Chapter 7: Strategic Planning Part 2

Question 1

Swot Analysis

definition

Answer 1

• Used to gather and categorise information about business opportunity, new market, strategy formulation and change
• Evaluate internal and external environment
• SW will determine how well a business can respond to OT

Question 2

SWOT:

Strength

Answer 2

• Internal characteristics of the business that give it advantage over the others and contribute to business success

Question 3

SWOT:

Weakness

Answer 3

• Internal characteristic of the business that puts it at a disadvantage over the others and cause barrier to business success

Question 4

SWOT:

Opportunities

Answer 4

• External condition, events or change that could create opportunities for a business to succeed and grow

Question 5

SWOT:

Threats

Answer 5

• External elements in the environment that could cause trouble for the business or project

Question 6

PEST

definition

Answer 6

• Used to analyse the marco environment of the business

- Each factor is used to analyse their impact on the business

Question 7

Porter’s 5 Forces

definition

Answer 7

• Explains an industry’s level of competition

- The strength of the forces determines how easy it is to compete in a market

Question 8

Porter’s 5 Forces:

Threats of New Entrants

Answer 8

• How easy it is for new business to enter the industry
• If it is easy to enter the industry, competition will increase
• If IP of product is not protected or supplies are easy to obtain, it makes it easier for competitors to sell the same products
• Time and cost of entry

Question 9

Porter’s 5 Forces:

Bargaining Power of Supplier

Answer 9

• Amount of pressure suppliers can put on the business to increase the price of supplies, affecting CoP and profitability
• Number of suppliers
• Uniqueness of service

Question 10

Porter’s 5 Forces:

Bargaining Power of Buyer

Answer 10

• Amount of pressure that buyers can put on business to reduce price
• Strongest effect on pricing when they are organised and collectively account for much of the product’s income
• Number of buyers
• Cost of changing

Question 11

Porter’s 5 Forces:

Threats of Substitutes

Answer 11

• Products or services in another industry that customers can go to as it provides similar benefits
• Number of substitutes
• Cost of changing

Question 12

Porter’s 5 Forces:

Level of Competition

Answer 12

• Intensity of competition between existing firms in the industry
• Highly competitive industry would have low earnings as cost of competition is high
• Number of competitors