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SBA > L6 SWOT and strategic options > Flashcards

L6 SWOT and strategic options Flashcards

1
Q

Models for pulling together all your analysis?

A

SWOT (AKA CORPORATE APPRAISAL)

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2
Q

What does the SWOT (CORPORATE APPRAISAL) diagram do?

A

a study undertaken by an organization to identify its internal strengths and weaknesses, as well as its external opportunities and threats.

IT TAKES ALL THE ANALYSIS DONE AND HELPS YOU COME UP WITH A STRATEGY.

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3
Q

What does the SWOT diagram look like?

A
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4
Q

How do you use the swot diagram?

A

From the internal analysis, identify the strengths and weakness and put them in the box.

From the external analysis, identify the opportunities and threats and also place them in their relevant boxes.

SWOT diagrams can be especially useful when trying to decide whether or not to embark on a certain strategy by visualizing the pros and cons.

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5
Q

What would internal analysis include?

A

Competences and value chain analysis.

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6
Q

What would extrernal analysis include?

A

SPENT and Porters 5 forces

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7
Q

What is the TOWS matrix?

Why is it different from SWOT?

A

TOWS emphasises the external environment (so looking at opportunities and threats) and therefore has them on the y-axis, and looks at how the interact with the stre

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8
Q

Problems with SWOT?

A
  1. There is no prioritisation. Doesn’t tell you which s/w or o/t are most important.
  2. Bias. Especially with S/W
  3. Easy to miss isues. (bounded rationalle)
    4.
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9
Q

benefit of SWOT?

A

Benefit is it pulls everything together that you have looked at in external and internal analysis.

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10
Q

how to answer swot Q?

A
  • Heading for strengths, weaknesses, opportunities and threats.
  • Some could go under diff headings, just justify your points.
  • 1 mark per valid point.
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11
Q

KEY for answering SWOT questions?

A

YOU NEED TO JUSTIFY WHY ITS UNDER EACH HEADING.

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12
Q

Models for using SWOT and using this to generate strategies for our business?

A
  1. -TOWS
  2. -Gap analysis
  3. -Generic strategies
  4. -Bowman’s clock
  5. -Ansoff

note all these models are essentially lists, and ideas about what you could do in your business.

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13
Q

What is the TOWS model?

A

This uses SWOT as a way to come up with strategies.

It looks at the opportunities/threats (O/T) as possible strategies and then assesses them using the strengths/weaknesses from the SWOT DIAGRAM.

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14
Q

what does the tows diagram look at?

A
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15
Q

What is gap analysis?

A

Gap analyis tries to formally get you to figure out the gap between where you want to be in an ideal world, and where you will end up if you don’t enact strategies

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16
Q

what does the gap analysis diagram look like?

A

Will have profit on y axis and time on x axis.

You can then have two lines showing the outcomes of where you want for profits to be and the profits you make if you dont do anything and you keep going as you are going.

THE DIAGRAM WILL SHOW THE GAP IN PROFITS BETWEEN NOT DOING ANTHING AND THE DESIRED STATE YOU WANT TO BE AT.

17
Q

What are the three ways the gap analysis suggests you can close the gap in the desired state and where you are without performing a strategy? (the gap on the graph)

What is key for these strategies?

A

1.Efficiencies – look for efficiencies you can make in the production process. E.g. id waste and eliminate it. This may close some of the gap. Don’t do anything differently just look to be more efficient.

2.Expansion – This means to do the same thing as before, but look for ways to sell more of them. Try and expand sales and production. E.g. enter new geographical market.

3.Diverisfication – This involves moving in to something new completely. i.e. New markets and new products. This is high risk but may be the only way you can get to the desired state.

NOTE the above strategies must be done in order!! (in the least risk to most risky way) (i.e. 1, 2 and then 3.) go through each till you hit the desired state.

18
Q

Benefits and drawbacks to GAP analysis?

A

Benefits:

-Deals with low risk things first

Drawbacks:

-Lots of estimates regarding your desired states and strategies to close gap, so good chance it could be wrong.

19
Q

What is porters generic strategies?

A

Porter suggested with his generic strategies is that the goal of the business is to gain a competitive advantage and as a result there is only 3 strategies that will let you beat your competitors.

20
Q

What are the three strategies porter suggested to beat your competitors?

Therefore, what does the diagram look like?

A
  1. cost leadership
  2. cost focus
  3. differentiation (this breaks in to two).
    • Differentiation
    • Differentiation focus.
21
Q

What is the cost leadership strategies of porters generic strategies?

A

This is all about leading on the cost front, and being the lowest cost producer in your market whilst still having a product as good as your competitiors.

22
Q

Two ways to get competitive advantage from cost leadership strategy from porters generic strategies?

A
  1. lower prices as result of lower costs and therefore increase sales volume.
  2. Set price same as competitors and recieve larger profit per unit as have lower costs which can be used to invest in order to grow.
23
Q

How can you achieve cost leadership?

(porters generic strategies)

A

Can achieve through:

  • Economies of scale
  • Latest technology
  • Productivity improvements
  • Reduced overheads
  • Efficient use of the value chain
24
Q

Problem with cost leadership from undercut pricing?

A
  • Problem with this is there wil come a point where competitors will have to offer a lower price too in order to survive. This will result in a price war.
25
Q

Solution to the possible problem of a price war resulting from the cost leadership strategy?

A

If you are a cost leader you may then choose to sell at the same price as your rivals. So you make product more cheap and sell at comparable price and therefore make more profit per unit which you can use for investment in the form of new stores, advertisign etc.

26
Q

e.g. of cost leader?

A

Aldi

27
Q

Cons of the cost leadership strategy?

A
  1. Pin success on being cheaper than rivals. If someone’s manages to be cheaper than you you have no selling point and you will lose customers to someoen doing it cheapre. Technology also increases the risk of this.
  2. You also assume that products may be poor quality if it is cheaper. This can also put customers off.
28
Q

What is porters diversification generic strategy?

A

Differentiation suggests that you find a way of making your product actually better or perceived to be better than its rivals.

29
Q

How can you achieve differentiation?

A
  1. Improved image/reputation/brand
  2. Additional features (R&D/design)
  3. Value added
30
Q

What does differentiation usually allow for and why?

A

Differentiation normally allows premium pricing so you can make more profit on unit than your rivals.

As a result of making your product stand out due to brand or it being better

31
Q

Risks of differentiation?

A
  1. Rivals may just copy the extra features you put in place and may even go beyond yours. So its possible the likes of apple could be surpassed by samsung who copy them and then go beyond then
  2. Diff also has high costs due to brand awareness etc
  3. Also very risky thing to do if the market suffers. People may not be able to pay the prices you charge for your better more expensive goods. So you may be more exposed to market influences.
32
Q

What is the focus strategies of the porters generic strategies?

A

This looks at cost focus and differentiation focus.

Focus suggests that you target a small section of the market with products tailored to their needs.

33
Q

What are the two ways of performing the cost focus strategy? Explain.

A

1.Cost focus.

  • Here a business seeks a lower-cost advantage in just one or a small number of market segments.
  • This is the idea you target a niche section of the market but you bulk buy products for them. So you try and provide products that are tailored to them but that you can offer very cheaply. E.g. Claire’s. It targets young girls/teenagers and try to sell jewelry to this small subset of the population, by buying them in bulk and selling cheaply by passing on the cost savings.

2.Differentiatied focus.

  • This is when you tailor your product and services to the group they are trying to focus. E.g. Saga. Sell a range of goods and service for well off and old. Such as travel insurance, holidays etc. But the products/services they offer are tailored to this group of people. As they are tailored to this group they are willing to pay more as it is exactly what they wanted. So companies can charge a lot more for their product.
34
Q

How do you achieve the focus strategies (differentiation and cost)?

A

In order to perform this strategy you need to understand your niche in the market. So you need to understand your market well through market research to find out what the product is they want.

35
Q

Benefit of the focus strategies?

A

If you only target a small segment of the market the big players aren’t likely to try and force you out the market. They may be more willing to keep you in the market.

36
Q

Problems of the focus strategies from porters generic strategies?

A
  1. Market segment you focus may be small. So you may not be able to do anything in bulk so costs would be high
  2. Also face a chance that the segment shrinks or is too small. i.e. if economy fails or change you may have less to target and therefore not enough to target and make a profit.
  3. Other firms may also enter the market after you prove you can be successful by targeting a specific niche market. So not guaranteed you can keep the niche.
37
Q

What did porter describe you as if you are not one of the generic strategies and what is the problem with this?

A

Porter said if you are not one of the three strategies you are known as “stuck in the middle” i.e. you cannot do more than one at once. You have to adopt one of the three or you will find it almost impossible to compete. And if you are stuck in the middle you might be okay for a while but after that someone will come in and steal market share from you as you don’t have a unique selling point.

38
Q

What is bowmans clock? what is the difference to porters generic strategies?

which does the diagram show 8?

A

Says there are 5 strategies you can use. Differs to bowman as Bowman tried to categories the different strategies by the perceived value of the product to the customer, compared to the price charged for the product.

6,7, and 8 unrelasitic as other companies will sell the same good for lower price so cannot survive.

39
Q

which numbers are the same as porters generic strategies?

Remember bowmans clock is an extension of porters generic strategies.

A
  1. “cost leadership” - same product as competitors but low price as result of low costs.

4 & 5 same as differentiation parts.

SBA (6 decks)

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