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CIMA E3 > Chapter 4 > Flashcards

Chapter 4 Flashcards

1
Q

What is the purpose of environmental analysis?

A

Identification of threats and opportunities
Assessment of competition
Identification of strengths and weaknesses
Meeting stakeholder needs

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2
Q

Why are business becoming more volatile?

A

Changing technology
Globalisation
Unpredictable demand
Development of high growth economied
Geopolitical impact
Demographics
Customer empowerment
Social change
Digital technology
Automation
Sustainability

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3
Q

What does PESTEL analyse?

A

Analyses general macro-environment
Good at identifying if a market is growing/declining

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4
Q

What is a macro environment?

A

external forces within an economy

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5
Q

What does PESTEL stand for?

A

Political
Economy
Social
Technological
Environmental
Legal

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6
Q

What are Porter’s 5 forces?

A

Threat of new entrants
Bargaining power of buyers
Bargaining power of suppliers
Threat of substitutes
Competitive rivalry

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7
Q

What are the limitations of Porter’s 5 forces?

A

Dynamic Industries - once analysis been done the industry has likely moved on
Collaboration
Outside-in vs inside-out
NFP - focuses on industry profitability
Role of government

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8
Q

What are the four stages of the product life cycle?

A

Introduction
Growth
Maturity
Decline

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9
Q

What happens in the introduction phase?

A

New to market
High launch and marketing costs
Price elasticity of demand influences pricing strategy

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10
Q

What happens in the growth phase?

A

Sales Increases
Markets grow rapidly
Demand becomes more sophisticated
Profitable and cash flows increase

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11
Q

What happens in the maturity phase?

A

Growth slows
High levels of competition
Desirable to have high market share

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12
Q

What happens in the decline phase?

A

Number of customers fall
Competition reduces

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13
Q

Why is the product life cycle model useful?

A

Improved strategic planning
Improved budgeting
Proactive approach

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14
Q

What is a competitor analysis?

A

Set of activities which examines the comparative position of competing enterprises within a given strategic sector

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15
Q

What are the 3 purposes of a competitor analysis according to Grant?

A

Forecast competitors future strategies and decisions
Predict customer likely reactions to firms initiatives
Determine how customer behaviour can be influenced

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16
Q

What is the framework for a competitor analysis?

A
  1. Identify competitors
  2. Analyse competitors
  3. Develop competitor response profiles
17
Q

What are some types of competitors?

A

Brand
Form
Industry
Generic: Compete for same income

18
Q

What are the four responses to a competitor analysis?

A

Laid back - dont respond
Selective - react to attack in certain markets
Stochastic - no predictable pattern exists
Tiger - responds aggressively

19
Q

Why would we enter a foreign market?

A

Pressure
Saturated
Opportunities
Trade barriers coming down

20
Q

What are the risks that arise from global markets?

A

Marketing mix adaptations
Varying cost structures
Exchange rate volatility
Political involvement
Cultures vary
Different competitive levels
Different economic situations
Political situations

21
Q

What are the benefits of entering global markets?

A

Economies of scale
Challenge to traditional home culture
Market development
Political power
Management opportunity
Cheaper sources of raw materials
Risk reduction
Political sponsorship

22
Q

What are Porter’s four key factors that determine attractiveness of difference countries to a particular industry?

A
  1. Demand conditions
  2. Related & Supporting industry
  3. Factor conditions
  4. Strategy, Structure & rivalry
23
Q

What are factor conditions when talking about Porter’s four key factors?

A

Initial advantage
Human, physical, knowledge, capital and infrastructure
Can use national identity as basis for brand

24
Q

What are demand conditions when talking about Porter’s four key factors?

A

Demanding consumers set high standards

25
Q

What is related and supporting industry when talking about Porter’s four key factors?

A

Advantage conveyed by availability of superior supplier industries

26
Q

What is strategy, structure & rivalry when talking about Porter’s four key factors?

A

Different nations have different approaches to business in terms of structure
Domestic rivalry keep organisation ‘lean and mean’
Governments can promote this rivalry via policy

27
Q

What are the criticisms of Porter’s four key factors?

A

Only applies to developed countries
Does not adequately address role of multi national corporations
Focused on manufacturers, banks and management consultancy firms
Not all firms from given country are successful

28
Q
A

CIMA E3 (4 decks)

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