Development and Implementing Strategy Flashcards
In developing the best strategy to meet its goals the entity must look at
the Overall Macro Environment in which it operates
what does a firm use to assist in developing appropriate Strategic plans
SWOT Analysis
Strength
Weaknesses
Opportunity
Threats
Internal Factors of SWOT examples (Strengths (if met) and Weaknesses (if NOT met))
- Innovation of Product Line
- Competence of Management
- Core Competencies
- Influence of High Level Managers
- Capital Improvements
- Leadership in Research & Development
- Cohesiveness of the Values of the Organization
- Marketing Effectiveness
- Effectiveness of Communication
- Clarity of the strategic Mission
Categories of External Factors of SWOT (Opportunities and Threats)
Industry - competitive environment and overall industry
Firm - competitive environment
Examples of external factors that effect overall industry and competitive environment of the industry
- The Economy
- Regulation & Laws
- Demographic & Population
- Technological Advances and Existing Technology
- Social Values
- Political Issues
Examples of external factors that effect the competitive environment of the firm
Porter’s 5 Forces (BCS BCS)
- Barriers to Market Entry
- Market Competitiveness
- Existence of Substitute Products
- Bargaining Power of the Customers
- Bargaining Power of the Suppliers
General Rule of Porter’s 5 Forces
As competition increases, Profits decrease
Barriers to Market Entry
Lower the Barrier = More competitive
- Perfect competition
- Monopolistic Competition
Higher the barrier = less competitive
- Oligopoly
- Monopoly
Factors that increase the barrier (Decrease competition)
- Government Regulation
- Supplier Access
- High up Front Capital Requirement
- Preexisting Customer Preference and Loyalties to Old Suppliers
- Economies of Scale
- Learning Curve Issue
- Other Up Front competitive Cost Disadvantages (such as Patents, trade barriers, etc)
Market competitiveness examples (Most Significant factor of the 5 forces) of Rival Firms
a) Respond to Change (if easy to do then increases competition)
b) Advertising - If Rivals ARE willing to spend a LOT of money (increases competition)
c) Research and Development (if High then more competitive)
d) Alliance of Rival firms and Suppliers - if HIGH then more competitive market
Existence of Substitute Products
When Substitute product availability is High
Elasticity is High
Prices go Down
Profit goes down
If CLOSE substitute products exist
Buyers may have a LIMIT on Maximum price they are willing to pay
Which will Directly effect profits
Bargaining power of the Customer
IF HIGH then
Elasticity is High
Profits are Down
Bargaining Power of Suppliers
If High then
Cost are High
Profits are Down
What types of strategies can a firm take to find success in a competitive market?
Cost Leadership and Differentiation Advantage
