strategy and implementation

Question 1

what is SWOT analysis

Answer 1

it’s a diagnostic tool used to identify the internal strength and weaknesses and the external opportunities and threats to a business
helps discover what a business does better than competitors and what competitors do better than them

Question 2

purpose of SWOT analysis

Answer 2

helps inform decision making
gives a structural approach to analysing a business
includes quantitative and qualitative factors
considers internal and external issues

Question 3

what can SWOT help with

Answer 3

maximise strengths
minimise weakness
take advantage of opportunities
avoid threats

Question 4

SWOT- strenths

Answer 4

may include a USP
a strong brand
market leading equipment
motivated workforce

Question 5

SWOT- weaknesses

Answer 5

poor customer loyalty
demotivated staff
poor financial position

Question 6

SWOT- opportunities

Answer 6

they’re external conditions that could positively impact the business’s performance and improve competitive advantage provided action is taken

Question 7

SWOT- threat

Answer 7

it’s an external condition that could have a negative impact on the business’s performance and reduce competition advantage

Question 8

strengths of SWOT analysis

Answer 8

encourages a business to develop strategies to convert its weaknesses into strengths

Question 9

drawback of SWOT analysis

Answer 9

it may oversimplify the strengths weakenesses opportunities and threats facing the business
can be time consuming and complicated to identify key issues

Question 10

what is porters five forces framework

Answer 10

in 1979 Michael Porter, a professor at harvard business school created a framework to look at the attractiveness to a business in terms of profitability of markets
each of the 5 forces will affect profitability of the business in the industry
should use this strategy to analyse their position

Question 11

what are porters 5 forces

Answer 11

barriers to entry
buying power of customers
buying power of suppliers
degree of competition
threat of substitutes

Question 12

porters five forces- barriers to entry

Answer 12

any factors that stop a firm from entering the market
some markets will have high barriers
barriers exist in monopoly markets, these stop businesses from entering

Question 13

examples of barriers to entry

Answer 13

brand loyalty
high cost to enter the market
intellectual property rights/ legal barriers (e.g patent)
economies of scale
gov regulation where businesses are restricted from entering
unfair competition e.g predatory
access to distribution networks

Question 14

porters five forces- buying power of customers

Answer 14

buying power concerns the ability of the customers within an industry to affect/ determine the price they pay

Question 15

examples of factors that determine buyer power

Answer 15

the amount of bargaining leverage the buyer has, does the business buy a large proportion of the businesses product?
whether the customer buys in bulk
whether the buyer has info on costs / availability of alternative suppliers
brand identity and loyalty of products bought

Question 16

porters five forces- buying power of suppliers

Answer 16

if suppliers have high level of power, they are able to push up prices of raw materials and components
with lower levels the situation is reversed, the buyer may be able to force prices paid down

Question 17

factors that determine supplier power

Answer 17

number of alternative suppliers
importance of volume of order to suppliers
cost of switching to new suppliers
availability of alternative inputs
if backwards vertical integration exists

Question 18

porters five forces- degree of competition

Answer 18

monopoly- one business dominates
duopoly- 2 businesses dominate
monopolistic competition- many compete in an industry selling differentiated products
perfect competition- many businesses in the industry with no influence on market price
dominant businesses are those that tend to have a high degree of monopoly power in their markets

Question 19

what can a dominant business do

Answer 19

reduce choice
increase prices
be inefficient without competition
create barriers to entry

Question 20

porters five forces- threat of substitutes

Answer 20

occurs when businesses within an industry are faced with the threat of similar products from another industry
if there’s high substitutes the business is less competitive
less substitutes is more attractive

Question 21

examples of substitutes

Answer 21

smoking, vaping
car, bike
the ease of switching to the substitute will have a significant impact

Question 22

what can porters be used for

Answer 22

can be used by a business currently in the market to assess the securing of its position
or by businesses thinking of entering
market research is important

business will need to reposition themselves by being proactive after analysis the market or reactive in response to threats

Question 23

strengths of porters five forces

Answer 23

Encourages businesses to look beyond their own operations and understand external competitive pressures.
Helps managers identify which forces are strongest and where to focus strategy (e.g. reducing supplier power or differentiating products).
Businesses can judge whether entering an industry is likely to be profitable.
Encourages proactive strategies to respond to future competitive threats (e.g. new entrants or substitutes).

Question 24

weakenesses of porters five forced

Answer 24

Assumes market conditions are stable — doesn’t reflect fast-changing industries (like tech or fashion).
Doesn’t consider government regulation, global shocks, or technological innovation directly.
Modern businesses often form partnerships, which the model doesn’t easily account for.
Doesn’t include internal factors such as brand strength, leadership, or innovation (unlike SWOT).

Question 25

4 components of ansoffs matrix

Answer 25

market penetration product development market development diversification

Question 26

market penetration( ansoff)

Answer 26

existing product, existing market involves the business aiming to increase sales within its present market business already has a good understanding of the market, its competitors and customer needs

Question 27

strategies of market penetration

Answer 27

attracting new customers attacking competitors sales increasing consumption/ purchases by existing customers could reduce prices, increase buying options or more promotion

Question 28

market development (ansoff)

Answer 28

existing product, new market find a new market for existing products, could be done in a new geographical markets, new distribution channels and using new pricing methods to attract diff customers

Question 29

product development (ansoff)

Answer 29

new product existing market business may need to develop new skills to be able to create different products that will appeal to existing market it can be risky

Question 30

examples of product development

Answer 30

mars bar made a mars bar icecream as opposed to just a chocolate bar tesco offers services like phone company

Question 31

diversification (ansoff)

Answer 31

new product, new market very risky bcs business doesn’t have experience in the market or the product

Question 32

example of diversification

Answer 32

virgin moved into other industries like airplanes and train services by spreading out their business if one industry fails not all of the business is affected

Question 33

advantages of ansoff matrix

Answer 33

simple and easy to use, helps visualise growth strategies encourages firms to consider risk of each strategy useful for firms wanting to expand can be used by all kinds of business supports decision making

Question 34

disadvantages of ansoff matrix

Answer 34

oversimplified, more complex than 4 boxes ignores external influences doesn’t explain HOW to achieve this strategy lacks consideration of resources, doesn’t factor in things like if there’s enough finance or staff can lead to over ambitious growth

Question 35

what is horizontal integration

Answer 35

where 2 businesses at the same stage of production intergrate 2 car manufacturers

Question 36

what is vertical integration

Answer 36

2 businesses at diff stages in production process intergrate car manufacturer and tire supplier

Question 37

conglomerate intergration

Answer 37

2 unrelated firms intergrating

Question 38

secors of business activity

Answer 38

primary secondary tertiary

Question 39

forwards vertical integration

Answer 39

joins with a business at the next step of the production process manufacturer with a retailer

Question 40

backwards vertical integration

Answer 40

joins with a business at an earlier stage of production manufacturer and supplier of raw materials

Question 41

advantages of vertical integration

Answer 41

Ensures reliable supply of raw materials (backward) or guaranteed distribution channels (forward). Captures the profit previously earned by suppliers or distributors. Reduces delays and transaction costs between stages of production. Can create barriers to entry for rivals (e.g. controlling key inputs or distribution).

Question 42

disadvantages of vertical integration

Answer 42

Buying or merging across stages of production can require large capital investment. Firms may not understand the new stage of production, leading to inefficiency. Tied into one supplier or distribution channel — harder to switch if market changes. Capital spent on integration could have been used for innovation or expansion elsewhere.

Question 43

advantages of horizontal integration

Answer 43

Larger firm can lower average costs through bulk buying, shared marketing, and rationalisation of resources. Reduces competition and increases market power, allowing higher prices or stronger negotiating power with suppliers. Access to more customers and markets may boost sales and profits. Access to more customers and markets may boost sales and profits.

Question 44

disadvantages of horizontal integration

Answer 44

As the firm grows too large, communication and coordination become harder, raising costs Different organisational cultures can cause conflict between employees or management. market If both firms operate in the same industry, risk is not diversified. Duplicate roles may lead to layoffs, damaging morale or reputation.

Question 45

why do businesses grow

Answer 45

increase sales increase market share take advantage of economies of scale be more competitive

Question 46

internal/ organic growth

Answer 46

its expansion from within the business this is a low risk strategy by expanding in size by changing their business activities control is easier to maintain can be a national or multinational approach

Question 47

methods of organic growth

Answer 47

new products new markers new routes to markets- multichannel distribution of increase types and location of stores franchising diversification increased advertising reducing prices to attract sales

Question 48

advantages of growing organically

Answer 48

Growth is gradual and controlled — the business expands using its own resources, so there’s no culture clash or integration problems like in mergers. Often funded through retained profits rather than taking on large debts or issuing new shares. Expanding at a manageable pace helps the business match growth in demand and avoid overexpansion. Employees may feel more secure and motivated when growth creates promotion opportunities within the business.

Question 49

disadvantages of growing organically

Answer 49

can take a long time to expand sales, market share, or geographical reach compared to mergers or takeovers. This may allow competitors to grow faster. Growth depends on the firm’s retained profits, workforce, and capacity — if these are limited, expansion will be restricted. The firm might miss out on acquiring new technologies, brands, or distribution networks that external growth could bring. If the business grows only by expanding current products or locations, it may become vulnerable to changes in that market

Question 50

what is external/ inorganic growth

Answer 50

the bringing together of two or more businesses

Question 51

what is a merger

Answer 51

when two or more businesses agree to become integrated to form one business under joint ownership A+B= AB it’s an agreement

Question 52

what’s a takeover

Answer 52

when one business gains control over another and becomes the owner, it can achieve this by buying 51% of shares can be hostile A+B= A

Question 53

advantages of growing inorganically

Answer 53

Mergers or takeovers allow a business to expand its size, revenue, and market share much faster than through organic growth Can immediately enter new geographical markets or market segments by acquiring an existing firm. A larger combined business can gain greater control over prices, suppliers, and customers, reducing competition Combining operations can lower average costs through shared production, marketing, and distribution. The acquired firm may bring expertise, innovation, or intellectual property that strengthens competitiveness Larger firms can achieve higher revenues and profits through expanded customer bases and reduced competition.

Question 54

disadvantages of growing inorganically

Answer 54

Mergers and takeovers often require large sums of money — funded by loans or share issues — increasing debt and financial risk. Two businesses may have very different management styles, values, or working cultures, leading to conflict and low morale. Combining operations, systems, and staff can be complex and time-consuming, causing disruption and inefficiency As the firm grows rapidly, coordination and control can become harder, increasing average costs Duplicated roles (e.g. HR or marketing) often lead to layoffs, lowering employee morale and damaging the firm’s reputation.

Question 55

what is franchising

Answer 55

it’s an agreement where a business grants another business the license to sell under its name for a percentage of revenue generated

Question 56

what is a franchisee

Answer 56

it’s a business that has been granted permission from another business to trade using its name/ brand/ goods

Question 57

what is a franchisor

Answer 57

a business that sells a license granting permission for another firm to trade under its name allow for rapid growth but comes with risks

Question 58

advantages of franchising

Answer 58

the franchisee gets access to free training and marketing the franchisee is part of an established business easier to make money lower risk than setting up a new business The franchisor earns revenue through franchise fees and ongoing royalties. As the franchise network grows, bulk buying and shared marketing reduce costs per unit. Customers already recognise and trust the brand, making it easier to attract business.

Question 59

disadvantages of franchising

Answer 59

Franchisees run their own outlets, so the franchisor has less direct control over daily operations, quality, or customer service. reputation If a franchisee delivers poor service or breaks rules, it can damage the reputation of the entire brand. Instead of keeping all profits, the franchisor only receives a portion through royalties and fees. Franchisees must follow the franchisor’s rules on pricing, products, and marketing — they can’t make major independent decisions. Franchisees must pay royalty fees, advertising contributions, and possibly buy supplies only from the franchisor, which can reduce profits. The franchise fee and setup costs can be very high, especially for well-known brands.

Question 60

what is rationalisation

Answer 60

it’s the reorganisation of a business in order to increase its efficiency this reorganisation normally leads to a reduction in business size, change of policy or an alteration of strategy relating to particular products

Question 61

why rationalise

Answer 61

after a sustainable period of growth it is likely that inefficiencies will start to appear in even the best managed businesses (diseconomies of scale) economies of scale can be lost bcs of problems with location of factories markets change over time meaning the business may be left with redundant resources as tbh change their products to match market trends

Question 62

examples of rationalisation

Answer 62

closing branches transferring of production trimming product ranges incorporation of IT systems to replace paper ones

Question 63

results of rationalisation

Answer 63

loss of jobs uncertainty resistance from staff could lead to industrial action

Question 64

what must rationalisation be

Answer 64

well planned and well thought through

Question 65

How can location choice impact a business’s costs and profits?

Answer 65

A well-chosen location can reduce transport and labour costs, improving profits. A poor location can raise costs and limit sales.

Question 66

What are the short-term effects of relocation?

Answer 66

High one-off costs (e.g. moving equipment, redundancy payments) and possible disruption to production.

Question 67

What are the long-term benefits of relocation?

Answer 67

Lower operating costs, access to new markets, and potential efficiency gains.

Question 68

How does rationalisation affect employees?

Answer 68

Can lead to redundancies and lower morale, but remaining staff may benefit from greater job security in a leaner, more efficient business.

Question 69

What are the long-term benefits of relocation?

Answer 69

Lower operating costs, access to new markets, and potential efficiency gains.

Question 70

How does relocation affect customers?

Answer 70

It can improve service (e.g. faster delivery) if closer to markets, but may cause temporary disruptions.

Question 71

How might suppliers be affected by relocation?

Answer 71

Some may lose contracts if the business moves far away, while new suppliers closer to the new site could gain business.

Question 72

How does relocation or closure affect local communities?

Answer 72

Job losses and reduced local spending can harm the community, though new areas may gain investment and employment.

Question 73

What factors determine whether relocation/rationalisation is successful?

Answer 73

Strategic planning, good communication, stakeholder support, and minimising disruption.

Question 74

Overall evaluation of location/relocation/rationalisation decisions?

Answer 74

They can increase competitiveness and efficiency, but poor management can damage reputation, morale, and stakeholder relationships.

Question 75

Why are costs an important factor in location decisions?

Answer 75

Businesses aim to minimise costs like labour, land, transport, and utilities to improve profitability. High costs may lead to relocation or rationalisation.

Question 76

How does labour availability and quality affect location?

Answer 76

Firms locate where there’s access to skilled, affordable workers. A shortage or high wage costs can push firms to relocate.

Question 77

Why is proximity to markets important?

Answer 77

Being close to customers reduces delivery time, increases customer satisfaction, and improves competitiveness—especially for perishable goods or services.

Question 78

How does proximity to suppliers influence location decisions?

Answer 78

Being near suppliers reduces transport costs, delivery times, and improves coordination — key for manufacturers and logistics firms

Question 79

Why is infrastructure a key factor when deciding where to locate

Answer 79

Good transport links (roads, ports, airports) and digital infrastructure improve distribution and communication efficiency.

Question 80

How can government incentives influence business location?

Answer 80

Governments may offer grants, tax breaks, or enterprise zones to attract firms, reducing costs and encouraging relocation.

Question 81

How do competitors affect location decisions?

Answer 81

Some firms cluster near competitors (e.g. retail parks) to attract customers; others locate away to avoid competition.

Question 82

How does rationalisation relate to location decisions?

Answer 82

Firms may close less efficient sites or merge operations into one location to cut costs and increase efficiency.