Strategy 2 Flashcards
What does marketing strategy involve
- Analysis = market research using desk or field research
- Segmentation = identify which customers to supply
- Implementation = develop an appropriate marketing mix
What things would you do for market research
Want to identify and anticipate customers needs
Stability if buying cycles
Product life cycles
Homogeneity of consumers
Technological infrastructure
What ways can the market be segmented
Industrial = selling to other businesses
- geographic
- company size and type
- purchasing characteristics
Consumer segmentation = selling to end consumer
- geographies
- demographic
- purchasing characteristics
- purchasing motivation
What is the marketing mix
Controlling variables that can be adapted for the market
For a product (4Ps)
- Product = brand, quality, USP
- Promotion = advertising, sales promotion
- Place = distribution; direct or indirect
- Price = different pricing strategies
For a service industry (3Ps)
- People = attitude, professionalism and knowledge
- Process = efficiency of service
- Physical evidence = tangible aspects of the service
What are different pricing strategies
Price skimming = high prices to initially skim off customers willing to get product sooner
Penetration = low price initially to increase market share
Price discrimination = different prices charged for the same product to different customer groups
Perceived quality = price reflects perceived value placed by customers on product
Going rate = match competition to meet market conditions
Cost plus pricing = adding a mark up to the cost of a product
What is Handy’s Shamrock - Organisation structure
Business should be flexible with staffing to cut costs and increase efficiency
Should have core of vital payment staff with support from part time and outsourced staff
Professional core = permanently employed key staff
Customers = may perform some tasks themselves
Flexible labour force = temporary and part time staff used to cover peak demand
Contractual fringe = outsourced staff performing non- core services which are cheaper
What is organisational structure Mintzberg
Operating core = basic work of organisation
Middle line = managers linking operating core and strategic apex
Strategic apex = higher management, overall long term planning and control
Support staff = provision of services to organisations which support operations and production
Ideology = organisations values and beliefs
Factors influencing span of control
Complexity of work
Degree of change
Managements ability
Assistance recieved by managers
Amount of non- supervisory work
Level of knowledge and experience of staff
Level of cost
Level of danger
Physical proximity of subordinates
IT
Divisional performance measurement
ROI = (controllable profit / divisional capital employed) * 100
- relative measure
RI = controllable profit - (divisional capital income * cost of capital)
- absolute measure
Both of these increase with the age of the assets
Risk using TARA
Transfer risk to third party
Avoid risk
Reduction of risk
Acceptance = tolerate the losses
Quantitative analysis to analyse risks
Break even = level of production required for business to make neither a profit nor a loss
- total profit = total contribution - total fixed costs
- break even is where total contribution = total fixed costs
Sensitivity analysis
Expected value
Decision tree
Statistical analysis
Acquisition vs organic growth
Acquisition
- quicker
- avoid barriers to entry
- one less competitor
- synergies
Organic
- entry cost may be too high
- clash of cultures
- easier to control growth
- reputation of target company
Synergies
Benefits from two or more businesses combined which wouldn’t be avaliable to each independently
Market power = especially if company buys a competitor
Economies of scale = bulk discount for combined buying quantities
Rationalisation of shared activities = shared research and development
Surplus assets = don’t need two head offices/ sets of central warehouses
Synergies of vertical integration = can control supply/distribution chains
Diversification of risk
Additional finance options = may be large enough to consider floatation
Advantages/disadvantages of franchising and licensing
Advantages
- increases number of distribution outlets without extensive capital investment
- local expertise and access to enthusiastic entrepreneurs
- economies of scale (marketing)
- rapid expansion
- risk sharing with franchisee
Disadvantages
- shared profits
- successful franchises may set up their own indirect competition
- quality control
How to measure short term liquidity
Current ratio = current assets/ current liabilities
Quick ratio = current assets excluding inventory / current liabilities
Solvency measure dog performance
Gearing ratio = debt / equity
Interest cover = profit before interest payable / interest payable
Efficiency measures of performance
Trade receivables collection period = trade receivables / revenue * 365
Inventory holding period = inventory / cost of sales * 365
Trade payables payment period = trade payables / purchases * 365
Limitations of financial performance indicators
Historical information is not necessarily useful when trying to predict future outcomes
Financial information mostly reports internal performance and does not always consider external factors
Can encourage short term decision making at the expense of long term objectives
Can be easily manipulated with the use of accounting policies
Does not consider whole picyure
Performance indicators - balanced scorecard
Ensures a mix of financial and non-financial perspectives are considered when selecting performance indicators
Financial perspective
Customer perspective
Internal business perspective
Innovation and learning perspective
What is in a business plan
Produced when business is applying funding from investors. Aims to provide then info about future strategies so they can make an informed decision
- Cover page, Contents Introduction and Executive summary
- Management team
- Products and devices
- Market information
- Business operations
- Details of finance required
- Appendicies e.g financial projections
What is digital disruption and data analytics
Digital disruption = rapid change happening as organisations move into digital transformation
Data Analytics = process of collecting, organising and analysing large sets of data to discover patterns and other information which an organisation can use for future decisions
What us big data and the limitations
Big data = term that describes large volumes of data that inundate a business on a day to day basis
Volume = amount of data fed into an organisation
Velocity = speed data is fed in the organisation
Variety = considers the various forms of data recorded
Veracity = considers the reliability of data being recieved
Limitations
- data overload
- ability to verify the data
- representative data
- shortage of talent to analyse the data
- cyber attack
- legal and regulatory compliance
What are digital assets and how do you implement digital asset strategy
Digital assets = any text/data file that is formatted into a binary source which includes the right to use it e.g images, pdf
Businesses use encoding, encryption and watermarks to protect them
Implementing digital assets strategy
- may need to outsource to a digital management company if business doesn’t have capability
- need to select supplier well to retrieve assets and prove support and management need to support
What are the forces and barriers to change - Lewis Force field
Promote driving forces for change e.g, increased competition, changing market, new tech, globalisation
Remove barriers to change
Cultural barriers
1. structural inertia = embedded systems hard to change
- group inertia = group resistant if it threatens the importance of their skills
- power structures = changes in balance of power
Personnel barriers
1. habit
2. security
3. effect in earnings
4. fear of the unknown
5. selective information processing
6. psychological contract
How do you manage change - Lewis Jceberg Model
Unfreeze = challenge of existing behaviour
- communication
- education
- participation
- negotiation
Move = making the change
- training
- installing new equipment
- new contracts
- organisation structure
Refreeze = consolidation
- reinforce changes
- communicate benefits
- reward conformity
What is corporate social responsibility
Belief firm owes responsibility to society
Impacts reputation, self regulation more cost effective, more rounded staff
Includes
- health and safety
- protecting environment
- staff welfare
- customer welfare
- fair trade suppliers
Types of organisation structures
Entrepreneurial
- Boss at top
- Then everyone else
Divisional
- Board of directors
- Then each division
Functional
- Board of directors
- Then each department e.g sales, finance
Matrix
- Function A and Function B at top
- Each project runs horizontally
Joint development strategies
- Joint ventures = contractual agreement between companies, often by setting up another separate company
- Strategic alliances = looser agreement to share knowledge, technology or opportunity
- Licensing = right to exploit a resource in return for a share of the profit
- Franchising = right to exploit a business brand in return for a capital sum plus share of profits/ turnover
