Chapter 4 Flashcards
What is the purpose of environmental analysis?
Identification of threats and opportunities
Assessment of competition
Identification of strengths and weaknesses
Meeting stakeholder needs
Why are business becoming more volatile?
Changing technology
Globalisation
Unpredictable demand
Development of high growth economied
Geopolitical impact
Demographics
Customer empowerment
Social change
Digital technology
Automation
Sustainability
What does PESTEL analyse?
Analyses general macro-environment
Good at identifying if a market is growing/declining
What is a macro environment?
external forces within an economy
What does PESTEL stand for?
Political
Economy
Social
Technological
Environmental
Legal
What are Porter’s 5 forces?
Threat of new entrants
Bargaining power of buyers
Bargaining power of suppliers
Threat of substitutes
Competitive rivalry
What are the limitations of Porter’s 5 forces?
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
What are the four stages of the product life cycle?
Introduction
Growth
Maturity
Decline
What happens in the introduction phase?
New to market
High launch and marketing costs
Price elasticity of demand influences pricing strategy
What happens in the growth phase?
Sales Increases
Markets grow rapidly
Demand becomes more sophisticated
Profitable and cash flows increase
What happens in the maturity phase?
Growth slows
High levels of competition
Desirable to have high market share
What happens in the decline phase?
Number of customers fall
Competition reduces
Why is the product life cycle model useful?
Improved strategic planning
Improved budgeting
Proactive approach
What is a competitor analysis?
Set of activities which examines the comparative position of competing enterprises within a given strategic sector
What are the 3 purposes of a competitor analysis according to Grant?
Forecast competitors future strategies and decisions
Predict customer likely reactions to firms initiatives
Determine how customer behaviour can be influenced
What is the framework for a competitor analysis?
- Identify competitors
- Analyse competitors
- Develop competitor response profiles
What are some types of competitors?
Brand
Form
Industry
Generic: Compete for same income
What are the four responses to a competitor analysis?
Laid back - dont respond
Selective - react to attack in certain markets
Stochastic - no predictable pattern exists
Tiger - responds aggressively
Why would we enter a foreign market?
Pressure
Saturated
Opportunities
Trade barriers coming down
What are the risks that arise from global markets?
Marketing mix adaptations
Varying cost structures
Exchange rate volatility
Political involvement
Cultures vary
Different competitive levels
Different economic situations
Political situations
What are the benefits of entering global markets?
Economies of scale
Challenge to traditional home culture
Market development
Political power
Management opportunity
Cheaper sources of raw materials
Risk reduction
Political sponsorship
What are Porter’s four key factors that determine attractiveness of difference countries to a particular industry?
- Demand conditions
- Related & Supporting industry
- Factor conditions
- Strategy, Structure & rivalry
What are factor conditions when talking about Porter’s four key factors?
Initial advantage
Human, physical, knowledge, capital and infrastructure
Can use national identity as basis for brand
What are demand conditions when talking about Porter’s four key factors?
Demanding consumers set high standards
