SWOT ANALYSIS

Strengths Weaknesses

What the business does poorly

What the business is good at
- For example:
- For example:
+ Ways in which the business lags
+ Qualities that separate the business
behind competitors
from rivals
+ Resource or capital limitations
+ Internal resources such as skilled
including labor and finance
sta< or a particular innovation
+ Lack of a competitive advantage
+ Possession of assets such as capital,
+ Lack of a unique selling proposition
patents, or intellectual property
(USP)
+ A loyal customer base

Opportunities Threats

Options a business may exploit to enjoy

Hazards that have the potential to damage
further success
business performance
- For example:
- For example:
+ Developing markets for specific
+ New or emerging competitors are
products become apparent
gaining market share
+ Few competitors exist
+ Social or technological developments
+ Social or technological developments
threaten obsolescence of products
create an emerging need for the
+ Economic indicators becoming less
businesses products
favorable
+ Economic indicators becoming more
+ Negative press coverage
favorable
ANSOFF MATRIX

Market penetration
- The least risky strategy to achieve growth is to pursue a strategy of market penetration
- Involves selling more products to existing customers by encouraging
+ Brand loyalty of customers
+ Increased usage of the product

Market development
- Market development involves finding and exploiting new market opportunities for existing
products by
+ Entering new markets abroad
+ Repositioning the product by selling to di<erent customer profiles

Product development
- Product development involves selling new or improved products to existing customers by
+ Developing new versions or upgrades of existing successful products
+ Redesigning packaging and aesthetic features
+ Relaunching heritage products at commercially convenient intervals
Diversification
- Diversification is the riskiest growth strategy as it involves targeting new customers with
entirely new or redeveloped products
STEEPLE ANALYSIS

• STEEPLE Analysis is particularly useful in the following situations

o Product development
STEEPLE analysis can guide whether the business should keep selling a product to
a particular region

o Strategic business planning

STEEPLE analysis is beneficial when starting a business planning process as
it provides a detailed guide that includes growth targets, brand positioning, and
potential risks

o Marketing planning
STEEPLE analysis provides a business with information on external factors that
could be used to create a marketing strategy

External factor Explanation Examples

Social - The extent to which Greater numbers of university
personal attitudes and graduaters have increased the
values, culture and quality of workers available to
demographic change businesses
are expected to affect
the business including
+ Social mobility
+ Education
+ Migration
Technological - The extent to which Rapid developments in
technological change technology have reduced the
are expected to impact length of product life cycles
the business including and increased the need for
+ Research & businesses to carry out
development ongoing research,
+ Production and development and innovation
distribution processes
and efficiency
+ Quality and new
materials
Economic - The extent to which High rates of fuel and food
economic indicators inflation in parts of Europe
are expected to have reduced the level of
directly impact disposable income for most
business performance households
including
+ Inflation
+ Cost of living
+ Unemployment
levels
Environmental - The extent to which Strict rules on the disposal of
changes in attitudes commercial waste have
and government policy increased costs for
towards businesses
environmental
protection as well as
the impact of global
warming expected to
impact the business
including
+ Changing
infrastructure
+ Energy availability &
cost
+ Disposal of materials
Political - The extent to which The decision to leave EU led to
local and national the reintroduction of trading
government is restrictions for businesses
expected to influence importing goods from
the business including suppliers in Europe
+ Government stability
+ Tax regulations
+ Trade restrictions
+ Fiscal policy
Legal - The extent to which A rise in the level of the
changes in law and minimum wage increases
regulations are business staffing costs
expected to impact the
business
+ Taxation
+ Advertising
Ethical - The extent to which Many supermarkets have
moral principles ought implemented ‘above and
to be considered in beyond’ policies related to the
decision-making sale of alcohol and tobacco
process and require customers to
+ Being truthful about prove they are significantly
products and using older than the minimum legal
responsible marketing age of sale
practices
+ Paying staff and
suppliers on time and
in full
+ Trading fairly
CIRCULAR BUSINESS MODELS

A circular business model is an approach to business designed to minimize the consumption of

scarce resources and reduce waste

• Circular business aims to maximize the use and value of resources

• Materials and products are recycled, reused, or regenerated rather than being disposed of
after use
• A circular business model is also known as the cradle-to-cradle approach

Principle Explanation

Products are designed to have a longer

Design for longetivity lifespan reducing the need for frequent
replacement

Resources are used efficiently throughout the

Resource efficiency product lifecycle, minimising waste and
optimising material usage

Materials from products that have reached the

Recycling & reuse end of their life cycle are recycled or reused to
create new products

Instead of selling products businesses provide

Product as a service them as services, such as leasing, encouraging
product sharing and extending their lifespan

Nature-inspired design principles are used to

create products and processes that mimic
Biomimicry
natural systems resulting in greater
sustainability

Businesses collaborate with suppliers,

customers and other stakeholders to create
Collaboration & partnerships
closed – loop systems and promote the
exchange of materials
FORCE FIELD ANALYSIS

• Force field analysis involves managers identifying the driving and restraining forces
that surround a strategic change decision
o Once identified these forces can be analyzed to determine whether a decision
should go ahead

Driving forces

• Driving forces are factors that could justify that strategic change is needed
o Internal driving forces may include:
§ Outdated machinery or product lines
§ Declining team morale
§ The need to increase profitability
o External driving forces may include:
§ A volatile market
§ Disruptive technologies e.g. AI
§ Changing demographic trends

Restraining forces

• Retraining forces are factors that could prevent or limit change

o Internal restraining forces may include:
§ Fear of the unknown
§ The existing organisational structure
§ "That's not how things are done here" attitudes
o External restraining forces may include:
§ Existing commitments to partner organisations
§ Government legislation
§ Obligations towards customers

Weighting the forces

• Driving forces and restraining forces are weighted from 1 to 5 in terms of their relative
importance
o A value of 5 is most important and 1 least important
Worked example

After several years of poor financial performance the owners of Lujosa Ltd are considering the
relocation of their factory from Spain to Indonesia.

Department managers have provided feedback on the idea. They have identified the following
driving and restraining forces.

Force Description Weighting

Driving • Need to reduce production 5
costs to increase profitability

• Outdated production 3
machinery in Spanish factory
affects volume and quality of
output

• Difficulty of recruiting and 1

retaining skilled employees in
Spain

Restraining • Costs of relocation including 4

construction and fitting of a
brand new factory in Indonesia

• Employee resistance to job 2

losses

• Disruption to production 4
during the change period
(a) Use force field analysis to determine whether Lujosa's owners should go ahead with the
decision [4]

Step 1: Construct the force field analysis

[1]

Step 2: Calculate the relative weight of driving forces

5+3+1=9

Step 3: Calculate the relative weight of restraining forces

4 + 2 + 4 = 10

Step 4: Compare the relative weights of driving and restraining forces

• The relative weight of restraining forces (10) is greater than the relative weight of driving
forces (9)
• There is little chance that this decision would be successful and should be abandoned

[1]

(b) Identify two actions Lujosa's owners could take to allow the move to Indonesia to go ahead
[2]

• Relevant actions include

o Outsource production during the relocation process
o Research ways to reduce costs of building and fitting of the new factory
o Consult and engage with workers to reduce fears of redundancy
 Evaluating Force Field Analysis

Strengths Weaknesses
• Simple and Visual • Subjective
o Easily o Relies on
understood by perceptions/judgements
stakeholders of individuals or teams
o Simple diagram o Can lead to bias in the
makes it accessible analysis

• Comprehensive • Lacks Quantitative Data

o Considers both o Challenging to assign
the driving forces specific weights or
and restraining measures to the forces
forces which limits the
o This helps in precision of the
understanding the analysis
complexity of a
situation

• Identifies most critical • Snapshot

factors o Does not account for
o Visualising/ranking how forces might
helps clarify which change over time
forces have the o This is crucial in
most significant dynamic/evolving
impact on the business environments
desired change
PORTER’S GENERIC STRATEGIES

• Porter’s Generic Matrix identifies a range of strategies a business can utilise to increase
their success
• The matrix considers two factors
o Its source of competitive advantage (cost or differentiation)
o The scope of the market in which it operates (mass or niche)

Mass Market Strategies

Cost Leadership

• Most suitable for businesses that have a significant cost advantage over rivals

o Cost leadership with parity is where a business has lower costs than rivals but
charges the same price
o Cost leadership with proximity is where a business has lower costs and charges a
lower price than rivals

Evaluating the Cost Leadership Strategy

Advantages Disadvantages
• Economies of Scale • Risky
o Cost leadership o May result in a price
involves large-scale war if more than one
production and lower business in a market
unit cost pursues this strategy
• Competitive Pricing
o Cost leaders can
offer lower prices
than their • Quality Concerns
competitors which o Low costs/prices are
attracts often linked to poor
morecustomers quality
• Barriers to Entry
o New rivals struggle to
fund required capital
investment

Differentiation

• Businesses that cannot be the most competitive on cost should make its products
distinct from those of rivals
• Successful differentiation allows a business to charge apremium price and achieve
a high profit margin
• Examples of businesses that adopt a mass market differentiation strategy include Coca
Cola, Samsung and Volvo
o Coca Cola's trusted and well-known branding includes its logo, brand colours and
characters such as the Coca Cola truck
o Volvo's focus on safety and build quality allows it to charge premium prices in the
mass market
A Diagram to show ways to Achieve Differentiation

Businesses can achieve differentiation through branding, customer service, design features
and quality

Evaluating a Differentiation Strategy

Advantages Disadvantages
• Premium Pricing • High Costs
o Customers are o Researching,
willing to pay more developing and
for unique features, maintaining unique
quality or brand features requires
image significant budgets
• Brand Loyalty • Customer Preferences
o A strong brand o Fashions, trends and
image can lead to customer
less price-sensitive preferences change
loyal customers over time
• Fewer Competitive
Pressures
o A differentiated
product is difficult
for rivals to imitate
 Niche Market Strategies

• Business that operates in a niche markets should adopt one of two focus strategies that
closely meet the needs of its specific group of customers

Cost focus strategy

• A cost focus involves being the lowest cost competitor within the market niche
o Examples of businesses that adopt a cost focus strategy include Carnival Cruise
Line and Glasses Direct
§ Carnival Cruises sells cruises to locations including the Caribbean and
Europe and is well-known for it's eye-catching low fares that can be offered
due to its fleet of smaller vessels that operate at full capacity

Differentiation focus strategy

• A differentiation focus involves offering specialised products within the niche market
o Examples of businesses that adopt a differentiation focus strategy include Hotel
Chocolat and Brompton Bicycle Retail Ltd
§ Hotel Chocolat sells a range of premium, fair-trade celebration
confectionary in its chain of beautifully-designed retail outlets

An Evaluation of Niche Market Strategies

Strengths Weaknesses

• Focusing on a specific niche • Focusing on a small

allows a business to tailor segment limits sales
its products or services to a potential
particular audience

• If the niche market shrinks

• Can be highly or changes the business
profitableas low may struggle to break even
competition allows high
prices to be charged
• Larger competitors might
enter the niche market
• Serving a niche market well and outcompete the
can lead to strong customer focused business.
loyalty