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Lending Skills > Qualitative Frameworks > Flashcards

Qualitative Frameworks Flashcards

1
Q

What does SWOT stand for?

A

Strengths, weaknesses, opportunities, threats

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2
Q

What does PESTE stand for?

A

Political, economical, social, technological, environmental

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3
Q

What are the two axes of the BCG (Boston Consulting Group) matrix?

A

Market share, market growth

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4
Q

What are the characteristics of a cash cow on the BCG matrix?

A

High market share, low market growth

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5
Q

What are the characteristics of a rising star on the BCG matrix?

A

High market share, high market growth

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6
Q

What are the characteristics of a dog on the BCG matrix?

A

Low market share, low market growth

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7
Q

What are the characteristics of a problem child on the BCG matrix?

A

Low market share, high market growth

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8
Q

What are Porter’s 5 Forces?

A
  • Threat of new entry
  • Threat of substitution
  • Buyer power
  • Supplier power
  • Competitive rivalry
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9
Q

Which model would be useful to assess the attractiveness of a sector?

  • Porters Five Forces
  • SWOT
  • PESTE
  • BCG Matrix
A

Porters Five Forces

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10
Q

Which of the following is a strategy for gaining competitive advantage?

  • Price Optimisation
  • Value added
  • Supplier Management
  • Buyer Management
A

Value added

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11
Q

Which one of the following is one of the external forces categorised in PESTE?

  • Suppliers
  • Threat of new entrants
  • Social Developments
  • Emerging Markets
A

Social Developments

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12
Q

Which of the following is a description of the benefit of using the PESTE model?

  • Determines the stage a business is at in its lifecycle
  • Examines the current state of an individual business
  • Focuses on the current position and factors that can change an industries dynamics
  • Assesses the attractiveness of a sector
A

Focuses on the current position and factors that can change an industries dynamics

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13
Q

Which of the following would normally be a key business strategy during the start-up stage of market development?

  • Cost reduction
  • Asset reduction
  • Investment
  • Product/Market refocusing
A

Investment

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14
Q

The PESTE framework is designed to help you:-

  • Access the extent of suppliers bargaining power in a sector
  • Analyse the rivalry between existing businesses within a sector
  • Determine at what stage a specific business is in its life cycle
  • Identify and react to the potential impact of technological developments
A

Identify and react to the potential impact of technological developments

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15
Q

As a business moves through the BCG Matrix it changes from being a consumer of cash to a generator of cash. At which stage does this normally occur?

  • Problem Child to Rising Star
  • Rising Star to Cash Cow
  • Dog to Cash Cow
  • Cash Cow to Problem Child
A

Rising Star to Cash Cow

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16
Q

Which of the following are two of the three generic strategies identified by Porter for gaining competitive advantage?

  • Value added and niche player
  • Cost differentiation and supplier management
  • Niche player and price optimisation
  • Value added and buyer management
A

Value added and niche player

17
Q

A Company has just launched an innovative new product. According to the BCG Matrix, what stage of the business lifecycle has it reached?

  • Dog
  • Cash Cow
  • Rising Star
  • Problem Child
A

Problem Child

18
Q

Which one of the following is the best example of where it is likely to be acceptable to support a business at the Dog stage of the BCG Matrix?

  • Business in slow decline, but market still substantial and ongoing financing likely to be minimal
  • Business in rapid decline and profits under threat however good security cover is held
  • Business has ceased developing new products so it can focus on generating sales from a market that has been in decline for the last few years
  • Business is in decline however various competitors have ceased trading and new management believe there is potential to generate additional sales
A

Business in slow decline, but market still substantial and ongoing financing likely to be minimal

19
Q

Sustaining competitive advantage is a major challenge for any business. Which one of the statements about competitive advantage is NOT true?

  • Fundamental cost advantage may arise through an innovative production process
  • A strategy based solely on meeting needs better and cheaper is highly likely to be successful in the long term
  • For a competitive advantage to be sustainable it must be based on a fundamental advantage in cost or skill
  • Operating in a niche market allows a business to achieve an advantage through being precise in its strategic target
A

A strategy based solely on meeting needs better and cheaper is highly likely to be successful in the long term

20
Q

In which phase of the BCG Matrix will a business primarily expect competition in the shape of new entrants to the market?

  • Dog
  • Cash Cow
  • Rising Star
  • Problem Child
A

Rising Star

21
Q

Which two qualitative frameworks identify and assess the key success factors of leading businesses operating in an industry?

  • BCG Matrix and PESTE
  • BCG Matrix and SWOT
  • PESTE and Porters Five Forces
  • Porters Five Forces and SWOT
A

PESTE and Porters Five Forces

22
Q

According to the BCG Matrix which stage of the business lifecycle has been reached by a business with high market share in a low growth market?

  • Dog
  • Cash Cow
  • Rising Star
  • Problem Child
A

Cash Cow

23
Q

Which one of the following is best used to summarise the findings of all four qualitative frameworks?

  • BCG Matrix
  • PESTE
  • Porters Five Forces
  • SWOT
A

SWOT

24
Q

Which qualitative framework evaluates the power of buyers and sellers in a business sector?

  • BCG Matrix
  • PESTE
  • Porters Five Forces
  • SWOT
A

Porters Five Forces

25
Q

Which is the main reason why you are unlikely to be approached for bank lending by many good businesses that are currently classified as a Problem Child within the BCG Matrix?

  • Few businesses reside within this quadrant
  • Invoice Finance is more applicable to this type of business
  • Demand for external finance does not arise until the business moves into Rising Star quadrant
  • This quadrant holds start-up businesses which will initially be funded with equity
A

This quadrant holds start-up businesses which will initially be funded with equity

26
Q

Which one of the following is the best definition of a competitive advantage?

  • Sell more products than its competitors
  • Make higher profits than its competitors
  • Operate in more markets than its competitors
  • Gain and sustain an advantage over its competitors
A

Gain and sustain an advantage over its competitors

27
Q

Your customer operates in an industry where you believe that the threat of substitute products may be significant. Which model should you use to help you better understand these industry factors?

  • BCG Matrix
  • PESTE
  • Porters Five Forces
  • SWOT
A

Porters Five Forces

28
Q

Which are the two qualitative frameworks that examine the external market?

  • BCG Matrix and PESTE
  • PESTE and Porters Five Forces
  • BCG Matrix and SWOT
  • Porters Five Forces and SWOT
A

PESTE and Porters Five Forces

29
Q

Which one of the following illustrates the difference between the PESTE and Porters Five Forces frameworks?

  • PESTE determines broad industry trends & prospects & Porters Five Forces reviews internal aspects of the industry structure
  • PESTE determines broad industry trends & prospects & Porters Five Forces considers lifecycle of an individual business
  • PESTE assesses the competitive forces within an individual business & Porters Five Forces considers the lifecycle of that business
  • PESTE analysis the forces that can make an industry attractive & Porters Five Forces relates this analysis to an individual business
A

PESTE determines broad industry trends & prospects & Porters Five Forces reviews internal aspects of the industry structure

Lending Skills (7 decks)

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