Evaluation of using SWOT analysis?
:) - Assists strategic thinking in a structural way
- Low - cost, simple approach
- Can be combined with other decision-making models, such as PESTLE
:( - Subjective - depends on opinions of managers
- Does not offer clear solutions
- Classification may depend on perspective
Factors affecting corporate objectives?
External factors:
- actions of competitors
- economic conditions
- social change
- technological change
- global prices
Internal factores:
- poor performance
- new leadership
- business ownership
- business culture
- business growth
Evaluation of market penetration?
:) - low risk
- product and market familiar to business
- limited investment required
:( - possibly limited growth potential
- business becomes vulnerable if it does not innovate
Evaluation of product development?
:) - familiar with customers
- builds on/innovates current products
- responds to customer needs
:( - takes time and can be expensive
- product cannibalisation (pulling demand away from existing products)
Evaluation of market development?
:) - potential for growth
- no need for expensive product development
:( - limited understanding of new customers’ needs
- competing against established businesses
Evaluation of diversification?
:) - spreads the business risk by engaging in different markets
- business can utilise some of it’s core competencies and apply them to a new context
:( - high risk (if product fails lots of investment lost)
- no reputation or expertise in the marker
How to achieve cost leadership strategy?
- operate at a scale that keeps average costs low
- achieve economies of scale through growth
- have unique access to technology
- have unique access to raw materials or skills
- control the supply of a product
Eval of cost leadership?
:) - help to achieve high profit margins as cost per unit kept low
- can lower price and acquire market share
- appeal to price elastic customers
- good if inflation increases
:( - few businesses can operate as the cost leader within a market as multiple businesses cannot directly compete on cost
- hard for small business to gain economies of scale
- requires lean management approach - ethical considerations lower down list of priorities
How to achieve differentiation strategy?
- ensuring quality
- customer service
- brand personality
- customer experience
- after-sales service
- speed and efficiency
- meeting the unique needs of a specific market niche
Eval of differentiation strat?
:) - makes business stand out
- unique brand image - loyalty - reduce PED
- adds value therefore higher prices can be charged
- may be able to meet ethical obligations more easily
:( - could be copied by other businesses at lower prices
- takes time and investment
- other factors need to be considered (economic factors, market position etc)
Factors to consider when choosing a strategy?
- expected cost
- anticipated return
- risk aversion
- stakeholders
- external environment (e.g. legislation)
- core competencies
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