Chapter 9 Flashcards
What is the competitive advantage?
an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and services that justifies higher prices
What are Porter’s 5 forces for new entrants and buyers?
1) Threats of new entrants
2) Power of suppliers
3) Threat of subsitutes
4) Power of buyer’s
5) Competitive rivarly
What is porter’s take on threats to new entrants?
How easy it is for new companies to enter a market
Depends on no. of barriers they face (economy of scale, brands, initial cap requirements, restricted access, government policy)
What is porter’s take on power of buyers?
Effected by: No of buyers in market, proportion of purchases made by customers, quality and knowledge of customer
what is porter’s take on power suppliers?
Switching costs, number of suppliers, specialists or differentiated the product is
What is porter’s take in threat of subsitutes?
another product can be used to satisfy customer needs
What is competitive rivarly?
Number and strength of competitors
Rate of growth (expansion decreasing and stable increase)
high fixed costs company cuts costs
What are generic strategies?
Used to consider different approaches to acheiving a sustainable competitive adv. ( cost leadership and differentiation)
What is cost leadership?
Aim is to produce a standard product or a standard service and provide it at the lowest cost in the industry
Produce same quality just less to make
What does a lower selling price cause?
Barrier to entry
What if a company sells at the same price?
Higher profit
What if a defence against price works?
Bigger margin when price reduces
What is it when company’s differentiate?
Higher quality, more service features, better service, better brand
what happens if a company differentiates?
Higher selling price, customer loyalty, give something different
What is porter’s value chain?
Helps an organisation understand it’s strategic capabilities by identifying and analysing value adding activities
What are the 4 support activities?
1) Firm infrastructure
2) Technology development
3) Human resource management
4) Procurement
What are the 5 primary activities?
1) Inbound logistics
2) Operations
3) outbound logistics
4) marketing and sales
5) service
What are inbound logistics?
All the activities concerned with the reciepts, storage and distribution of the product inputs e.g., of cars - stored in a way they are not damaged
What are operations?
Turns the inputs into outputs e.g., assembly of the vehicles
What are outbound logistics?
Conerns the storage and delivery of the product to customers
What are marketing and sales?
Activities conerned with marketing the customers aware of the product
What is service?
After sale - installation, training, after sale care
What are support activities?
Process of acquiring resources of all other aspects of the value chain
Buying side, dealing with suppliers e.g., selecting high quality suppliers, building relationships
What is human resource management?
Recruitment, training, managing, anything to do with staff
What is technology development?
Technology involved in product itself or through chain e.g., music system, manufacturing technology
What is firm infrastructure?
Finance, legal, quality, control, culture, board
What is the corporate analysis?
SWOT - Stengths, weaknesses, opportunity, threats
What are threats focussing on weaknesses?
normally top priority, not fully automating production line (weakness), increase in min wage (threat)
What is the strategy with threats focussing on weaknesses?
Increase automation
What are threats focussing on weaknesses?
Good relationship with current government (strength), election uncertainty (threat)
What is the strategy with threats focussing on weaknesses?
assess/build relationships with opposition
What are the opportunity focussing on strengths?
good at product development delivery (strength)
Opportunity to develop new product
What is the strategy with opportunity focussing on strength?
get product to market before competitors
What is opportunity focussing on weakness?
Opportunity to enter new market
No rights to enter new market (weakness)
What is the strategy with opportunity focussing on weakness?
Develop local joint venture
