Chapter 7

Question 1

The 5 critical success factors

Answer 1

• Encouraging creativity and innovation
• Gaining employee commitment
• Providing value - quality products at a reasonable price
• Meeting and exceeding customers’ needs
• Achieving financial performance

Question 2

SWOT analysis

Answer 2

A SWOT analysis looks at the Strengths and Weaknesses of the company itself and the Opportunities and Threats for the company in its external environment

Question 3

Porter’s five forces model

Answer 3

A model that focuses on the five forces that shape competition within an industry

Question 4

Industry life cycle model

Answer 4

A useful tool for analyzing the effects of an industry’s evolution on competitive forces

Question 5

What are Porter’s five forces?

Answer 5

1. The risk of new entry by potential competitors
2. The degree of rivalry among established companies within and industry
3. The bargaining power of buyers
4. The bargaining power of suppliers
5. The threat of substitute products

Question 6

What are the five stages of industry evolution?

Answer 6

1. Embryonic
2. Growth
3. Shakeout
4. Mature
5. Declining

Question 7

Vision statement

Answer 7

A clear, concise picture of the company’s future direction in terms of its values and purpose that is used to guide and inspire

Question 8

Mission statement

Answer 8

A clear, concise articulation of how the company intends to achieve its vision - how it is different from its competition and the keys to its success

Question 9

Pro forma financial statements

Answer 9

Projected financial statements of future values