Today, we further discussed about SWOT Analysis and processing it to be useful for decision making. After identifying the internal and external factors that may affect a business operation, positive and negative comments are made about these factors. The positive and negative comments are then grouped and totaled to get the net internal and external factor. This value is useful for making Grand Strategy Matrix that involves strength and weakness in the horizontal axis (strength as the positive value and weakness as the negative value)as well as opportunity and threat in the vertical axis (opportunity as the positive value and threat as the negative value). The values gotten from the net internal (horizontal axis) and external (vertical axis) factors are plotted in the matrix to form a coordinate.
- Positive External and Positive Internal factor result in Expansion strategy
Expansion is a company's attempt to allocate its resources to make the business bigger. There are basically two types of expansion strategy, concentration (can be vertical and horizontal) and diversification (concentric and conglomerate). Concentration is the expansion of a business in the same industry in the same (horizontal) or different (vertical) level of business activity, while diversification is the expansion of a business to a different industry with (concentric) or without (conglomerate) any similarity in the business type.
- Positive External and Negative Internal factor result in Stability
When a company wants to maintain its stability, then it should ensure that its present course is well run.
- Negative External and Negative Internal factor result in Retrenchment
This is the final stage of a company that doesn't have any other way out, that is, reducing the use of its resources in order not to worsen efficiency. There are several ways to do this, they are turnaround (making former product improvement), divestment (taking out current investment) or liquidation (liquidating assets to generate more cash AKA announcing bankruptcy!
- Negative External and Positive Internal factor result in Combination
This situation with unfavorable threat from the industry and the favorable strength of the company can be handled through the combination of several strategies simultaneously or sequentially to achieve its goals.
This analysis may help us in determining the present condition of our company, whether it is favorable or unfavorable and assist us in making the right decision and taking the right action. But of course, it depends on the type of business, its scale of operation and lots of other factors. In my opinion, this analysis is quite simple to conduct but should be supported with any other analysis such as product life cycle and value analysis.
Monday, March 21, 2011
Monday, March 14, 2011
Report and Discussion
Making a good report is every student's task, from scientific analysis to business plan. It is an essential part of our studies and that was why we were given some tips in making good report. Here they are:
1. simplicity, the report should be straight to the point of discussion
2. clarity, the language used should be clear and easily understood
3. accuracy, the facts presented should be from trusted source
4. completeness, the contents should meet the standards given
5. relevance, it should stick and always be related to the main topic
6. objectivity, use of formal language
7. brevity, there should be a brief description about the topic being analyzed
8. reader oriented, the language used should suit the targeted reader
9. appendix, support materials should be mentioned
These are the things that we can do to improve the quality of our reports. It will be very useful for us when we are making SWOT Analysis and Marketing Plan for our mid-term and final-term exams respectively.
After the discussion on making good report, then we went back on the theory. Today, we learned about SWOT and Context Analysis.
SWOT Analysis is a strategic planning method used to determine the strengths, weaknesses, opportunities and threats of a business venture. Strength and weaknesses are internal factors while opportunities and threats are external factors. For new comers like us, this method should be very useful in analyzing our competitors' as well as our ability in surviving the market we are going to get into. This way we can maximize the use of our strength and exploit the opportunities presented to us to earn success.
Context Analysis is a method to analyze the environment in which a business operates. This includes the economy of the country, technology, socio-cultural, regulatory and physical context. In my business subject in high school, I also learned a similar concept called PESTEL Analysis that covers the political, economical, social, technological, environmental and legal factors that can influence business activities. We need to be aware that these things can affect the planning or decision making of our business. For example, we can use the improvements in technology in getting better product quality and more effective, time efficient production rather than with the use of man power.
Even for a small scale business like ours, we need to take into account the external factors happening around us that can affect our business activities such as changing trading policy, environmental concern (e.g. global warming or waste) and changes in currency rates.
1. simplicity, the report should be straight to the point of discussion
2. clarity, the language used should be clear and easily understood
3. accuracy, the facts presented should be from trusted source
4. completeness, the contents should meet the standards given
5. relevance, it should stick and always be related to the main topic
6. objectivity, use of formal language
7. brevity, there should be a brief description about the topic being analyzed
8. reader oriented, the language used should suit the targeted reader
9. appendix, support materials should be mentioned
These are the things that we can do to improve the quality of our reports. It will be very useful for us when we are making SWOT Analysis and Marketing Plan for our mid-term and final-term exams respectively.
After the discussion on making good report, then we went back on the theory. Today, we learned about SWOT and Context Analysis.
SWOT Analysis is a strategic planning method used to determine the strengths, weaknesses, opportunities and threats of a business venture. Strength and weaknesses are internal factors while opportunities and threats are external factors. For new comers like us, this method should be very useful in analyzing our competitors' as well as our ability in surviving the market we are going to get into. This way we can maximize the use of our strength and exploit the opportunities presented to us to earn success.
Context Analysis is a method to analyze the environment in which a business operates. This includes the economy of the country, technology, socio-cultural, regulatory and physical context. In my business subject in high school, I also learned a similar concept called PESTEL Analysis that covers the political, economical, social, technological, environmental and legal factors that can influence business activities. We need to be aware that these things can affect the planning or decision making of our business. For example, we can use the improvements in technology in getting better product quality and more effective, time efficient production rather than with the use of man power.
Even for a small scale business like ours, we need to take into account the external factors happening around us that can affect our business activities such as changing trading policy, environmental concern (e.g. global warming or waste) and changes in currency rates.
Monday, March 7, 2011
Questions for Industrial Association
Tomorrow, 2008 and 2009 THM students will have a talk show with the industry association leaders of tourism and hospitality businesses. Our lecturer, Mr. Sandy made us to create some questions regarding our business plan to be asked during the talk show.
Our business is in the food and beverage industry and we focus on providing packed snacks for events such as meetings and seminars, specifically marketed in the middle to upper class economy. We bring new concept in the snacks itself by creating innovative flavors and shapes through producing and bringing together innovative pastry products all around us.
So, here are the questions that we are going to ask tomorrow:
1. In your opinion, what is the most suitable price range and most strategic place to sell our product?
2. What pastry product is in the rise (getting popular) at the moment? Do you think our innovation may have the chance to get popular in the market as well?
3. What is the characteristics or profile of the target market that may be interested in our innovative product? Will it be the youngsters or elders? Do you think this target market will bring benefits to the company?
4. In the pastry industry, is product innovation more beneficial than innovation in packaging? Which one presents more potential?
These industry association leaders are experienced in their fields and may give us information, suggestions, helps and considerations in the planning of our business. The theory in class that we learn may not be the same with the current market condition and it may not also be enough to help us in making decisions. I am very excited for tomorrow's talk show and really looking forward to meet these leaders!
Our business is in the food and beverage industry and we focus on providing packed snacks for events such as meetings and seminars, specifically marketed in the middle to upper class economy. We bring new concept in the snacks itself by creating innovative flavors and shapes through producing and bringing together innovative pastry products all around us.
So, here are the questions that we are going to ask tomorrow:
1. In your opinion, what is the most suitable price range and most strategic place to sell our product?
2. What pastry product is in the rise (getting popular) at the moment? Do you think our innovation may have the chance to get popular in the market as well?
3. What is the characteristics or profile of the target market that may be interested in our innovative product? Will it be the youngsters or elders? Do you think this target market will bring benefits to the company?
4. In the pastry industry, is product innovation more beneficial than innovation in packaging? Which one presents more potential?
These industry association leaders are experienced in their fields and may give us information, suggestions, helps and considerations in the planning of our business. The theory in class that we learn may not be the same with the current market condition and it may not also be enough to help us in making decisions. I am very excited for tomorrow's talk show and really looking forward to meet these leaders!
Monday, February 28, 2011
Market Analysis
There are two factors that we have to consider when analyzing a market, they are the customer and competitor.
In analyzing the market, the first step is to segment the population. Segmentation is the process of dividing the population into groups with similar characteristics. This can be divided into demographic (age, sex, religion), geographic (living areas) and psychographic (lifestyle, income, personality). After that, the next step is targeting, here we have to choose which portion of the segment are we going to cater to. This chosen target market should be the most suitable and potential for the company's offering. The last step is positioning where the company needs to compare the product to be launched to the products in the market, give it a competitive advantage that is distinctive from other products and can be remembered clearly by the customer.
The next process is value chain analysis. It consists of the primary and support activities involved in a company. Primary activities are the main activities that a company do everyday such as purchasing (and any other inbound logistics), operations, sales (and any other outbound logistics), marketing, sales and service. While support activities are the other things a company do to enhance the primary activities, such as firm infrastructure, human resources management, technology and procurements. These two activities will directly affect the profit margin that the company will generate in the end of accounting period. In order to gain more profit margin, a company with penetration pricing strategy will have to cut down the costs from these two activities so that a lower selling price may be set and higher market share may be obtained. However, for a company with market skimming approach, costs minimization may be done as long as it doesn't affect the product quality.
In analyzing the market, the first step is to segment the population. Segmentation is the process of dividing the population into groups with similar characteristics. This can be divided into demographic (age, sex, religion), geographic (living areas) and psychographic (lifestyle, income, personality). After that, the next step is targeting, here we have to choose which portion of the segment are we going to cater to. This chosen target market should be the most suitable and potential for the company's offering. The last step is positioning where the company needs to compare the product to be launched to the products in the market, give it a competitive advantage that is distinctive from other products and can be remembered clearly by the customer.
The next process is value chain analysis. It consists of the primary and support activities involved in a company. Primary activities are the main activities that a company do everyday such as purchasing (and any other inbound logistics), operations, sales (and any other outbound logistics), marketing, sales and service. While support activities are the other things a company do to enhance the primary activities, such as firm infrastructure, human resources management, technology and procurements. These two activities will directly affect the profit margin that the company will generate in the end of accounting period. In order to gain more profit margin, a company with penetration pricing strategy will have to cut down the costs from these two activities so that a lower selling price may be set and higher market share may be obtained. However, for a company with market skimming approach, costs minimization may be done as long as it doesn't affect the product quality.
Monday, February 21, 2011
Five Forces and Product Life Cycle Analysis
Market is the place where demand push and pull of goods or services occur and where business transactions happen. While, industry is the people or companies selling similar goods or services to the same target market. Lastly, sector is the smaller part of industry with different segment.
In creating new business, we have to make a wise decision in which market, industry or segment where we want to operate. This decision requires many factors (both internal and external) to be analyzed carefully so that we can make the right decision. We don't want to enter a market with too intense competition because the chance of winning will be small but an unexploited market with lesser competition will open up chances. There are basically 2 methods that we learned today that can help us analyzing market competitiveness, Five Forces and Product Life Cycle Analysis.
Five Forces Analysis takes into account the external factors that affect sector competitiveness, they are threat of new entrants, bargaining power of buyers, threat of substitute products or services, bargaining power of suppliers and rivalry among existing competitors. We have to understand these five factors in the sector that we want to enter and decide whether they give us opportunities or threats. If more opportunities than threats are presented then we can enter this market easily, but if the result is the contrary then entering this sector may not be possible.
Product Life Cycle represents the stages a product in the market will go through before it should be drawn back and replaced by another product. These stages include introduction, growth, maturity and decline. For us, it is recommended to enter a market with a product in the growth stage because the competition is not as intense as in the maturity stage so that we will not need to make a major innovation in the product, but just a minor alteration of the currently existing product in the market.
These two analysis are very useful for us when we are deciding on setting up a new business. They will help us determine the competitiveness of a certain market, setting up other marketing strategies, allocate resources and deciding on the product innovation that we have to make.
In creating new business, we have to make a wise decision in which market, industry or segment where we want to operate. This decision requires many factors (both internal and external) to be analyzed carefully so that we can make the right decision. We don't want to enter a market with too intense competition because the chance of winning will be small but an unexploited market with lesser competition will open up chances. There are basically 2 methods that we learned today that can help us analyzing market competitiveness, Five Forces and Product Life Cycle Analysis.
Five Forces Analysis takes into account the external factors that affect sector competitiveness, they are threat of new entrants, bargaining power of buyers, threat of substitute products or services, bargaining power of suppliers and rivalry among existing competitors. We have to understand these five factors in the sector that we want to enter and decide whether they give us opportunities or threats. If more opportunities than threats are presented then we can enter this market easily, but if the result is the contrary then entering this sector may not be possible.
Product Life Cycle represents the stages a product in the market will go through before it should be drawn back and replaced by another product. These stages include introduction, growth, maturity and decline. For us, it is recommended to enter a market with a product in the growth stage because the competition is not as intense as in the maturity stage so that we will not need to make a major innovation in the product, but just a minor alteration of the currently existing product in the market.
These two analysis are very useful for us when we are deciding on setting up a new business. They will help us determine the competitiveness of a certain market, setting up other marketing strategies, allocate resources and deciding on the product innovation that we have to make.
Monday, February 14, 2011
Innovation, Competitive Advantage and Sustainability
In our second meeting, we learned about product innovation. It is the invention, creation and introduction of a brand new good or service to the market. Yes, as an entrepreneur we have to be smart in analyzing the market and innovating a product to create a new market for it. In this phase, creativity is tested so that the product that we come up with can be well received by the market and bring us profit. That's the main idea behind product innovation. Innovation is a very important process because we don't want to be just a copycat of other people's product and earn little revenue before the product enters its decline stage but creating a brand image that will benefit the whole company.
The thing about product innovation is, the product should have a competitive advantage compared to other products in the market. Competitive advantage itself is a special factor that the product has over any other products, can be in terms of quality, function and any other factors. For a new innovated product to be able to strive in the market and win over its competitors, it has to have competitive advantage.
We all know that a business is a going concern, it means it will continue to operate to an indefinite future. Indeed, in operating a business we have to remember that it has to be sustainable. Competitors will come up copying and bringing up new ideas, that is why we have to continue to innovate to retain our sustainability.
Even for the small-scale businesses that we're going to do this semester, we have to be innovative in order to gain our own market and lesser competition. This may involve high risk, but with a thorough analysis and research, the right strategy can be formed to achieve our goal.
The thing about product innovation is, the product should have a competitive advantage compared to other products in the market. Competitive advantage itself is a special factor that the product has over any other products, can be in terms of quality, function and any other factors. For a new innovated product to be able to strive in the market and win over its competitors, it has to have competitive advantage.
We all know that a business is a going concern, it means it will continue to operate to an indefinite future. Indeed, in operating a business we have to remember that it has to be sustainable. Competitors will come up copying and bringing up new ideas, that is why we have to continue to innovate to retain our sustainability.
Even for the small-scale businesses that we're going to do this semester, we have to be innovative in order to gain our own market and lesser competition. This may involve high risk, but with a thorough analysis and research, the right strategy can be formed to achieve our goal.
Monday, February 7, 2011
Strategic Marketing Report
Today is my first day back to campus.. It's been almost 8 months since the last time I went to classes, worked on assignments and projects (remembering that I spent the last semester away in Bali for internship).. Well, as usual I will not expect something big on the first day, probably some introductions, get-together and stuff like that.. However, I found myself sitting in front of my laptop, making blog for marketing class assignment! Geeez....... Ooooh, well let's do the assignment and get it over with so that I can go back to my DVDs..
For our first meeting, we were introduced to marketing strategy and I found that it is so important because we need to make use of our limited resources on the greatest opportunity available so that we can increase sales, gain profit and continue doing business! Basically, business is like a war with the marketing team in the front line, without the right strategy, we will not be able to defeat our enemy and win the battle.
More than that, we also learned about The G-STIC Action Planning Pyramid which is composed of Goal, Strategy, Tactic, Implementation and Control. This is the guideline to be followed when any people (or company) want to achieve something, starting from the very top of the triangle which is the Goal itself. First of all we need to have a goal so that we can stay focused on our mission then we can plan our strategies and tactics to achieve that goal. After everything is well planned then we can now begin to implement our strategies and tactics and lastly control our performance progress towards the goal that we've set. This action planning pyramid can be applied not only for businesses but in any areas of our life including our studies, career or even love life!
What got my attention the most was when the lecturer told us that we're not going to learn about the marketing used in multinational or large companies (the one that I've learned in Business Studies class in high school) but more on the entrepreneurial marketing that will be very useful for us to start our own business next semester. Wow, great idea! I was really excited....
For our first meeting, we were introduced to marketing strategy and I found that it is so important because we need to make use of our limited resources on the greatest opportunity available so that we can increase sales, gain profit and continue doing business! Basically, business is like a war with the marketing team in the front line, without the right strategy, we will not be able to defeat our enemy and win the battle.
More than that, we also learned about The G-STIC Action Planning Pyramid which is composed of Goal, Strategy, Tactic, Implementation and Control. This is the guideline to be followed when any people (or company) want to achieve something, starting from the very top of the triangle which is the Goal itself. First of all we need to have a goal so that we can stay focused on our mission then we can plan our strategies and tactics to achieve that goal. After everything is well planned then we can now begin to implement our strategies and tactics and lastly control our performance progress towards the goal that we've set. This action planning pyramid can be applied not only for businesses but in any areas of our life including our studies, career or even love life!
What got my attention the most was when the lecturer told us that we're not going to learn about the marketing used in multinational or large companies (the one that I've learned in Business Studies class in high school) but more on the entrepreneurial marketing that will be very useful for us to start our own business next semester. Wow, great idea! I was really excited....
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