chain analysis
Primary activities to comment on: Inbound logistics Operations Outbound logistics Marketing and sales Services
Supporting activities: Infrastructure Technology development HR management Procurement.
Also comment on -
Cost drivers: factor causing costs.
Value drivers: biggest sources of value that differentiate a product or service from its competition
Cyber security risks
Types of slcyber attack: Denial of service- website hacked and shutdown so it cannot be used by staff or customers. Ransomeware Virus attack Phishing of customer data/fraud
Cyber security breaches can result in:
Loss of brand reputation
Loss of customer confidence
Reduction of sales amidst security fears
Customers expect businesses to have sufficient cyber security
Insufficient security could result in litigation and/or legal cases
Safeguards:
Protect integrity of systems
Safeguard information
Ensure business continuity plan in even of a crisis
Have backup servers
Ensure syestms are regularly updated and tested
Transfer risk by outsourcing cyber security to a specialist provider or getting specific cyber insurance
Data encryption
Firewalls
Payment verification software
Employ specialised cyber security staff
Porters 5 forces
Power of customers
Power of suppliers
Competitive rivalry
Threat of new entrants
Threat of substitutes (products not competitors)
Show professional scepticism with info given in the question!!!
Analysing product portfolio
Models:
BCG
Product lifcycle
Exam tips
Plan time and rough points
Breadth scores higher than depth
Types of sustainability
Environmental
Social - public opinion/reputation
Economic - financial
Ethics questions
Always question whether the accusations are true
Change notes:
Types of change
Barriers to change
Transformative - big change
Tweak - small change
Personnel Barriers
Habit, security, effect on earnings, fear of the unknown, selective information processing, psychological contract
Cultural barriers:
Structural inertia-embedded systems and procedures
Group inertia-skills, norms, peer pressure e.g. their importance will be threatened
Power structures-existing decision-making structures e.g. decision makers fear they will lose power
Strategies to create change
Lewin 3 stage model
Unfreeze- trigger change by challenging an existing norm
Move- make the changes while encouraging adoption of new way.
Refreeze- consolidate change by communicating benefits and disciplining resistance
Refreeze-
BCG matrix
Star- dominant in attractive market
Cash cow- Dominant in stagnant market
Problem child- weak position in attractive market
Dog- low market share in stagnant market
Product lifecycle
Overall objective is to have a balanced portfolio
Development- negative cash flows
Introduction- cash outflow with initial sales
Growth- New competition seen and economies of scale usable
Maturity- critical mass and positive cash flow
Decline- heavy price discounting, brand loyalty may keep things afloat
Porter’s diamond
Demand conditions
Factor conditions
Strategy structure rivalry
Related and supporting industry
The competitive advantage
Transfer pricing methods
Market price- transfers between divisions made at the present market value of the product. This reflects the value added by each division
Cost price- transfer purely at the cost of making the product. Turns the selling division into a cost centre
Cost plus- adds a small profit margin to the cost of making the product
Cost to customer less x%
Other alternatives- two part transfer prices, dual pricing, negotiated pricing
Use of AI
Strengths
Could reduce numbers of staff needed - reduce costs
Frees up remaining staff to perform more judgement based tasks
Ai gets more powerful over time as it learns so will be an exponentially more useful tool
Ai can provide services to customers in there home and where staff are not readily available
Weaknesses
Expensive to implement so costs may outweigh the benefits
Benefits are uncertain if competitors can develop superior technology
Additional staff training required to use the technology
Business strategy 3 criteria
Suitable - appropriate considering business’ strategic position and outlook
Feasible- must have resources and competencies to carry the strategy out
Acceptable - must gain support of essential shareholders
Question on external factors influencing competition
PESTEL
Porters 5 forces
Data tables key calcs to include
Financial to financial Operating to operating Financial to operating Revenue change Profit margins Profit change Analysis of performance of different products if individual info is given
Balanced score card approach
Ensures a mixture of financial and nonfinancial performance indicators.
Financial perspective
Customer perspective
Innovation and learning perspective
Internal business perspective
Additional benefits of a strategic alliance
Share of risk and consequence
Share of costs
Cosy efficiencies from integration of work done by each party
Weaknesses
May lack goal congruence e.g. one may want short term profit while the other wants to invest in long term growth
Smaller Share of profit than if operating alone
Porter’s value chain
Primary activities (create value) Inbound logistics, operations, outbound logistics, marketing&sales, services
Supporting activities (don't create value but ensure efficiency) Procurement, tech development, human resources management, firm infrastructure
