Toolkit
SWOT analysis (TK) where the business is now
:
Now :
Strenghtsa
Future : Opportunities
Threats
Markets
Ansoff matrix (TK): business planning tool to plan growt strategies
Products
e
new
existing
Market
Penetration
Product
Development
strategy
strategy
Market
8
.
Development
Diversification
Strategy
Strategy
Growth methods
Market penetration
When
·
grows by
a business
·
safest , cow-risk
·
relies on
heavily
increasing its
market share , seling more of
its
existing products in the same
market
option
on
promoting brand loyalty
to encourage
customers to
buy
again
Market development
market segments in existing
·
expand the market by
·
riskier , the business may not
·
requires market research , local knowledge and effective distribution channels
looking
for
markets
new
understand
the
new
or
new
markets
markets
Product development
·
development of new products
. AKA Up-grades
·
riskier than market Penetration
Research and development (rod) and first
Key : Market research strong
,
·
m ove r
advantage
Diversification
·
riskiest : flack of familiarity of the new market
2 Product unknown
and untested
STEEPLE analysis (TK) Externa environment
-
External factors that affect the business
can be analysed
be determinate
using
which
beyond its control
the STEEPLE Changes
.
one is the
They can be threats or opportunities
. Externo environment
. In STEEPLE analysis each element is analized and it'll
will impact objectives and strategy
most important
.
Social : Values attitudes cultural , demographic changes , etc
,
,
...
can
Technological : fast-changing tech, scientific research , etc
...
Economic : the state in which
.
a business
affect the business
can affect the business and its functions
operates-90u Ability to achieve economic objectives, employment, trade , ec
.
Ecological environmental : 900 rules to protect the environment affect
.
...
affect the business
the business
Political : Political stability of the country free market taxes , protectionism , interventionism , etc
. .. affect the business
,
,
Legal : gov rules
.
to
protect customers
and
businesses
can
affect the business
Ethical : Moral principles that are considered in decision making-towards stakeholders affect the business (higher costs but better imagine)
Positive
·
Negative
,
aids business Planning
doesn't consider all threats and opportunities
gives
g r over awareness of the impacts of decisions
doesn't propose strategies to deal with
external
environment
Circular business model.
Circular supply model
Resource recovery model
Product life extension model
Sharing model
Product service system models
Evaluation
(toolkit)
Gantt charts
Is a great and quick way to display the individual tasks of a particular project. It allows to allocate time to specific areas of the project-> common management tool
Advantages
Makes complex information more manageable, visual planner
Improves efficiency by avoiding overlapping tasks and showing dependancies, schedule tasks properly
Enables to set realistic deadlines and expectations
Can be motivational for the team-> they don’t delay project
Limitations
For larger projects is not possible to show tasks in single view
Bars don’t represent number of hours for each task
It’s not easy to see dependancies or determine float times/impact of delays
For large projects is not possible to display all information as they are harder to analyze
Not everything will go according to the plan
Forcefield analysis
It’s a situational and decision-making tool that deals with the forces for against the change. The forces are numerically weighted in order to calculate the relative strengths of
driving and restraining forces and helps in an objective and quantifiable way. 2 forces:
•
driving forces: push for change, argument for the change
•
Restraining forces: act against the change, resist the change
steps: - proposal for change
- list the driving forces
- list the restraining forces
- estimated value between 1-5 to each force
Advantages
•
•
•
more objective and logical decision-making process
Simple visual representation of forces
Weighting forces makes consider the importance of factors
Disadvantages
•
qualitative factors are difficult to quantify
•
Weighting of the sources is subjective- potential bias
•
Omission of forces can alter quite drastically the outcome
It’s dependant on the skill and level of knowledge of the group
Based on assumptions not facts
Can divide a workforce between who favour restraining and who favours driving-> can cause conflicts
Can affect motivation of the employees
Contribution analysis
•
contribution: difference between sales revenue (price) and variable costs of producing it -> sales revenue-total VC. Ex. Selling price= $5; FC=$100,000; AVC=$2;
Units=120,000->
Used in decision making:
-Make or buy decisions: determining whether to manufacture a product in house or to purchase it from an outsourced third-party supplier. Quantitative factors: the cost of making
the product (CTM) VS the cost of buying it (CTB). CTM= FC+(VCxVOL)
Factors influencing it: quantitative factors.
CTB= unit cost plus delivery
Timeframe in which the product can be produced in house VS outsourced
Spare capacity- whether the business has enough capacity to produce in house
Reputation/reliability of the supplier
Expertise of the business VS of the supplier
Firm’s core competencies VS the ones of the supplier
Strategic importance-whether the product is part of its core competencies and key
Have complete control over the production (more significant products)
External influence that have impacts (political, climate, environment, exchange rate)
Fixed costs- whether it’s worth to buy the equipment to produce (especially for start ups)
Contribution costing: is a method of valuing costs by allocating direct costs to products/division. It enables to set the price for different products based on their level of
contribution (must be higher than the AVC), identify products that are more profitable than others. Products with - contribution are discontinued. Indirect costs aren’t considered
Eg:Moka makes the strongest contribution, however, we also have to consider the
number of units sold to determine the total contribution
Absorption costing: way of allocating fixed cost to a product to ensure that the price covers all costs. The simplest way is to split them equally amongst all the products; however,
sometimes it’s not the most accurate way and wee may require more information as undirected costs are not directly related to the production.
->x is not worth keeping for the way costs are split
Direct and indirect costs in total
Direct and indirect costs per unit
Porter’s generic strategies.
Positive:
Negative
all indirect costs may be wrong
Benefits might not be enough to justify the complexity-
price
Not all indirect costs can be divided accurately
departments
subjective
acknowledge that using a single way to allocate
More complex
Makes managers more aware of the product
> time consuming
Fairer method to allocate costs of different
Can’t allocate indirect costs accurately as it’s
Measures the profitability of each product
(10)
decision-making tool that outline the ways that businesses can use to gain a competitive advantage (enables you to outperform rivals).
3 strategies: 1. Cost leadership: involves the business becoming the lowest-cost organization in the industry
- cost parity: charging the same price as competitors but lowering costs-> increase profit margin
- cost proximity: charge lower price than competitors whilst reducing costs-> price advantage, smaller profit
It can be risky if more organizations tries to achieve competitive advantages with the same strategy in the same market
2. Differentiation: when a firm makes its good distinct from others so it appeals to customers, better quality rather than low cost. It enables to charge higher prices.
Advantage: more unique products
Premium pricing
Business are more responsive to demands of the customers
Establish customer loyalty
Disadvantages: expensive
Requires innovation and creativity
Requires constant and sustained marketing
Riduce rivalry
3.focus: concentrate on a narrow or niche market. Can be highly profitable due to high prices and low competition, build strong brand name
-cost focus: focus on being a low cost producer in narrow markets-> uniquely low-cost products
-Differentiation focus: focus on a particular market segment-> well-specified and high-end products
Stuck in the middle:business without a clear business strategy are stuck in the middle, with detrimental consequences. No sustainable competitive advantages
Evaluation of porter’s generic strategies
Advantages: clear framework for businesses and allows to decide which strategy to follow
It’s flexible firms can target different segments depending on external environment
Disadvantages: suggests to focus on 1 strategy, big firms use more strategies
Tech development Joan eliminate competitive advantage
It’s theoretical
BCG-Boston matrix
Marketing tool used to examine an organization’s product portfolio
There are 4 possible outcomes:
1.
Dogs: product with low market share operating in a low growth market (end of their product life cycle), they tend to be stagnant/declining
2. Question mark: low market share in an high growth market. The business can try to convert them in stars but it requires investments
3. Stars: high market share in a high growth market, they’re successful products and business spend to promote and develop them. They can become cows
4. Cash cows:high market share in a low growth market (mature and stable market), greatest earners of cash but they might become dogs
Disadv:
Focuses on the current market position of the products (no future planning
Time consuming and complex to define the product according to market share and growth
High market share doesn’t mean high profits
Adv:
Provides an overview of the portfolio to see if
it’s balanced
Simple linear regression
Used to consider the relationship between 2 variables to help the business make predictions and strategic decisions. There’s an independent and an dependent variable
•
scatter diagram: visual tool used to show the relationship between 2 variables.
positive correlation means the variables move in the same direction
Negative correlation means the variables move in the opposite direction
No correlation means the data don’t show positive or negative correlation
•
line of best fit: calculating and drawing a straight line that that goes roughly through the middle of all the points on the scatter diagram. Helps
To express the relationship between the variables.
If the data on the graph don’t deviate from the line there’s a strong correlation (closer=stronger)
There’s a moderate correlation if the line can be determined but the data points aren’t closely allineate
•
correlation/extrapolation: correlation measures the extent to which there’s a relationship between two variables while exploitation
enables to estimate data values beyond the original data set, project them forward. E.i Prediction tool
Causation: is the occurrence of one event that has caused another event
Correlation: states there’s a pattern between 2 events but one didn’t caused the other
Evaluation: reliability of the data, there’re random variations (eg covid), impact of seasonal and non-seasonal