Revision Flashcards
What are the strengths and limitations of Porters Five Forces framework?
Strengths:
- Provides a thorough examination of the competitive dynamics within an industry
- Can develop informed strategies to enhance their competitive position
- Flexible tool for strategic analysis
- Helps businesses to understand who holds power
Weaknesses:
- Static: may not account for rapid changes
- Oversimplification: oversimplifies complex competitive interactions
- does not reflect real world scenarios where there are many influences (behavioral factors and imperfect formation
- May overlook significant external influences
Discuss 4 types of change with examples
Adaptation: Upgrading software systems (Slow, minimal disruption)
Reconstruction: Restructure managerial hierarchy (Rapid, noticeable)
Revolution: Complex digital transformation (Rapid, high impact)
Evolution: Continuous integration of feedback (slow )
How to act on the different quadrants of the BCG Matrix?
Stars:
Market share is high
Growth is high
Require investment to maintain position
Cash cow:
Market share is high
Growth is low
Generates more cash so ideal to fund other segments
Question mark (problem child)
Market share is low
Growth is high
Requires resources to increase market share. need to decide whether to invest and change to a star or divest
Dog
Market share is low
Growth is low
Do not generate enough to sustain themselves. Divest
Using the Ansoff Matrix assess the strategic options available for an organization. Recommend most appropriate growth strategy
The Ansoff Matrix is a strategic planning tool that helps businesses evaluate their growth options based on existing or new products and markets. For a growing retail company, the four primary growth strategies outlined in the Ansoff Matrix are Market Penetration, Market Development, Product Development, and Diversification. Each strategy presents unique benefits and risks.
Market Penetration
Description: This strategy focuses on increasing sales of existing products within the current market. It aims to gain a larger market share by attracting more customers or encouraging existing customers to buy more.
Benefits:
Lower Risk
Cost Efficiency:
Risks:
Market Saturation
Competitive Pressure
Market Development
Description: This strategy involves selling existing products in new markets. This could mean targeting new geographical areas or different customer segments.
Benefits:
Growth Potential
Diversification of Customer Base
Risks:
Cultural Misalignment:
High Investment Costs:
Product Development
Description: This strategy focuses on developing new products for existing markets. It leverages the company’s understanding of its current customer base while introducing innovations.
Benefits:
Customer Loyalty and Retention
Competitive Advantage:
Risks:
Development Costs
Market Acceptance Risks
Diversification
Description: This strategy entails entering new markets with new products. It is often considered the riskiest option due to the lack of familiarity with both the product and market.
Benefits:
Risk Reduction through Variety
New Revenue Streams:
Risks:
High Uncertainty and Investment Risk:
Resource Drainage
For a growing retail company, the most appropriate growth strategy often depends on its current market position, resources, and risk tolerance. Generally, Market Penetration is advisable as a first step due to its lower risk profile and potential for quick returns. However, if the company has strong capabilities in innovation and market research, pursuing Product Development, followed by careful exploration of Market Development, could also yield significant benefits. Ultimately, while diversification offers substantial growth opportunities, it should be approached cautiously due to its inherent risks.
Explain the concept of Blue Ocean Strategy and how it differs from traditional competitive strategies
It is a strategy that emphasizes the creation of new and uncontested market spaces (blue ocean) where competition is minimal and irrelevant
Fundamental aim is to foster innovation, which involves developing unique products
Key concepts is red ocean and value innovation
Principles of blue ocean strategy:
- reconstruct market boundaries
- build execution into strategies
- align value, profit, people and propositions
It is a paradigm shift from traditional competitive strategies (outperforming rivals in existing markets)
Focuses on creating new spaces where competition is irrelevant
Explain the concept of international diversity and key drivers that push for internalization.
Discuss various modes of entry
Risks and challenges
International strategy refers to how businesses operate and compete in markets outside their domestic boundaries
Key drivers:
Market drivers: Seek new customers/markets
Cost drivers: economies of scale, access to cheaper inputs
Competitive drivers: Countering international competitors
Government drivers: Influence of trade policies regulations
Modes of entry:
Exporting
Licensing and franchising
Joint ventures
Wholly owned subsidiaries
Risks/challenges:
Cultural risks: misunderstanding local shit
Political risks: instability, govt policies
Currency risks: exchange rate fluctuations
Operational risks: supply change disruptions, logistic challenges
What are the key components of the PESTEL framework and how it help organizations analyze external factors
Political: influence of government policies, regulations and political stability
Economic: overall economic environment in which a business operates
Social: Involves cultural and demographic aspects of the external environment
Technological: impact of technological advancements
Environmental : Ecological and environmental aspects
Legal: Laws and regulations govern business practices within a market.
Explain 3 different types of business structures, high lighting key features , pros and cons for each structure
Functional
Divisional
Matrix
Project
Multinational
Functional:
Pros: Specialization, clear hierarchy, efficiency
Cons: Silo mentality, limited flexibility, slow decision making
Divisional:
Pros: focus on specific markets, enhanced accountability, resource allocation
Cons: Duplication of efforts, coordination challenges, resources competition
Matrix:
Pros: Flexibility, adaptability, cross functional collaboration, decentralized decision making
Cons: Complex reporting, coordination challenges, management overheads
Evaluate the effectiveness of force field analysis tool in managing organizational change.
It provides an overview of the balance between forces driving change in a business and the forces resisting change
It is effective in the decision making process related to change managements. Provides a clear visual representation of factors influencing desired outcomes
Pros:
enables leaders to make informed decisions whether to change
assists organizations in strategic planning by identifying what needs to be strengthened
involves inputs from multiple sources
