chapter 3 competition Flashcards

1
Q

brainstorm mind map of porter’s five forces model.

A

Porter’s Five Forces Model
|
|— Threat of New Entrants
| |
| |— Barriers to entry
| |— Economies of scale
| |— Brand recognition
| |— Capital requirements
| |— Access to distribution channels
|
|— Threat of Substitute Products or Services
| |
| |— Price
| |— Quality
| |— Convenience
| |— Customer loyalty
|
|— Bargaining Power of Buyers
| |
| |— Buyer concentration
| |— Buyer bargaining power
| |— Buyer switching costs
| |— Buyer information
|
|— Bargaining Power of Suppliers
| |
| |— Supplier concentration
| |— Supplier bargaining power
| |— Supplier switching costs
| |— Supplier dependence
|
|— Rivalry Among Existing Competitors
|
|— Market share
|— Industry growth rate
|— Industry profitability
|— Diversity of competitors/fragm
|— Exit barriers

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2
Q

what should be strategies for the question mark?

A

if the growth prospects are good then the entity should invest in the product and if the growth prospects are low then should formulate an exit strategy

Differentiation or focus strategy might be used to gain the market share

Invest cash from the product 1 into this product

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3
Q

what should be strategies for the DOG Product?

A

Use the work NPV ROI can be used instead of positive cashflows

If the product is still generating positive cashflows then entity should keep the product untill its cashflows are no longer positive

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4
Q

what should be the strategies for Star Product?

A

Stars are the cash cows of the future.

An entity should market a star product aggressively, to maintain or increase market share.

A large continuing investment in new equipment and R&D will probably be needed.

Stars should at some stage generate enough cash to be self-sustaining. Until then, the cash from cash cows can finance their development

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5
Q

what should be the strategy for cashcow products?

A

Defend and maintain market share.

Spending on innovation (R&D) should be limited.

The cash generated by a cash cow can be used to develop other products in the portfolio.

Market penetration, although difficult to implement in a low-growth market, should be used when expansion is required as it is the least risky approach. For example, this can be obtained through cost leadership and acquisition of competitors, etc.

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6
Q

Outline of BCG matrix

A

BCG Matrix

Stars
    High market share
    High market growth rate
    Generate high revenue
    Require high investment
    Have strong competitive position
    Examples: iPhone, Tesla

Question Marks
    Low market share
    High market growth rate
    Have potential to become stars or dogs
    Require high investment to grow
    Have uncertain future prospects
    Examples: TikTok, Netflix

Cash Cows
    High market share
    Low market growth rate
    Generate high cash flow
    Require low investment to maintain
    Have stable and loyal customer base
    Examples: Coca-Cola, Microsoft Office

Dogs
    Low market share
    Low market growth rate
    Generate low revenue
    Require low investment to sustain
    Have weak competitive position
    Examples: Kodak, Blackberry
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