Key concepts Flashcards
Explain stakeholder mapper
Tradeoff between power and interest, LOW/LOW = Minimal effort
High/Low = Keep satisfied - Often passive but can make presence felt if disturbed
LOW/HIGH = Keep informed = interested in plans but lack power to do much about it
HIGH/HIGH = Key players - most important to business, posess considerable power
What are ohmae’s 5 cs
Factors encouraging development of a global business:
Customer
Competition
Company itself
Currency volatility
Country
What are porters competitive advantage of nations (diamond )
Understanding competitive advantages they have over firms from another country
Strategy (managing finance, competitive advantage within industry or diversify into multiple), structure (national cultural factors that orientate business people towards certain industries), rivalry ( domestic rivalry teaches innovation and competitive success)
Factor conditions - Necessities that enable a business to start. Basic factors include natural resources, climate, labour. Advanced include digital communications and highly educated personnel
Related and supporting industries - Local proximity which makes doing business easier. And development of expertise in related industry e.g. silicon valley tech start ups
Demand conditions - Start locally if successful, demand rises likely to succeed globally, company sets up in different regions
Chance events - Disaster, war, good fortune
Government - Grants, subsidies, export arrangements, shaping demand conditions in home market
Porters 5 forces
Threat of New Entrants:
Description: The risk that new competitors may enter the market and disrupt the existing players.
Impact: If it’s easy for new companies to enter the market, profitability can be reduced due to increased competition.
Barriers: High capital requirements, brand loyalty, economies of scale, and government regulations can deter new entrants.
Bargaining Power of Suppliers:
Description: The ability of suppliers to influence the price of materials or services.
Impact: If suppliers have strong power, they can raise prices or reduce the quality of supplies, hurting profitability.
Factors: The number of suppliers, uniqueness of their products, and the cost of switching between suppliers determine their bargaining power.
Bargaining Power of Buyers:
Description: The ability of customers to influence pricing and product quality.
Impact: When buyers have strong power, they can demand lower prices or higher quality, which reduces profitability for businesses.
Factors: Buyer power increases when there are fewer buyers, products are standardized, or switching costs are low.
Threat of Substitute Products or Services:
Description: The risk that customers can switch to alternative products or services.
Impact: If substitutes are easily available and affordable, companies may face reduced demand and pressure to lower prices.
Key Drivers: Innovation, technological advancements, and customer willingness to switch influence the threat of substitutes.
Industry Rivalry:
Description: The level of competition among existing companies in the market.
Impact: Intense rivalry can lead to price wars, higher marketing expenses, and reduced profitability.
Factors: High competition is often driven by a large number of competitors, slow market growth, and low differentiation between products.
Explain industry life cycles
Intro: Unproven market, few competitors, R&D necessary to attract more customers and outperform competition. With investment and marketing costs, likely low profitability
Growth: Viable market now, gain new entrants, ^comp and strategies, ^market share. Continued R&D investment, ^barriers to entry with patents and brand loyalty.
Shakeout: Crowded market, underperforming comp will be weeded out. R&D will reduce production costs. Markets may be pushed elsewhere e.g. geographically or new segments. Successful companies profits grow
Maturity: Fully established market, competitors will seek to maximise returns through continual refinement of production processes and focusing on customer database. Strong brands left, low R&D and marketing costs.
Decline: Products become commodities, customers are more price sensitive, new alternative technologys become more enticing. Companies squeeze profits from loyal customers, thinning product variations, then exit plans are made.
Explain international trade life cycle
- Product created in high income country with skills that reside within it (USA), export to similar countries (UK, aus, Canada)
- Those in export market (UK etc) begin domestically producing
- Third party export markets e.g. brazil, india
- Third party countries start domestically producing where they have significant cost advantages and start exporting back to originator’s markets where they compete for business and price them out.
What are Kay’s three sources - core competences?
• Competitive architecture - network of relationships within a business
- help create core competences.
- Take time to build.
- Broken down into internal (employee relationships), External (suppliers, customers), network (between businesses)
• Reputation - why customers come back, investors invest etc
- Takes years to create
• Innovative ability - ability to develop new products and services and maintain a competitive advantage.
What are 9ms
Checklist of resources:
• Men and women - availability, cost, culture
• Money - availability of capital, liquidity
• Machinery - physical assets, capacity
• Materials suppliers - innovation, price, quality
• Markets - distribution, how/where we sell, customer relationships
• Management - general competence of board
• Methods - processes used and intellectual property e.g. patents/brands
• Make-up - organisation structure/culture
• management info systems - strategic use of IT
What is the value chain ?
- A way of visualising an organisation
- consisting of primary activities
- work to produce the output and earn profit.
- Underpinned by support activities, which don’t add to margin but enable primary to work efficiently
What are the primary activities ?
• Inbound logistics - Receiving, handling and storing inputs to the production system.
• Operations - Convert resource inputs into a final product or service. Materials/resources (includes people)
• Outbound logistics - storage of product and distribution to customers. Including packaging, warehousing etc
• Marketing and sales - informing customers abt the product, persuading to buy, ads, promo
• Service - installation of products, repairs, upgrades, advice
What are the support activities?
• Procurement - Acquisition of resource inputs for the primary activities. E.g. purchase of materials, equipment
• Human Resources - recruiting, training, development and rewards
• Infrastructure - Organisational structure and location of operations.
• Technology - product design, improving processes and resource utilisation
What is porter’s generic strategies
Business should be either a cost leader or a differentiator. Firms should have a focus/niche
Cost leader - High profit lowest costs
‘Stuck in middle’ - Low profit, higher costs
Differentiator - Highest profit. higher costs
