Business Analysis & SWOT Fundamentals

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Questions and Answers

What are the two main categories of factors that a company's situation analysis usually focuses on?

  • Opportunities and Threats
  • Internal and External (correct)
  • Strengths and Weaknesses
  • Financial and Operational

Which of the following are considered internal factors that a company has some control over?

  • Government regulations
  • Economic conditions
  • Competitor actions
  • Brand reputation (correct)

Which of the following is NOT a factor that can be considered a threat to a business?

  • High customer loyalty (correct)
  • A weak economy
  • Strong competitors taking market share
  • High interest rates

What is the primary purpose of conducting a SWOT analysis?

<p>To identify a company's competitive advantage (C)</p> Signup and view all the answers

What does SWOT stand for?

<p>Strengths, Weaknesses, Opportunities, Threats (B)</p> Signup and view all the answers

What is a key benefit of having loyal employees?

<p>They are more likely to develop strong customer relationships (D)</p> Signup and view all the answers

Which of the following is an example of a strength that a company can leverage to gain a competitive advantage?

<p>A strong brand name (C)</p> Signup and view all the answers

How can a company determine if a factor is internal or external?

<p>By removing the company from the situation and observing what remains (A)</p> Signup and view all the answers

What was a significant change that many restaurants made during the COVID-19 pandemic?

<p>Offering curbside pickup and delivery (B)</p> Signup and view all the answers

What does the term 'pivoting' refer to in the context of a business dealing with a changing environment?

<p>Adjusting its strategies and operations to fit new conditions (A)</p> Signup and view all the answers

Which of the following is NOT a factor that PepsiCo indicated they were focusing on in their product strategy?

<p>Products with high sugar content (A)</p> Signup and view all the answers

Why did PepsiCo decide to sell off some of its brands, like Planter's and the Nestlé candy business?

<p>To focus on its most profitable products and core strategies (D)</p> Signup and view all the answers

What is a key takeaway in terms of the internal environment of a company?

<p>A company's internal environment helps shape its competitive advantage (D)</p> Signup and view all the answers

What is a key element that a company must consider as part of its internal environment assessment?

<p>Its mission statement and objectives (A)</p> Signup and view all the answers

Which of the following is an accurate statement regarding external factors?

<p>External factors are beyond a company's control but can affect its decisions (D)</p> Signup and view all the answers

What is a significant challenge faced by suppliers during the pandemic?

<p>Shortages of materials and logistic difficulties (D)</p> Signup and view all the answers

What is the main reason why companies need to understand the political and legal environment in which they operate?

<p>To ensure compliance with government regulations and laws (C)</p> Signup and view all the answers

What is the Sherman Act primarily aimed at?

<p>Preventing monopolies and cartels from hindering trade (C)</p> Signup and view all the answers

What is a significant factor that is contributing to the globalization of businesses?

<p>The increased ease of communication and transportation facilitated by technology (A)</p> Signup and view all the answers

Which of these factors can impact the strategic decisions made by companies?

<p>All of the above (D)</p> Signup and view all the answers

What is the main reason why interest rates tend to rise during periods of inflation?

<p>To discourage borrowing and slow down economic growth (D)</p> Signup and view all the answers

Which of these is NOT a factor considered in the demographic and social and cultural environment?

<p>The political climate and government policies (B)</p> Signup and view all the answers

What is a key challenge faced by companies due to the demographic shift in the United States?

<p>All of the above (D)</p> Signup and view all the answers

How has the rise of the internet affected companies?

<p>All of the above (D)</p> Signup and view all the answers

Which of these organizations is responsible for setting safety standards for consumer products?

<p>Consumer Product Safety Commission (A)</p> Signup and view all the answers

What is a specific example of a demographic trend mentioned in the text?

<p>The rising number of women in the workforce. (D)</p> Signup and view all the answers

Which of these represents a significant change in the business environment due to the pandemic?

<p>Shifting towards a more digitalized and remote work model. (D)</p> Signup and view all the answers

What is a key implication of the increasing bargaining power of large buyers in the market?

<p>They can dictate prices and negotiate favorable terms with suppliers. (B)</p> Signup and view all the answers

What is the primary challenge faced by companies when expanding into international markets?

<p>All of the above (D)</p> Signup and view all the answers

What is an example of how companies are responding to the changing demographics and social trends?

<p>Developing products that are more convenient and time-saving (B)</p> Signup and view all the answers

What is a key element in a value proposition?

<p>A summary of the benefits for target customers. (B)</p> Signup and view all the answers

Why is it important for a company to develop a strong value proposition?

<p>To effectively communicate why customers should choose their product or service. (B)</p> Signup and view all the answers

What is the primary audience for a value proposition?

<p>Target customers and potential buyers of the product or service. (A)</p> Signup and view all the answers

What is the difference between Apple's value proposition and Shopify's value proposition?

<p>Apple emphasizes a holistic user experience, while Shopify highlights specific functionalities. (C)</p> Signup and view all the answers

Which of the following is NOT a key aspect of a strong value proposition?

<p>Highlighting the company's profitability and revenue goals. (A)</p> Signup and view all the answers

How does Uber's value proposition, "The Smartest Way to Get Around," differ from Apple's value proposition, "The Experience IS the Product"?

<p>Uber focuses on a specific need (transportation), while Apple focuses on a broader user experience. (A)</p> Signup and view all the answers

Why would a company choose to focus on the customer's experience rather than specific features in their value proposition?

<p>To create emotional resonance and a sense of connection with the customer. (D)</p> Signup and view all the answers

What is a common characteristic of effective value propositions?

<p>They are concise and easily understandable, highlighting key benefits. (D)</p> Signup and view all the answers

What is a key advantage of franchising over licensing?

<p>Greater control for the franchisor. (A)</p> Signup and view all the answers

Which strategy involves sharing profits, losses, and control between two parties?

<p>Joint ventures (B)</p> Signup and view all the answers

What is one potential benefit of contract manufacturing?

<p>Lower production costs due to local expertise. (A)</p> Signup and view all the answers

What characterizes direct investment as a market entry strategy?

<p>Complete ownership and control. (C)</p> Signup and view all the answers

Which market entry strategy is considered riskier than exporting?

<p>Direct investment (B)</p> Signup and view all the answers

In which scenario may a firm need to diversify its product offerings?

<p>To mitigate risks from existing markets. (C)</p> Signup and view all the answers

What is a common challenge faced by firms entering a licensing agreement?

<p>Loss of control over brand use. (C)</p> Signup and view all the answers

What does a strategic business unit (SBU) typically have?

<p>Its own competitors and profit center. (C)</p> Signup and view all the answers

Which of the following is NOT a functional-level plan within a company?

<p>Corporate-level plan (D)</p> Signup and view all the answers

What kind of products are commonly associated with contract manufacturing?

<p>Consumer electronics. (A)</p> Signup and view all the answers

An example of a joint venture is:

<p>Fuji Xerox, created between Fuji Photo Film Co. and Xerox. (C)</p> Signup and view all the answers

What might be a reason for a diversification strategy to fail?

<p>Lack of expertise in the new market. (B)</p> Signup and view all the answers

Which of the following statements about the strategic planning process is true?

<p>Different SBUs may have different mission statements. (D)</p> Signup and view all the answers

Which strategy typically involves the least control for the original company?

<p>Licensing (D)</p> Signup and view all the answers

What is green marketing primarily focused on?

<p>Promoting environmentally safe products and services (D)</p> Signup and view all the answers

How has technology changed the way firms conduct business?

<p>It has prompted marketers to allocate budgets to digital technologies. (A)</p> Signup and view all the answers

What is the purpose of a mission statement?

<p>To define the organization's purpose and business objectives (D)</p> Signup and view all the answers

Why are organizations increasingly engaging in sustainable practices?

<p>To manage resources that are perceived as scarce (B)</p> Signup and view all the answers

What characteristic should objectives possess according to the analysis?

<p>Realistic and achievable within a given time frame (A)</p> Signup and view all the answers

How do mobile devices influence consumer behavior?

<p>They facilitate frequent information acquisition and shopping online. (D)</p> Signup and view all the answers

In what way do organizations assess their planning process?

<p>Through continuous monitoring of external and internal environments (B)</p> Signup and view all the answers

Which of the following is an example of a firm adapting its operations for sustainability?

<p>A restaurant that serves water only upon request during shortages (A)</p> Signup and view all the answers

What commonly varies across different strategic business units (SBUs) within a company?

<p>The mission statement and objectives (C)</p> Signup and view all the answers

What is a potential benefit of implementing green marketing for companies?

<p>Cost savings through more sustainable practices. (C)</p> Signup and view all the answers

Which factor is critical when setting objectives for a firm?

<p>Objectives must be aligned with the firm’s mission statement. (C)</p> Signup and view all the answers

What should organizations do when faced with changing conditions?

<p>Analyze and adjust their plans accordingly. (C)</p> Signup and view all the answers

How do firms generally convey their mission statements?

<p>By publicizing them generally to their stakeholders. (C)</p> Signup and view all the answers

What is a common way consumers can now shop easily due to technology?

<p>By conducting price comparisons on multiple websites (B)</p> Signup and view all the answers

What is the primary purpose of strategic business units (SBUs) in an organization?

<p>To satisfy customers’ needs in different markets (B)</p> Signup and view all the answers

Which of the following best describes a 'star' in the context of the BCG matrix?

<p>A product with high growth and high market share (D)</p> Signup and view all the answers

What is a cash cow as per the BCG matrix?

<p>A product with low growth and high market share (C)</p> Signup and view all the answers

How must the plans at the functional level of an organization relate to corporate-level objectives?

<p>They must support and be consistent with corporate objectives (D)</p> Signup and view all the answers

Which of the following statements about portfolio planning approaches is true?

<p>They involve comparing business units against one another (B)</p> Signup and view all the answers

What should a company with multiple strategic business units primarily decide upon?

<p>The objectives and strategies for each business unit (C)</p> Signup and view all the answers

Which of the following is NOT a benefit of strategic planning at different organizational levels?

<p>Decentralization of decision-making (B)</p> Signup and view all the answers

Which of the following describes a question mark in the BCG matrix?

<p>High growth and low market share (C)</p> Signup and view all the answers

How can functional-level strategies contribute to corporate strategy success?

<p>By increasing sales and market share of key products (B)</p> Signup and view all the answers

In the context of the BCG matrix, what does it usually imply if a business is classified as a 'dog'?

<p>It has low market share in a low-growth market (A)</p> Signup and view all the answers

What strategic consideration does the BCG matrix primarily utilize?

<p>Market share and growth rates (B)</p> Signup and view all the answers

Which of the following is a crucial factor for developing strategic plans at the functional level?

<p>Alignment with business and corporate strategies (D)</p> Signup and view all the answers

What does a firm typically need to do with its cash cows?

<p>Manage them effectively to maintain revenue (B)</p> Signup and view all the answers

Which of the following roles do strategic plans serve across different levels of an organization?

<p>To deliver consistent organizational growth (B)</p> Signup and view all the answers

What characterizes a 'dog' product in business?

<p>Low growth and low market share (B)</p> Signup and view all the answers

What is one likely action a company might take with a 'problem child' product?

<p>Invest to increase market share (C)</p> Signup and view all the answers

Which term describes the strategy of reducing investment in a product to increase short-term profits?

<p>Harvesting (C)</p> Signup and view all the answers

In the context of the BCG matrix, what is the primary goal of investing in question marks?

<p>To help them grow into stars (A)</p> Signup and view all the answers

What does a 'red light' signify in the General Electric approach?

<p>Weak business strengths and unattractive industry (A)</p> Signup and view all the answers

What is the main purpose of the BCG matrix?

<p>To classify products based on market share and growth (A)</p> Signup and view all the answers

Which of the following is a strategy firms might use to maintain their market share?

<p>Holding market share (B)</p> Signup and view all the answers

What drives companies to classify their products using the BCG or GE matrix?

<p>Resource allocation for various product lines (B)</p> Signup and view all the answers

What does a 'green light' indicate in the General Electric approach?

<p>Strong business strengths in an attractive industry (D)</p> Signup and view all the answers

When might a company choose to divest a product?

<p>When they wish to focus resources on more successful brands (A)</p> Signup and view all the answers

Which market condition might prompt companies to limit investments in a sector, according to the GE approach?

<p>Economic downturns (B)</p> Signup and view all the answers

Why might some companies hesitate to classify products as 'dogs'?

<p>They believe all products can be made successful (C)</p> Signup and view all the answers

What does the term 'success sequence' refer to?

<p>Investing profits from strong products into question marks (B)</p> Signup and view all the answers

Which factor does the General Electric approach NOT consider when assessing attractiveness?

<p>Consumer preferences (C)</p> Signup and view all the answers

What is the main objective of a marketing plan?

<p>To create a guide for the marketing group to follow. (B)</p> Signup and view all the answers

What is a key aspect of a successful marketing strategy?

<p>Creating a unique selling proposition that competitors cannot easily replicate. (A)</p> Signup and view all the answers

What are tactics in marketing?

<p>The specific actions taken to execute strategies. (D)</p> Signup and view all the answers

Which of these is an example of a market penetration strategy?

<p>Offering discounts to encourage customers to buy more. (C)</p> Signup and view all the answers

What is a market development strategy?

<p>Selling existing products to new customers. (C)</p> Signup and view all the answers

Which of the following is NOT a method companies use to enter international markets?

<p>Direct Investment (C)</p> Signup and view all the answers

What is the least risky and least expensive method for a firm to enter a foreign market?

<p>Exporting (C)</p> Signup and view all the answers

Which of the following is an example of a product development strategy?

<p>Introducing a new flavor of an existing product. (B)</p> Signup and view all the answers

Which of the following is NOT an example of a market development strategy?

<p>A company releasing a new product line. (A)</p> Signup and view all the answers

What is a major factor that a company should consider when deciding to enter a foreign market?

<p>The political and economic conditions in that country. (D)</p> Signup and view all the answers

What is the main purpose of a value proposition?

<p>To communicate the unique benefits of a product or service. (D)</p> Signup and view all the answers

Which of the following is an example of a tactic used to execute a market penetration strategy?

<p>Offering special promotions to existing customers. (D)</p> Signup and view all the answers

What is a competitive advantage?

<p>A unique feature that differentiates a company from its competitors. (C)</p> Signup and view all the answers

Which of the following statements is TRUE about strategies and tactics?

<p>Strategies are the overall game plan, while tactics are the specific actions taken to execute the plan. (D)</p> Signup and view all the answers

What is the main purpose of a marketing objective?

<p>To set specific, measurable, achievable, realistic, and time-bound goals. (A)</p> Signup and view all the answers

Which of the following is NOT considered a factor in the macro environment?

<p>Marketing intermediaries (B)</p> Signup and view all the answers

How does the micro environment differ from the macro environment?

<p>The micro environment focuses on factors directly affecting a company's operations, while the macro environment encompasses broader trends. (A)</p> Signup and view all the answers

What is the primary reason why analyzing the external environment becomes more complex for globalizing firms?

<p>Global firms operate in multiple countries with varying regulations, competitors, and market conditions. (B)</p> Signup and view all the answers

What is the key factor that organizations must consider when focusing on elements of the external environment?

<p>The relevance of the factor to the organization's operations. (D)</p> Signup and view all the answers

What is the primary goal of analyzing the competitive environment?

<p>To understand the strengths, weaknesses, and strategies of competitors. (C)</p> Signup and view all the answers

Which of the following is NOT a component of Porter's five forces model?

<p>Marketing intermediaries (D)</p> Signup and view all the answers

How does the bargaining power of suppliers impact an organization?

<p>Suppliers can influence the price and availability of resources, potentially impacting an organization's costs and profitability. (B)</p> Signup and view all the answers

What is the significance of understanding the bargaining power of buyers in a competitive environment?

<p>It reveals the potential for price wars and competitive pressure. (C)</p> Signup and view all the answers

How does the concept of substitute products impact an organization's competitive strategy?

<p>Organizations need to identify and analyze substitutes to anticipate potential threats to their market share. (C)</p> Signup and view all the answers

Which of the following is a primary objective of conducting a competitive analysis?

<p>To gain insights into competitors' strengths, weaknesses, and strategies. (A)</p> Signup and view all the answers

What is the role of mystery shoppers in competitive analysis?

<p>To provide objective feedback on the quality of competitors' products and services. (D)</p> Signup and view all the answers

How can individuals apply the principles of competitive analysis in their personal lives?

<p>By studying the strategies of successful individuals in their field. (C)</p> Signup and view all the answers

What is the main implication for companies when suppliers enter the market previously served by those companies?

<p>Increased competition. (A)</p> Signup and view all the answers

Why did companies like Coke and Pepsi move into new product categories like vitamin water and sports drinks?

<p>To counter the increasing popularity of bottled water and other beverage alternatives. (B)</p> Signup and view all the answers

What is the primary advantage of applying the five forces model to analyze competitive strategies?

<p>It provides a framework for understanding the forces influencing an industry's competitive landscape. (A)</p> Signup and view all the answers

Which of the following BEST illustrates the concept of substitute products?

<p>A customer choosing to use public transportation instead of driving their own car. (D)</p> Signup and view all the answers

What is the value proposition for a sales consulting firm that states, “Our clients grow their business, large or small, typically by a minimum of 30–50 percent over the previous year?”

<p>To help clients improve their sales by 30–50 percent (C)</p> Signup and view all the answers

According to the content, what is the primary benefit of developing a personal value proposition for individuals and students?

<p>To showcase skills and experiences that make them valuable to potential employers (C)</p> Signup and view all the answers

What is the main purpose of Amazon’s logo, with the gold arrow going from A to Z, according to the text?

<p>To symbolize the wide selection of products available on Amazon (C)</p> Signup and view all the answers

Based on the content, what is the primary reason why Amazon has been so successful?

<p>Its ability to offer a wide selection of products, fast delivery, and low prices (D)</p> Signup and view all the answers

What is the significance of a company’s value proposition?

<p>All of the above (D)</p> Signup and view all the answers

What is the main purpose of a situation analysis in strategic planning?

<p>All of the above (D)</p> Signup and view all the answers

What is the key takeaway regarding value propositions?

<p>All of the above (D)</p> Signup and view all the answers

What is the main aspect of Bruce Platzman’s leadership style that is highlighted in the text?

<p>His collaborative approach and engagement with employees (B)</p> Signup and view all the answers

Which of the following is NOT mentioned as a key component of a strategic planning process?

<p>Conducting a financial analysis (B)</p> Signup and view all the answers

Based on the content, what is the main way Lyft differentiates itself from its competitor Uber?

<p>Lyft emphasizes a more personalized and community-oriented experience (D)</p> Signup and view all the answers

What is the underlying message of Slack’s value proposition, “Be More Productive at Work with Less Effort?”

<p>Streamlining workflow processes and optimizing efficiency (D)</p> Signup and view all the answers

Which of the following best represents the internal environment of a company, as described in the content?

<p>Financial resources and employee skills (A)</p> Signup and view all the answers

In the context of the provided content, what is the primary purpose of developing a target market?

<p>To tailor the value proposition to specific customer needs (B)</p> Signup and view all the answers

What is the main purpose of Amazon Prime’s value proposition, “Anything you want, quickly delivered?”

<p>To attract customers who prioritize convenience and speed (D)</p> Signup and view all the answers

Which of the following is NOT a key component of Amazon’s value proposition, as described in the text?

<p>Personalized customer service (B)</p> Signup and view all the answers

Based on the content, how can an internship experience contribute to a personal value proposition?

<p>All of the above (D)</p> Signup and view all the answers

Flashcards

Value Proposition

A statement summarizing key benefits for target customers.

Importance of Value Proposition

It explains why customers should buy, donors should give, or employers should hire.

Apple's Value Proposition

"The Experience IS the Product" emphasizes user experience over features.

Shopify's Value Proposition

"The ecommerce platform made for you" highlights versatility in selling.

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Uber's Value Proposition

"The Smartest Way to Get Around" clarifies benefits for consumers.

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Role in Strategic Planning

Value propositions must be developed before strategic plans.

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Target Customers

Specific groups of buyers that a business aims to reach.

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Competing Offers

Similar products or services available from other providers.

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Market Segmentation

The process of dividing a broader market into smaller, distinct groups of customers with common needs.

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Target Market

The specific group of customers that a company aims its marketing efforts at.

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Different Value Propositions

Companies often develop unique value propositions for various target markets to meet differing needs.

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Amazon's Value Propositions

Unique selling points for Amazon's different services, e.g., fast delivery for Prime.

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Value Proposition for Drivers (Lyft)

Lyft's appeal to drivers is captured in the phrase, 'Take the Wheel.'

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Sales Consulting Firm's Value Proposition

A statement emphasizing that clients can grow their business by 30-50% typically with their help.

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Personal Value Proposition

An individual's way of showing potential employers their unique benefits and skills.

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Situation Analysis

A comprehensive assessment of an organization’s internal and external environments.

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Internal Environment

The aspects within a company that influence its strategy, including resources and staff performance.

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External Environment

Factors outside a company impacting its performance, like market trends and competition.

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Strategic Planning

A long-term process that helps organizations allocate resources to capitalize on opportunities.

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Competitive Advantage

The unique edge a product or service has over competing offerings, explained in the value proposition.

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Bruce Platzman

Co-founder and CEO of AIS known for driving company growth and community engagement.

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Corporate Social Responsibility

A company's commitment to engaging in ethical practices and giving back to the community.

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Analyzing External Environment

Evaluating conditions affecting business from macro and micro perspectives.

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Macro Environment

External factors like economics, culture, and politics impacting business.

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Micro Environment

Specific competitive elements such as customers, competitors, and suppliers.

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Globalization Effects

Challenges in analyzing environments across different countries for businesses.

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Competitive Environment

Assessment of direct and indirect competition for customers' resources.

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Direct Competitors

Firms offering similar products or services to the same market.

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Indirect Competitors

Businesses providing alternative solutions that satisfy the same need.

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Michael Porter's Five Forces Model

Framework for analyzing an industry’s competitive pressure.

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Competitive Analysis

Assessment of competitors’ strengths, weaknesses, and strategies.

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Mystery Shopper

A hired person who evaluates a firm’s services through disguise shopping.

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Substitute Products

Alternative goods that satisfy similar customer needs but are not identical.

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Potential Entrants

New competitors that could enter an industry and disrupt existing players.

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Supplier Power

Influence suppliers have on the pricing and availability of goods.

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Buyer Power

The ability of customers to influence pricing and quality of goods.

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Strategic Response to Changes

Adjusting business strategies in reaction to shifts in competition or factors.

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SWOT Analysis

A strategic tool evaluating Strengths, Weaknesses, Opportunities, and Threats of an organization.

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Internal Factors

Elements specific to an organization that are controllable, like brand reputation and resources.

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External Factors

Elements outside of a firm's control that impact its performance, such as market trends and economic conditions.

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Strengths

Positive attributes of an organization that give it an advantage over competitors.

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Weaknesses

Negative attributes of an organization that put it at a disadvantage in the market.

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Opportunities

External chances that can be leveraged for growth or profit by an organization.

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Threats

External challenges that could harm an organization’s position in the market.

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Market Trends

Changes or shifts in consumer preferences and behaviors that impact market demand.

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Brand Awareness

The extent to which consumers are familiar with and recognize a brand.

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Target Audience

A specific group of consumers at which a company aims its products and marketing strategies.

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Curbside Pickup

A service allowing customers to order online and pick up items outside the store without entering.

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Pivot

A strategic shift in business direction to adapt to changing market conditions.

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Hispanic Consumer Preferences

Consumers in diverse groups have unique product and brand preferences.

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Impact of Technology

Technology alters communication and business practices for consumers and firms.

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Digital Marketing Shifts

Marketers allocate budgets to digital platforms over traditional media.

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Mobile Shopping

Using mobile devices for comparison shopping and information access.

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Green Marketing

Promoting eco-friendly products and practices to benefit the environment.

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Sustainable Practices

Engaging in activities that protect the environment and conserve resources.

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Mission Statement

A declaration defining an organization's purpose and goals.

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Objectives in Organizations

Specific goals organizations aim to achieve within a set timeframe.

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Example of Mission Statement - PepsiCo

PepsiCo focuses on providing diverse food and beverage options globally.

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Social Responsibility

Organizations' obligation to act ethically and contribute to society.

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Strategic Planning Process

Evaluating internal and external factors for effective organizational planning.

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Competitive Edge

The unique advantage a service or product has over its competitors.

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Technology Adaptation

Organizations must evolve with new technologies to remain competitive.

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Sustainability and Ethics

Practices that ensure ethical actions while being environmentally conscious.

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Consumer Awareness of Resources

Consumers are recognizing the scarcity of natural resources and its impact.

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Material Shortages

A lack of raw materials needed for production, often due to disruptions.

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Buyer Bargaining Power

The ability of buyers to influence prices and terms in their favor.

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Global Marketplace

An interconnected economy where businesses compete on a worldwide scale.

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Sherman Act

A U.S. law prohibiting monopolies and restraints on trade.

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Consumer Product Safety Commission

An agency that establishes safety standards for consumer products.

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General Data Protection Regulation (GDPR)

A law that protects personal data of EU residents.

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Economic Environment

The overall economic conditions affecting consumer and business spending.

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Inflation

The increase in prices over time, reducing purchasing power.

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Recession

A period of economic decline characterized by reduced consumer spending.

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Demographic Characteristics

Statistical data relating to the population's age, income, and education.

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Social Trends

Changing preferences and behaviors reflected in society.

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Remote Work

Working from outside the traditional office, facilitated by technology.

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Market Regulations

Laws that govern business practices to protect consumers and ensure fair competition.

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Substitutes

Alternative products or services that satisfy the same need.

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Business Units

Divisions of a company focused on specific markets and products.

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Market Share Objective

A goal to increase a product's sales percentage within its market.

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Formulating Strategies

Creating plans to achieve business objectives.

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Tactics

Specific actions executed to implement strategies.

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Marketing Plan

A document detailing the marketing strategy for a product.

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Market Penetration

Selling more of existing products to current customers.

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Product Development

Creating new products for existing markets.

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Market Development

Selling existing products to new customers.

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Exporting

Selling products to buyers in foreign markets.

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Licensing

Granting rights to use patents or trademarks in foreign markets.

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Competitive Situation

Understanding the market landscape where a firm operates.

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Joint Ventures

Collaborations between two or more companies to enter new markets.

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Mega Brands

Large umbrella brands that encompass individual product brands.

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Innovations in Products

Introducing new features or entirely new products.

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Franchising

Granting an independent operator the right to use your business model and brand for a fee.

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Contract Manufacturing

Hiring manufacturers to produce goods in another country per set specifications.

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Direct Investment

Owning a company or facility in a foreign country.

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Diversification Strategies

Entering new markets with new products unrelated to existing lines.

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Strategic Business Units (SBUs)

A division or product line within a company that competes independently in its market.

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Corporate-Level Plans

Strategic plans developed for the overall corporation.

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Business-Level Plans

Plans focusing on specific strategic business units or product lines.

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Functional-Level Plans

Plans developed for specific departments within a company.

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Corporate Strategy

Long-term plan to achieve overall goals of an organization.

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Functional Level Strategy

Plans developed by departments to support business-level goals.

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PepsiCo Business Units

Seven divisions including North America Beverages and Frito Lay.

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Portfolio Planning Approach

Evaluating a group of business units for strategy and resource allocation.

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BCG Matrix

Tool to categorize SBUs based on market share and growth.

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Stars

Products with high growth and high market share.

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Cash Cows

Products with high market share in a low-growth market.

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Question Marks

Products with low market share but high growth potential.

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Dogs

Products with low growth and low market share.

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Market Growth Rate

Speed at which a market expands over time.

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Relative Market Share

Comparison of an SBU's market share to its competitors.

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Environmental Responsibility

Commitment to sustainable practices in business operations.

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Investment Decisions

Choices made regarding resource allocation to various SBUs.

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Consistency in Strategic Planning

Alignment of plans across corporate, business, and functional levels.

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Problem Children

Another term for question marks in business strategy.

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Success Sequence

Investing from cash cows to question marks to boost potential stars.

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Holding Market Share

Strategy to maintain a product's current market share level.

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Harvesting

Reducing investment in a product to generate short-term profit.

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Divest

Dropping or selling a product or business.

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General Electric Approach

Evaluates industry attractiveness and company strengths to guide investments.

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High Business Strength, Attractive Industry

Company should invest to build market share.

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Medium Ratings Strategy

Caution in investment; aim to hold existing market share.

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Low Rating Strategy

Harvesting or divesting to slow down losses.

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Portfolio Planning

Approach to allocate resources among multiple businesses or products.

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Resource Allocation Decisions

Determining how to distribute resources among various products or units.

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Study Notes

Value Proposition

  • A value proposition summarizes key benefits for target customers.
  • It explains why customers should buy a product, donate, or be hired.
  • It's a brief, persuasive statement showcasing a product's or service's superiority over competitors.
  • The value proposition answers: "Why should I buy from you?"
  • Apple's value proposition: "The Experience IS the Product."
  • Firms may develop different value propositions for different target markets.
  • Amazon's value proposition examples: Prime-"Anything you want, quickly delivered," Marketplace-"Sell more, sell better."
  • Value propositions focus on customer needs, not company profits.

Strategic Planning Process

  • Strategic planning allocates resources to capitalize on market opportunities.
  • It's a long-term process.
  • The process includes conducting a situation analysis, developing the organization's mission statement, objectives, value proposition, and strategies.

Situation Analysis

  • A situation analysis assesses an organization's internal and external environments.
  • Internal factors: financial, technological resources, personnel capabilities.
  • External factors: macro (economy, demographics, culture) and micro (competitors, suppliers).
  • Example: COVID-19 impacted supply chains, demand, and business strategies.
  • Situation analysis is essential before making strategic decisions.

SWOT Analysis

  • A SWOT analysis frames the situation analysis, using Strengths, Weaknesses, Opportunities, and Threats.
  • Strengths & Weaknesses are internal factors (controllable).
  • Opportunities & Threats are external factors (largely uncontrollable).
  • Self-assessment examples include strong leadership, communication skills (strengths), lack of organization (weakness).
  • External factors affect multiple entities.

Assessing the Internal Environment

  • Analyzing internal factors (strengths & weaknesses) assesses the internal environment.
  • Strengths can be used to capitalize on opportunities and develop competitive advantages (e.g., brand awareness, profitability, loyal employees).
  • Weaknesses must be addressed (e.g., low brand awareness, poor resources).
  • Evaluating past strategies is crucial.

Assessing the External Environment

  • Analyzing the external environment involves tracking macro and micro market conditions.
  • Macro environment: economy, demographics, culture, politics, technology, resources.
  • Micro environment: competition, suppliers, marketing intermediaries, customers.
  • Global business analysis is more complex.
  • Regulations & competition vary by country.

Competitive Environment

  • Direct and indirect competition for consumer resources (nonprofit & for-profit).
  • Industries are groups competing for market share.
  • Porter's five forces model analyzes competitors, substitutes, potential entrants, supplier power, and buyer power.
  • Competitive analysis examines competitor strengths, weaknesses, image, resources.
  • Mystery shoppers collect data on competitors.
  • Organizations must comply with government regulations.
  • Examples include antitrust laws (Sherman Act), consumer protection regulations.

Economic Environment

  • The economy significantly affects consumer and business spending.
  • Economic factors include inflation, unemployment, interest rates.
  • Economic downturns/recessions can affect sales.

Demographic and Social/Cultural Environment

  • Social trends (fitness, health), demographics (age, income), culture constantly change.
  • Marketers must adapt to changing consumer preferences.
  • Population diversity affects product preferences.

Technology

  • Technology continually changes communication & business.
  • Digital transformation is crucial for organizations.
  • Consumers rely on technology for information, news, and shopping.
  • Marketers are shifting budgets to digital platforms.

Natural Resources

  • Natural resources are scarce, influencing business practices.
  • Sustainable practices are important to firms (reducing waste, using sustainable materials, etc).

Mission Statement

  • A mission statement defines an organization's purpose.
  • Profit and nonprofit organizations have mission statements.
  • Companies may have multiple strategic business units (SBUs) with individual mission statements.

Developing Objectives

  • Objectives define what organizations want to achieve within a specific timeframe.
  • Objectives are realistic, achievable, and (ideally) measurable.
  • Marketing objectives align with corporate and business-level objectives.

Formulating Strategies

  • Strategies are the means to achieving objectives: The game plan, The actions.
  • Effective strategies establish and maintain a competitive advantage.
  • Tactics are specific actions to execute the chosen strategy.
  • Examples include special promotions, marketing campaigns.
  • Strategic planning may involve different levels within a firm (corporate, business, functional).

Product Market Strategies

  • Market penetration: increasing sales of existing products to existing customers.
  • Product development: introducing new products/services to existing markets.
  • Market development: reaching new customers with existing products/services.
  • Diversification: venturing into new markets with new products/services.

Different Types of Product/Market Entry Strategies

  • Exporting: selling abroad (least risky and least expensive; least control).
  • Licensing: selling rights to use trademarks/patents.
  • Franchising: granting an independent operator the right to use a business model, etc.
  • Contract manufacturing: contracting production to a foreign entity.
  • Joint Ventures: shared profit, loss, and control.
  • Direct investment: owning a company or facility overseas (most risky and most expensive; most control).

Portfolio Planning Approaches

  • Portfolio planning approaches analyze a firm's collection of businesses relative to one another.
  • Boston Consulting Group (BCG) Matrix: evaluates businesses based on market growth and relative market share (stars, cash cows, question marks, dogs).
  • General Electric (GE) Approach: assesses business strength and industry attractiveness in a matrix (high/medium/low ratings in matrix helps decide whether to invest more, less, divest etc.)

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