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Question 1

what is SWOT analysis?

Answer 1

Strength
Weaknesses
Opportunities
Threats

Question 2

explain the SWOT square.

Answer 2

weaknesses should be converted into strengths.
strengths should be matched to opportunities.
threats should be converted to opportunities.

Question 3

give porters 3 generic strategies to gain SCA.

Answer 3

• overall cost leadership
• differentiator
• focus / niche

Question 4

explain the overall cost leadership strategy.

Answer 4

strategy seeks to achieve position of lowest cost producer in industry. price main weapon in competing

Question 5

how can the cost leadership strategy be achieved?

Answer 5

• economies of scale
• latest technology
• cheap labour / relocate to cheaper countries
• learning curve effects

Question 6

how can the differentiator strategy be achieved?

Answer 6

seeks to gain competitive advantage through the characteristics of product eg. tangible or intangible qualities the customer will pay extra for

Question 7

how can the focus / niche strategy be achieved?

Answer 7

concentrate attention on particular segment, firm can then be cost leader or differentiator

Question 8

explain ansoffs matrix.

Answer 8

matrix with four quadrants, representing diff combo of products and markets. used to determine business’s product and market growth strategy.

Question 9

what market growth strategy is recommended for exisiting markets and existing products according to ansoffs matrix?

Answer 9

market penetration.
- small cuts
- larger advertising budget
- small improvements to subs
- buy rivals

Question 10

what market growth strategy is recommended for exisiting markets and new products according to ansoffs matrix?

Answer 10

product development.
- large r&d budget
- acquire rights to make other firms products
- buy in products & rebadge
- joint developments
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Question 11

what market growth strategy is recommended for new markets and existing products according to ansoffs matrix?

Answer 11

market development.
- new customer segments
- industrial vs consumer markets
- new regions of country
- foreign markets

Question 12

what market growth strategy is recommended for new markets and new products according to ansoffs matrix?

Answer 12

diversification.
- related diversification (vertical)
- unrelated diversification (conglomerate)

Question 13

give three advantages of vertical integration.

Answer 13

• economies from combining operations & avoiding the market
• access to knowledge
• reduce 5 forces

Question 14

give four disadvantages of vertical integration.

Answer 14

• increased operating gearing
• capital requirements
• reduced flexibility
• differing managerial requirements

Question 15

give four advantages of conglomerate diversification.

Answer 15

• spread risk
• ability to grow quickly
• use surplus cash
• stretch the brand & reputation

Question 16

give four disadvantages of conglomerate diversification.

Answer 16

• no synergies
• no additional benefit for SHs
• lack of common identity
• fall in one business could threaten the rest