Ratios Flashcards

Question

Porters five forces

Answer 1

Porters five forces can be used to assess the attractiveness of an industry in terms of long run profitability It determines level of competitiveness and therefore the profitability of industry Threat of new entrants. - how likely new people in market. High/low barriers to entry eg ec of scale, brand loyalty, capital requirements Is it easy customer switching, few existing competitors, high profit margins Threat of substitutes- different industries eg rail bus travel, sub industries mp3/cd, Is price of sub low, can customers switch easily Power of suppliers - do they have enough bargaining power to increase suppliers, what’s the providers of raw mats eg loads or not many, level of employee needed, can it be outsourced Power of customers. - do customers have enough bargaining power to push prices down eg low switching costs, price transparency (high easier) number of customers Competitive rivalry - how intense is competiton among players in market eg large number of existing competitors, growth level of industry, level of fixed costs, high exit barriers, importance of strategy

Answer 2

Critical success factor are a small number of key goals vital to success of the organisation What resources and core competencies do the business have that enable them to achieve the critical success factors

Answer 3

Machines - premise location age of machines Money (capital) - finance av Material (raw) - relations with suppliers, access to key inputs Markets (access to) - existing customers, locals where represented, distribution systems Make up (structure) - attitudes, culture, structure Management (leadership) - quality skills leadership styles of management Men - number skills motivation potential Methods (process) - activities and processes that the business has adopted MIS (big data) - quality of systems, production, RD

Answer 4

Used to assess competencies of an organisation Core competencies = critical activities and processes which enable the firm to meet the critical success factors and therefore achieve a sustainable competitive advantage Reputation - reason that customers are attracted to organisation Competitive architecture - network of relationships within and around a business Innovative ability - ability to develop new products and services Then for competitive architecture- Internal architecture - relationships with employees External architecture- relationships with suppliers customers and intermediaries Network architecture- relationships between collobarating businesses

Answer 5

Value chain analysis can be used to analyse the sequence of business activities which add value to the product or services produced by a company The value is measured by difference between the cost of the activities and sales revenue created by sales to customers Also non value adding activities can be identified and reduced or eliminated

Answer 6

Cost leadership v differentiation Primary activities - those that create value and are directly concerned with providing the product or deceive Primary activities includes: Inbound / outbound logistics Operations Marketing and sales Service Secondary activities- do no create value by themselves but enable the primary activity to take place with maximum efficiency Procurement Tencholofy development Human resource management Infrastructure

Answer 7

Strategic importance and process complexity and dynamics are the axis Low strategic importance and high process complexity - outsource High strategic importance and high process complexity - automate Low process complexity and dynamics and low strategic importance- automate / outsource Low process complexity and high strategic importuned - automate

Answer 8

Analysis of product or services Development Introduction Frowth Maturity Decline

Answer 9

Developed to help conglomerate companies decide where to allocate their resources High market growth high market share is star High market growth low market share is problem child Low market growth low market share is dog Low market growth high market share is cash cow

Answer 10

Can be used to perform a corporate appraisal to evaluate the strategic position of the organisation

Answer 11

Comparison between entity’s ultimate objective and the expected performance from projects

Answer 12

Cost leadership - broad target lower cost Differentiation - broad target differentiation Cost focus - narrow target and lower cost Differentiation focus - narrow target and differentiation Porters suggest sustainable competitive advantage arises from selection of a generic strategy which best fits the organisations environment - porters five forces

Answer 13

Market penetration existing market existing product Product development existing marker new product Market development - new maker existing product Diversification- new market & product

Answer 14

Product Place Promotion Price People Process Physical evidence

Answer 15

% change in demand / % change in price Looks at degree to which demwnd is affected by changes in the selling prince <1 is inelasric = increasing price will increase total Rev even though fewer units sold >elastic = increasing price will cut total Rev and fewer units sold

Answer 16

Entrepreneurial = built around owner then then manager. For small companies, very centralised. Quick decision making, good control But lack of career structure Functional structure = organise business in smaller departments Benefit from ec of scales, efficiency Dis ad = slow to adapt, conflict between functions Divisional structure = sim to functional but aligned with product divisions. Enables product growth, training Dis is loss of control duplication of effort Divisionalised structure = grouping lf activities on basis lf location. Enables geographic growth, clear responsibility Dis is same as divisional structure dis Matrix = departments managers mixed Ads = improved cross functional communication, flexibility Dis = conflict between managers time, functional authority Flexible structure allows firm to adapt to changing circumstances Ads = flexibility costs Did = lack of creation, culture embedded may be hard

Answer 17

Six component parts of an organisation Operating core = basic work Strategic apex = higher management Middle line = linking managers Technistuctire = expects Support = often outsides Ideology = company’s values

Answer 18

Risk register Risk > impact and likelihood > risk management

Answer 19

For managing change: Unfreeze - the trigger eg appointing external consultant Move - means making the change eg presentation to communicate the change Re freeze - means consolidation and reinforcement of new situation eg communicating benefits obtained from the change

Answer 20

Power structures - affect of management and other in authority Structural inertia - existing systems of planning and decision making Group inertia - when changes are inconsistent with the norms of team working and departments Personal barriers - fear of unknown