Tools Flashcards
2 elementary frameworks
Five C’s
Four P’s
Five C’s
- Company: big? Public ? Private ? What kind of product/ services ?
- Costs: what are the major costs? How has it’s costs changed in the past year ? How do it’s costs compare to others in the jndustry? How can we reduce costs ?
Competition: competitors? Market shares ? Has it change ? How do our services or products differ from the competition ? Do we hold any strategic advantage over competitors ?
- Consumers: who are they ? What do they want ? Are we fulfilling their needs ? How can we get more ? Are we keeping the ones we have ?
- Channels: distribution channels. How do we get our product into the hands of the final user ? How do we increase our distribution channels ? Are they areas of our market that we are not reaching? How do we reach them ?
Four P’s
- Product: what are ou products and services ? What is the company’s niche ?
- Price: how does our price compare to the competitions’? How was our price determined ? Are we priced right? If we change our price, what will that do to our sales volume ?
- Place: how do we get our products or the end user? How can we increase our distribution channels ? Do our competitors have products in place that we don’t ? Do they serve markers that we can’t reach ? Why ? How can we reach them ?
- Promotions: how can we best market our products ? Are we reaching the right market ? What kind of marketing campaigns has the company done in the past ? Were they effective ? Can we afford to increase our marketing campaign ?
BCG product Portfolio Matrix :
A company should have a portfolio of products with different growth rates and different market shares
Porter’s five forces:
- The threat of new or potential entrants: (new companies, barriers to entry: economy of scales)
- The intensity of rivalry among existing competitors
- Pressure from substitution product
- Bargaining power of buyers (buses compete with the industry by forcing down prices; bargaining for high quality or services; playing competitors against each other. All at the expense of industry profitability)
- Bargaining power of suppliers: when there are many suppliers but few buyers, the buyers have the upper hand. When there are many buyers but few suppliers, the suppliers have the advantage.
Barriers to entry:
- capital requirements,
- government policy,
- switching costs,
- access to distribution channels,
- product differentiation,
- proprietary product technology
The Value Chain :
Raw materials —> Operations —>
Delivery —> marketing &sales —>
Servie
=the company internal product processes
Raw materials: receiving materials into the warehouse, relationships with the supplier, Just in time delivery
opérations: use of capital and labor
Delivery: warehousing and distribution channels
Marketing and sales: marketing strategy, identification of customer base, sale forced issues
Service: customer support, customer retention (it’s cheaper to retain a customer than to go out and bring in a new one)
Sales scenarios
If sales are flat and profits are taking a header:
Examine both revenues and costs
1-first: revenues
2-second: costs
—> until you identify the revenue stream you can’t make educated decisions on the cost side
Sales scenarios 2
If the case included a decline is sales problem, analyze 3 things:
- overall declining market demand
- The current marketplace might be mature or your product may be obsolete (vinyl records give way to CDs)
- Loss of market share due to substitutions
Sales scenarios 3 :
If sales and market share are increasing, but profits are declining then you need to investigate:
- Wether prices are dropping and/or;
- cost are climbing
If costs aren’t the issue Rhein investigate product mix, and check to see if the margins have changed
Profit scenarios:
- if profits are declining because of a drop in revenues, concentrate on marketing and distribution issues
- if profit are declining because of rising expenses, concentrate on operational and financial issues: COGS, labor,rent, marketing costs.
-if leisure are declining, yet revenues went up, review :
•change in costs
•any addition expenses
•change in prices
•thé product mix
•change un customer’s need
Product scenarios:
- if as product is in its emerging growth stage: concentrate on R&D, competition, and pricing.
- if a product is in its growth stage, emphasize marketing and competition
- mature stage, Focus on manufacturing, costs, and competition
- declining stage, define niche market, analyze the competition’s play or think exit strategies
Pricing scenarios:
If you lower prices, and volumes rises, and you are pushed beyond full capacity, then your costs will shoot up as your employees work overtime and consequently your profit will suffer
Pricing scenarios 2: prices are stable only when 3 conditions are met
- growth rate for all competitors is approximately the same
- priced are paralleling costs
- prices of all competitors are roughly of equal value
- the the volume and thé costs are easier to change than market price levels (unless everyone change their price together)
