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Flashcards in Business Strategy and Market Analysis Deck (28)
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1
Q

Define “strategic planning”.

A

Strategic planning is the sequence of interrelated procedures for determining an entity’s long-term goals and identifying the best approaches for achieving those goals.

2
Q

Identify the major steps in a strategic planning process.

A
  1. Establish entity’s mission, values and objectives;
  2. Assess the entity (internal analysis) and the environment in which it operates (external analysis; environmental scanning);
  3. Establish goals;
  4. Formulate strategies;
  5. Evaluate and control strategic activities.
3
Q

Define an entity’s values and the operational role they play.

A

An entity’s values are the underlying beliefs that govern the entity’s operations. They prescribe the conduct of an entity in its relationship with other parties.

4
Q

Define PEST analysis.

A

Provides framework for assessing and understanding macro-environment.

  • Political,
  • Economic,
  • Social, and
  • Technological elements of an environment
5
Q

Identify the kinds of factors that should be considered in a macro-environmental analysis.

A
Political factors;
Economic factors;
Social factors;
Technology factors;
Ecological factors;
Legal factors
6
Q

Identify the kinds of political factors that should be considered in a political, economic, social and technological analysis (PEST analysis) of a macro-environment.

A
  1. Political stability;
  2. Tax policy;
  3. Labor laws;
  4. Environmental laws;
  5. International trade attitudes and restrictions.
7
Q

Identify the kinds of economic factors that should be considered in a political, economic, social and technological analysis (PEST analysis) of a macro-environment.

A
  1. Economic structure, stability and growth rate;
  2. Interest rate;
  3. Inflation rate;
  4. Currency exchange rates.
8
Q

Identify the kinds of social factors that should be considered in a political, economic, social and technological analysis (PEST analysis) of a macro-environment.

A
  1. Population growth rate;
  2. Age distribution;
  3. Educational attainment and career attitudes;
  4. Health and safety characteristics.
9
Q

Identify the kinds of technology factors that should be considered in a political, economic, social and technological analysis (PEST analysis) of a macro-environment.

A
  1. Level of research and development activity;
  2. State of automation capability;
  3. Level of technology “savvy;”
  4. Rate of technology change.
10
Q

Define an “industry” for purposes of competitive analysis.

A

An industry consists of those entities that produce goods or provide services which are identical or close substitutes and which compete for the same customers.

11
Q

Identify the five forces described by Michael Porter as determining the operating attractiveness and likely long-run profitability of an industry.

A
  1. Threat of entry into the market by new competitors;
  2. Threat of substitute goods or services;
  3. Bargaining power of customers of the good or service;
  4. Bargaining power of suppliers of inputs used by the industry;
  5. Intensity of rivalry within the industry.
12
Q

Identify factors that would help determine the extent to which new competitors are likely to enter an industry.

A
  1. Capital investment required;
  2. Access to raw materials, technology and suppliers;
  3. Economies of scale required for profitability;
  4. Customer loyalty and customer cost of switching providers;
  5. Access to distribution channels;
  6. Governmental impediments to entry.
13
Q

Identify factors that would help determine the level of threat posed by substitute goods or services.

A
  1. Availability of substitutes;
  2. Ease of use of substitutes;
  3. Relative price and performance of substitutes;
  4. Buyers’ brand loyalty;
  5. Cost to buyers of switching to substitutes.
14
Q

Identify factors that would help determine the bargaining power of buyers in an industry.

A
  1. Extent of product standardization;
  2. Number of suppliers;
  3. Extent to which there are dominant buyers of the good/service;
  4. Extent to which information about the good or service is available;
  5. Cost to buyers of switching suppliers.
15
Q

Identify factors that would help determine the bargaining power of suppliers in an industry.

A
  1. Extent of substitutes for the product or service;
  2. Relationship between the number of users (buyers) and suppliers (sellers);
  3. Ability of supplier to move downstream in the distribution/sales channel
  4. Extent to which supplier is unionized.
16
Q

Identify factors that would help determine the level of rivalry in an industry.

A
  1. Relative size of competitors in the industry;
  2. Degree of product differentiation;
  3. Cost structure of the industry;
  4. Strategic objectives of firms in the industry;
  5. Cost to customers of switching providers;
  6. Cost associated with exiting industry.
17
Q

Identify the categories of factors that should be considered in a strengths, weaknesses, opportunities, and threats analysis (SWOT-type analysis) of the relationship between an entity and its environment.

A

Strengths of the entity (internal)

Weaknesses of the entity (internal)

Opportunities in the environment (market) (external)

Threats in the environment (market) (external)

18
Q

Identify factors that might constitute strengths which provide an entity a relative competitive advantage in its market.

A
  1. Ownership of patents, copyrights, etc.;
  2. Favorable reputation;
  3. Proprietary processes, including those that give cost advantage;
  4. Exclusive or preferential access to natural resources/commodities;
  5. Desirable location.
19
Q

Identify factors that might constitute opportunities for an entity in a market.

A
  1. Unmet market needs (demand);
  2. Development or employment of new technology/processes;
  3. Reduction in legal or regulatory restrictions;
  4. Reduction of international trade barriers (quotas, tariffs, etc.).
20
Q

Identify factors that might constitute external threats to an entity in a market.

A
  1. New substitute products or services;
  2. Changes in customer preferences;
  3. Increases in legal or regulatory restrictions;
  4. Increases in international trade barriers (quotas, tariffs, etc.);
  5. Union demands.
21
Q

Identify the three generic strategies enumerated by Michael Porter.

A
  1. Cost leadership;
  2. Differentiation;
  3. Focus (or Niche)
22
Q

Define a “cost leadership strategy”.

A

Under a cost leadership strategy, an entity seeks to be the low-cost provider for a given level of output in an industry. The strategy is intended to enable either higher gross profits than competitors or sales at a lower price to gain market share.

23
Q

Define a “differentiation strategy”.

A

Under a differentiation strategy, an entity seeks to develop and offer a product or service that has unique features for which customers are willing to pay a premium price that more than covers the extra cost of providing the product or service.

24
Q

Define a “focus strategy”.

A

Under a focus strategy, an entity focuses on a narrow industry segment (an industry subgroup or “niche”) and seeks to achieve either:

  1. a cost advantage, or
  2. differentiation.
25
Q

Define “(external) environmental scanning”.

A

Environmental scanning is the assessment of the macro-environment in which an entity operates (or may operate) and the industry within that macro-environment. Thus, environmental scanning includes consideration and analysis of the economic system, economic market and industry in which an entity operates.

26
Q

What are the major characteristics appropriate for an entity’s goals?

A

An entity’s goals should be SMART:

    Specific;
    Measurable;
    Attainable;
    Relevant; and
    Time-bound.
27
Q

What are appropriate components associated with the evaluation and control element in a strategic planning context?

A
  1. Determine what characteristics (attributes) to evaluate and measure;
  2. Decide acceptable values (standards) for measurable characteristics;
  3. Measure targeted characteristics;
  4. Compare measurements with established acceptable values;
  5. Implement changes needed to correct variances.
28
Q

What is the Resources-Based Model (RBM)?

A

An alternative variation of the strategic planning processes, assesses each entity as a unique collection of resources and capabilities.