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MATRIC > Business environments and strategies > Flashcards

Business environments and strategies Flashcards

1
Q

what are the benefits of environmental scanning

A

identifies threats before imminent
identifies possible gaps in market
monitor competitors
make short and long term strategies to protect business

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2
Q

what are the two types of environmental scanning

A

before business is started-

continuous environmental scanning

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3
Q

why do you scan environment before you start your business

A
  • show you viability of product or service
  • strength of competitors
  • size of potential market
  • stability of resources
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4
Q

why do you do continuous environmental scanning

A

PESTLE, SWOT , value chain analysis, identify TBL and other effects business is having on community, analyse factors to adjust planning

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5
Q

what are 3 sectors of economy

A
  1. primary
  2. secondary
  3. tertiary
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6
Q

what is the primary sector

A

raw materials (mining and forestry)

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7
Q

what is the secondary sector

A

raw materials processed, production

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8
Q

tertiary

A

goods and services being sold

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9
Q

what is a consumer good

A

convenience (bread or milk), select goods ( shoes or clothing) , sPECIALITY goods (cars)

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10
Q

what is industrial good

A

used in manufacturing of other goods ( raw materials, machines and equipment)

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11
Q

types of services

A

personal (hairdresser) and professional( doctor)

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12
Q

what are auxiliary services

A

tertiary sector, transport, storage, insurance, grading and standardisation

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13
Q

8 steps n implementing a management strategy

A
  1. define vision, mission goals and objectives
  2. analyse business environments
  3. look at possible issues that the business should consider (ROI, potential for business growth, business image, BBBEE, CSI)
  4. identify strategic options available depending on type and size, aims of business
  5. evaluate and analyse viability of strategic options, prioritise them
  6. plan implementation of strategy, consider all factors
  7. implement chosen strategy , align with business objectives
  8. monitor and control strategy, ensure it is flexible
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14
Q

what is a vision statement

A

encompasses what the business would like to achieve in the future

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15
Q

what is a mission statement

A

sets business apart from other businesses helps establish goals and objectives , describes market, customers , differentiating qualities as well as social and environmental concerns, needs to be continuously revised

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16
Q

what are long term and short term objectives

A

long term- improving ROI, improving market share, employee development, TBL improvement

short term- depends on business current situation what business wants to achieve in near future

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17
Q

what is choice of strategy based on

A

competitive advantage of business identified in environment analysis

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18
Q

what is the culture of the business

A

values and attitudes shared within organisation, personality of business, needs to motivate people, must be inline with business strategy

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19
Q

what are business resources

A

physical, financial, human capital

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20
Q

what are the 8 business functions

A 
General M
financial
HR
Marketing
production
puchasing
admin
PR
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21
Q

what are examples of internal strengths

A 
strong brand
consumer loyalty
strong management team
patent rights
product or service know how
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22
Q

examples of internal weaknesses

A

poor access to distribution channels
unreliable product or service
financial resources
high costs

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23
Q

examples of external opportunities and threats

A 
change in cutosmer preference
change legislation
change tax rates
tech advance
political stability
new competitors, products , substitute products
economic factors
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24
Q

what is a resource based approach

A
  • based on idea that effective and efficient application of resources helps to determine competitive advantage of business
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25
Q

what makes a resource relevant

A
  1. valuable- bring value to business
  2. rare- unique strategy to gain competitive advantage
  3. unique- sources of sustained competitive advantage
  4. non substitutable- cant be replaced by other valuable resource
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26
Q

what are the elements of the market environment

A 
customers
suppliers
competitors
NGOS
strategic alliances
intermediaries
industry regulators
trade unions
government departments
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27
Q

market environment scanning methods

A

SWOT

Porters

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28
Q

what is Porters 5 forces

A 
level of rivalry
availability of substitutes
threat of new entrants
power of suppliers
power of buyers
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29
Q

explain level of rivalry

A

business best interest to gather info on competitors
location, financial performances, products, market share, promotion strategies

make competitor profile because it is not illegal

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30
Q

explain availability of substitute products

A

products that are different but satisfy same needs

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31
Q

explain threat of new entrants

A

future competitors

diminished with barriers like brand loyalty, government policies, huge capital outlay, limited distribution channels

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32
Q

explain the power of suppliers

A

need a good relationship with suppliers, need right quantity and quality , right time, right price to keep competitive advantage
if business is out of stock- loss of production, loss of profit, no discounts, customer goodwill lost

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33
Q

explain power of buyers (includes intermediaries)

A

important to know who buyers are (demographics)
target market
MARKET SEGMENTATION
needs to satisfy needs of buyer so they don’t buy from competitor

34
Q

what are the distribution channels

A

producer- consumer
producer- retailer- consumer
producer- wholesaler-retailer- consumer
producer-agent-wholesaler-retailer-consumer

35
Q

what is the power of competitors

A

consumers are fickle , competitors with competitive advantage have power to take away consumers

36
Q

when analysing competition what is important

A

identify from of market

  • oligopoly : few strong players who control market , contend with strong players
  • perfect competition: many suppliers and buyers with supply and demand ruling market, seldom exists, trends determine if your business is disabled or not
37
Q

what is power of substitute products

A

what other products there are , why consumers are using them (cost factor, availability, convenience)
must do market research

38
Q

what is the power of new entrants

A

can be small or large corporates who develop and increase their market share , unpredictable, steal consumers. must be aware of subtle changes in market.

39
Q

what is the power of suppliers

A

need prompt delivery of correct products an d services so don’t suffer a loss, need to have good quality
must have good relationship, open communication, regular reviews of responsibility, prioritization

40
Q

what is the power of a consumer

A

you need to keep them happy so they don’t go to a competitor, do market research, supply quality goods and services which fulfil needs and wants, provide adequate return policy, look after customers

41
Q

Trends

A

predictable changes which the business can plan for and adapt to although impact and rate of change difficult to predict (technological change, economic trends)

42
Q

what is a crisis

A

unexpected and unplanned situations that can throw an economy, industry or business into an unstable position ( war, natural disasters, labour strikes)

43
Q

what political factors are there

A 
terrorism
civil war
affect of media on relations between countries
corruption
elections
BBBEE
budget
political parties and policies
44
Q

what are physical factors

A

geography, infrastructure, area, climate, accessibility

45
Q

what are economic factors

A

inflation, economies of scale, competitor strategies, bop , unemployment rates , economic growth

46
Q

what are environmental factors

A

global warming
recycling
pollution
deforestation

47
Q

what are social factors

A 
lifestyle choices
demographics
unemployment
poverty
crime
48
Q

what are technological factors

A 
new materials
social media
changing technology
shorter production cycle
online shopping
49
Q

what are legal factors

A 
LRA
CPA
BCE
BBBEEE
skills development
employment equity
50
Q

ethical factors

A

sweatshops
child labour
intercultural issues
fair trade

51
Q

trends in a business environement

A

need to constantly scan environment, develop strategies to cope with changing trends, watch competitors, developed nations, similar industries and seasonal trends to help gain competitive advantage.

52
Q

what is a crisis in the business environment

A

need to pre empt and plan for it , need to have a crisis management strategy

53
Q

two crisis management strategies

A

risk management assessment strategy

decision trees

54
Q

what is a risk management assessment startegy

A

business needs to decide what their risk tolerance and appetite is. Occupational Health and Safety act requires employers to take precautions and make provision for possible risks. insurance company uses this to assess a business’s possible risk.

55
Q

what does a risk assessment include

A
  • who would be in charge of an emergency
  • other critical duties
  • emergency equipment
  • escape routes and procedures
  • workers must be adequately trained
56
Q

what is a decision tree

A

used for risk management , compare different options when making a decision. can see the probability of success for each option. shows the most logical route to follow

57
Q

what is a strategy

A

very specific plan of action formulated to address an issue the business is confronting

58
Q

what are the 4 different aproaches to strategies

A
  • informal (short term uncomplicated)
  • standard ( evacuation plans, induction plans)
  • simple ( simple solution to problem)
  • complex/ multi dimensional ( needs to be analysed implemented with department co ordination, management intervention, long term
59
Q

what are the 5 advantages of strategies

A
  1. gives business direction, defines aims and objectives, management understands long term consequences
  2. ensures consistency in decision making
  3. differentiates managment roles and areas of responsibility
  4. puts business role into perspective
  5. anticipates change in and links environments, business continues to be aligned with strategy
60
Q

what are 4 types of strategies

A
  1. corporate
  2. generic
  3. intensive
  4. other
61
Q

what are the types of corporate strategies

A
  1. growth
  2. decline
  3. corporate combination strategies
62
Q

what is a growth startegy

A

plan of action intended to increase business market share , focuses on resources to seize opportunity for growth , identify emerging trends and opportunities. Can lead to a business redefining business objectives. require increased R&D investments, reallocation of resources , recruiting and retaining skilled employees , more innovation, greater risk tolerance.

63
Q

what is internal growth

A

emphasizing existing products or services
increased customer retention
new product developement
new market and channel developement

64
Q

what is external growth

A

alliances, mergers etc

  • adjust business core objectives
  • existing products and services etc
65
Q

what is a decline strategy

A

after a business experienced difficult time, decline in one area to grow in another , cut losses, withdrawing large amounts of cash from declining demand in industry, or business is sold or terminated

66
Q

harvest strategy

A

decline strategy-limit market exposure by withdrawing large amount of of assets from industry where demand is declining

67
Q

divestiture strategy

A

decline strategy- selling assets or parts of business, cut losses

68
Q

liquidation strategy

A

decline strategy- business is sold or terminated

69
Q

what is a joint venture

A

corporate combination strategy- business and stakeholders come together to achieve business goals and gain competitive advantage by joining resources, each business maintains its own identity, over a period of time i.e one business provides capital other provides skills

70
Q

what is a merger

A

corporate combination strategy: businesses combine by mutual consent to advantage all involved. Involves one country buying most or all of targeted company. can be friendly or hostile.

71
Q

what is a hostile takeover

A

no mutual agreement in merger, acquiring company purchases large stakes in targeted company until it reaches majority ownership

72
Q

what are generic strategies

A
  1. low cost
  2. differentiation
  3. focus
73
Q

what is a low cost strategy

A

gaining competitive advantage with lowest possible cost.

increasing profits by reducing costs
increasing market share of business

need to have sufficient capital to invest in innovation and technology
ability to lower cost of all resources

74
Q

what is a differentiation strategy

A

involves making your product or service different and more attractive than your competitors. new features, brand image etc

75
Q

what is a focus startegy

A

focus on particular market segment to create strong brand loyalty

76
Q

what are intensive strategies

A
  • market penetration
  • product development
  • market development
77
Q

what is a market penetration strategy

A

aimed at giving business a a greater market share, when there are no new markets or products to develop explore etc. achieved through pricing, marketing , innovation iniatives.

78
Q

what is a product development strategy

A

develop new products for existing market or familiar market because aware of existing challenges, have to constantly adapt product until it reaches a point of marketplace acceptance and success

79
Q

what is a market development strategy

A

attempts to develop a new market for existing product or service, requires knowledege of current market to identify gaps in marketplace

80
Q

what are 3 other strategies

A
  1. revise business mission
  2. establish or revise objectives
  3. allocate resources effectively or differently

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