Friday, 13 December 2013

Past Year Questions



☆  بِسْــــــــــــــمِ اللهِ الرَّحْمَنِ الرَّحِيْـــــمِ  ☆

Assalamualaikum. Here we meet again :)
I've been given a task by my lecturer of Information Technology in  Business (MGT 300) which is past year questions
(March 2012, October 2012, March 2013)
and we have to post the answer in our blog. 


             Porter’s Five Forces Model analyzes the competitive forces within the environment in which a company operates to asses the potential the profitability in an industry. There are divided into five forces which are buyer power, supplier power, threat of new entrants, threat of substitute products or services and threat of substitute products or services. Buyer power is the ability of buyers to affect the price they must pay for an item. If buyer power is high, customers can force a company and its competitors to compete on price, which typically drives prices down. Supplier power is a supply chain consists of all parties involved, directly or indirectly, in obtaining raw materials or a product. In a typical supply chain, a company will be both a supplier and a customer. When a supplier power is high, buyers lose revenue because they cannot pass on the raw material price increase to their customers. The threat of substitute products or services is high when there are many alternatives to a product or service and low when there are few alternatives from which to choose. For example, travelers have numerous substitutes for airline transportation including automobiles, trains and boats. A company can reduce the threat of substitutes by offering additional value through wider product distribution. The threat of new entrants is high when it is easy for new competitors to enter a market and low when there are significant entry barriers to joining a market. An entry barrier is a feature of a product or service that customers have come to expect and entering competitors must offer  the same for survival. Rivalry among existing competitors is high when competition is fierce in a market and low when competitors are more complacent. Kroger, Safeway and Albertson’s in the United States compete in many different way, essentially trying to beat or match each other on price. 


                 Porter has identified three generic business strategies for entering a new market which are broad cost leadership, broad differentiation and focused strategy. Porter's generic strategies are ways of gaining competitive advantage – in other words, developing the "edge" that gets you the sale and takes it away from your competitors. Companies that are successful in achieving Cost Leadership usually have a low cost base. One successful way of doing this is by adopting the Japanese Kaizen philosophy of  "continuous improvement". Differentiation involves making your products or services different from and more attractive among those of your competitors. To make a success of a differentiation strategy, organizations need to do a good research, development and innovation. Examples of the successful use of a differentiation strategy are Hero Honda, Asian Paints, HLL and Nike athletic shoes. Large organizations pursuing a differentiation strategy need to stay agile with their new product development processes. Companies that use focus strategies concentrate on particular niche markets and by understanding the dynamics of that market. But whether you use cost focus or differentiation focus, the key to making a success of a generic focus strategy is to ensure that you are adding something extra as a result of serving only that market niche. Examples of firm using a focus strategy include Southwest Airlines, which provides short-haul point-to-point flights in contrast to the hub-and-spoke model of mainstream carriers, and Family Dollar.


              The purpose of these activities is to produce value that exceeds the cost of providing the product or service, i.e. to make a profit margin. Inbound Logistics, includes receiving, storing, inventory control of input materials and their distribution to manufacturing as they are required. Operations, includes all the activities that transform the inputs into the final product (as machining, packaging, assembly, equipment maintenance, testing. Outbound Logistics, includes the activities required to get the final product to the customers (as warehousing, order fulfilment, transportation, distribution management.) Marketing and Sales, includes activities associated with the identification of customer needs and the generation of sales (as channel selection, advertising, promotion, selling, pricing, retail management, etc) Service includes the activities that maintain and enhance the value after the products and services are sold to the customers (as customer support, repair services, installation, training, spare parts management, upgrading, etc.).




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