Q.

1 PORTERS 5 FORCES

Meaning
Porter’s Five Forces analysis is a framework that
helps analyzing the level of competition within a
certain industry. It is especially useful when starting a
new business or when entering a new industry sector.
1. Threat of new entrants

New entrants in an industry bring new capacity and the

desire to gain market share. The seriousness of the
threat depends on the barriers to enter a certain
industry. The higher these barriers to entry, the smaller
the threat for existing players.
Example:
The threat of new entrants in the airline industry can
be considered as low to medium. It takes quite some
upfront investments to start an airline company (e.g.
purchasing aircrafts). Moreover, new entrants need
licenses, insurances, distribution channels and other
qualifications that are not easy to obtain when you are
new to the industry (e.g. access to flight routes)

2. Bargaining power of suppliers

This force analyzes how much power and control a

company’s supplier (also known as the market of
inputs) has over the potential to raise its prices or to
reduce the quality of purchased goods or services,
which in turn would lower an industry’s profitability
potential.
Example:
The bargaining power of suppliers in the airline
industry can be considered very high. When looking at
the major inputs that airline companies need, we see
that they are especially dependent on fuel and
aircrafts.

3. Bargaining power of buyers

The bargaining power of buyers is also described as the

market of outputs. This force analyzes to what extent
the customers are able to put the company under
pressure, which also affects the customer’s sensitivity
to price changes.

Example:
Bargaining power of buyers in the airline industry is
high. Customers are able to check prices of different
airline companies fast through the many online price
comparisons websites such as Skyscanner and Expedia.
4. Threat of substitute products

The existence of products outside of the realm of the

common product boundaries increases the propensity
of customers to switch to alternatives. In order to
discover these alternatives one should look beyond
similar products that are branded differently by
competitors.

Example:
In terms of the airline industry, it can be said that the
general need of its customers is traveling. It may be
clear that there are many alternatives for traveling
besides going by airplane. Depending on the urgency
and distance, customers could take the train or go by
car.

5. Rivalry among existing competitors

This last force of the Porter’s Five Forces examines how

intense the current competition is in the marketplace,
which is determined by the number of existing
competitors and what each competitor is capable of
doing. Rivalry is high when there are a lot
of competitors that are roughly equal in size and
power, when the industry is growing slowly and when
consumers can easily switch to a competitors offering
for little cost.

Q.2 McKinsey 7s Model

INTRODUCTION:

McKinsey 7S framework. Developed in the early 1980s

by Tom Peters and Robert Waterman, two consultants
working at the McKinsey & Company consulting firm,
the basic premise of the model is that there are seven
internal aspects of an organisation that need to be
aligned if it is to be successful.

The McKinsey 7S model involves seven interdependent

factors which are categorised as either "hard" or "soft"
elements:

 "Hard" elements are easier to define or identify

and management can directly influence them:
These are strategy statements; organisation charts
and reporting lines; and formal processes and IT
systems.

 "Soft" elements, on the other hand, can be more

difficult to describe, and are less tangible and
more influenced by culture. However, these soft
elements are as important as the hard elements if
the organisation is going to be successful.
Let's look at each of the elements specifically:

1.Strategy: the plan to maintain and build competitive

advantage over the competition.

2.Structure: the way the organisation is structured and

who reports to whom.

3.Systems: the daily activities and procedures that staff

members engage in to get the job done.

4.Shared Values called "superordinate goals" when the

model was first developed, these are the core values of
the company that are evidenced in the corporate
culture and the general work ethic.

5.Style: the style of leadership adopted.

6.Staff: the employees and their general capabilities.

7.Skills : the actual skills and competencies of the

employees working for the company.
Q.3 BCG Matrix

INTRODUCTION:
The BCG Growth-Share Matrix is a portfolio planning
model developed by Bruce Henderson of the Boston
Consulting Group in the early 1970's. It is based on the
observation that a company's business units can be
classified into four categories based on combinations
of market growth and market share relative to the
largest competitor, hence the name "growth-share".
The four categories are:
1.Dogs - Dogs have low market share and a low growth
rate and thus neither generate nor consume a large
amount of cash. However, dogs do not have enough
money because of the money tied up in a business that
has little potential.

2.Question marks - Question marks are growing rapidly

and thus consume large amounts of cash, but because
they have low market shares they do not generate
much cash. The result is a large net cash consumption.
A question mark (also known as a "problem child") has
the potential to gain market share and become a star,
and eventually a cash cow when the market growth
slows. If the question mark does not succeed in
becoming the market leader, then after perhaps years
of cash consumption it will degenerate into a dog when
the market growth declines. Question marks must be
analyzed carefully in order to determine whether they
are worth the investment required to grow market
share.
3.Stars - Stars generate large amounts of cash because
of their strong relative market share, but also consume
large amounts of cash because of their high growth
rate; therefore the cash in each direction
approximately nets out. If a star can maintain its large
market share, it will become a cash cow when the
market growth rate declines. The portfolio of a
diversified company always should have stars that will
become the next cash cows and ensure future cash
generation.

4.Cash cows - As leaders in a mature market, cash

cows exhibit a return on assets that is greater than the
market growth rate, and thus generate more cash than
they consume. Such business units should be "milked",
extracting the profits and investing as little cash as
possible. Cash cows provide the cash required to turn
question marks into market leaders, to cover the
administrative costs of the company, to fund research
and development, to service the corporate debt, and
to pay dividends to shareholders. Because the cash
cow generates a relatively stable cash flow, its value
can be determined with reasonable accuracy by
calculating the present value of its cash stream using a
discounted cash flow analysis.
Q.4 Ansoff Matrix

INTRODUCTION:
The Ansoff Matrix, also called the Product/Market
Expansion Grid, is a tool used by firms to analyze and
plan their strategies for growth. The matrix shows four
strategies that can be used to help a firm grow and also
analyzes the risk associated with each strategy.

1. Market Penetration

In a market penetration strategy, the firm uses its

products in the existing market. In other words, a firm
is aiming to increase its market share with a market
penetration strategy.
The market penetration strategy can be executed in a
number of ways:
 Decreasing prices to attract new customers
 Increasing promotion and distribution efforts
 Acquiring a competitor in the same marketplace

2. Product Development

In a product development strategy, the firm develops a

new product to cater to the existing market. The move
typically involves extensive research and development
and expansion of the company’s product range. The
product development strategy is employed when firms
have a strong understanding of their current market
and are able to provide innovative solutions to meet
the needs of the existing market.
This strategy, too, may be implemented in a number of
ways:

 Investing in R&D to develop new products to cater

to the existing market

 Acquiring a competitor’s product and merging

resources to create a new product that better
meets the need of the existing market

 Forming strategic partnerships with other firms to

gain access to each partner’s distribution channels
or brand.

3. Market Development

In a market development strategy, the firm enters a

new market with its existing product(s). In this context,
expanding into new markets may mean expanding into
new geographic regions, customer segments, etc. The
market development strategy is most successful if
(1) the firm owns proprietary technology that it can
leverage into new markets,
(2) potential consumers in the new market are
profitable (i.e., they possess disposable income), and
(3) consumer behavior in the new markets does not
deviate too far from that of consumers in the existing
markets.

4. Diversification

In a diversification strategy, the firm enters a new

market with a new product. Although such a strategy is
the riskiest, as both market and product development
are required, the risk can be mitigated somewhat
through related diversification. Also, the diversification
strategy may offer the greatest potential for increased
revenues, as it opens up an entirely new revenue
stream for the company – accesses consumer spending
dollars in a market that the company did not previously
have any access to.
There are two types of diversification a firm can
employ:
1. Related diversification: There are potential
synergies to be realized between the existing business
and the new product/market.
For example, a leather shoe producer that starts a line
of leather wallets or accessories is pursuing a related
diversification strategy.
2. Unrelated diversification: There are no potential
synergies to be realized between the existing business
and the new product/market.
For example, a leather shoe producer that starts
manufacturing phones is pursuing an unrelated
diversification strategy.

Q.5 VUCA

INTRODUCTION :
 VUCA is an acronym that stands
for volatility, uncertainty, complexity and ambiguity, a
combination of qualities that, taken together,
characterize the nature of some difficult conditions and
situations.

The term is also sometimes said to stand for

the adjectives: volatile, uncertain, complex and ambigu
ous.
1.Volatility is the quality of being subject to frequent,
rapid and significant change. In a Volatile market, for
example, the prices of commodities can rise or fall
considerably in a short period of time, and the
direction of a trend may reverse suddenly. 

2.Uncertainty is a component of that situation, in

which events and outcomes are unpredictable. 

3.Complexity involves a multiplicity of issues and

factors, some of which may be interconnected.

4. Ambiguity is shown as clarity and the difficulty of

understanding exactly what the situation is.

Q.6 VRIO
INTRODUCTION:
VRIO framework is the tool used to analyze firm’s
internal resources and capabilities to find out if they
can be a source of sustained competitive advantage.
1. Valuable
The first question of the framework asks if a resource
adds value by enabling a firm to exploit opportunities
or defend against threats. If the answer is yes, then a
resource is considered valuable. Resources are also
valuable if they help organizations to increase the
perceived customer value. This is done by increasing
differentiation or/and decreasing the price of the
product.

2. Rare
Resources that can only be acquired by one or very few
companies are considered rare. Rare and valuable
resources grant temporary competitive advantage. On
the other hand, the situation when more than few
companies have the same resource or uses the
capability in the similar way, leads to competitive
parity. This is because firms can use identical resources
to implement the same strategies and no organization
can achieve superior performance.

3. Imitate
A resource is costly to imitate if other organizations
that doesn’t have it can’t imitate, buy or substitute it at
a reasonable price. Imitation can occur in two ways: by
directly imitating (duplicating) the resource or
providing the comparable product/service
(substituting).

4. Organized to Capture Value

The resources itself do not confer any advantage for a
company if it’s not organized to capture the value from
them. A firm must organize its management systems,
processes, policies, organizational structure and
culture to be able to fully realize the potential of its
valuable, rare and costly to imitate resources and
capabilities. Only then the companies can achieve
sustained competitive advantage.
Q.7 BALANCED SCORECARD
INTRODUCTION:
Balanced scorecard is a strategic management
performance metric used to identify and improve
various internal business functions and their resulting
external outcomes. Balanced scorecards are used to
measure and provide feedback to organizations. Data
collection is crucial to providing quantitative results as
managers and executives gather and interpret the
information and use it to make better decisions for the
organization.

1.Learning and growth are analyzed through the

investigation of training and knowledge resources. This
first handles how well information is captured and how
effectively employees use the information to convert it
to a competitive advantage over the industry.

2.Business processes are evaluated by investigating

how well products are manufactured. Operational
management is analyzed to track any gaps, delays,
bottlenecks, shortages, or waste.
3.Customer perspectives are collected to gauge
customer satisfaction with quality, price, and
availability of products or services. Customers provide
feedback about their satisfaction with current
products.

4.Financial data, such as sales, expenditures, and

income are used to understand financial performance.
These financial metrics may include dollar amounts,
financial ratios, budget variances, or income targets.

Q.8 RED OCEAN AND BLUE OCEAN

 Red ocean strategy involves competing in

industries that are currently in existence. 

 One industry in which a red ocean strategy would

be necessary is the soft drink industry. This
industry has been in existence for a long time, and
there are many barriers to entry. There are
industry leaders in place such as Coke and Pepsi,
and there are also many smaller companies also in
competition for market share. There’s also limited
 shelf space and vending spots, well-established
brand recognition of popular, current brands, and
many other factors that affect new competition.
This causes the soft drink industry to be very
competitive to enter and succeed in.
 Blue ocean strategy is based on creating demand
that is not currently in existence, rather than
fighting over it with other companies . Most blue
oceans are created from within red oceans by
expanding existing industry boundaries. The key to
a successful blue ocean strategy is finding the right
market opportunity and making the competition
irrelevant.

 An example of a successful execution of a blue

ocean strategy is the iPod. When the iPod was
introduced in 2001, Steve Jobs said that “with
[the] iPod, Apple has invented a whole new
category of digital music player that lets you put
your entire music collection in your pocket and
listen to it wherever you go.” Apple looked beyond
what was in the market at that time and
introduced a product that created a new industry
in and of itself. Apple looked beyond what
 customers were asking for and created a
successful product.

Q.9 PESTEL

PESTEL Analysis is a strategic framework used to

evaluate the external environment of a business by
breaking down the opportunities and risks
into Political, Economic, Social, Technological, Environ
mental, and Legal factors.

1.Political Factors
When looking at political factors, you are looking at
how government policy and actions intervene in the
economy and other factors that can affect a
business. These include the following:

Tax Policy
Trade Restrictions
Tariffs
2. Economic Factors
Economic Factors take into account the various aspects
of the economy, and how the outlook on each area
could impact your business. These economic indicators
are usually measured and reported by Central
Banks and other Government Agencies. They include
the following:

Economic Growth Rates

Interest Rates
Exchange Rates
Inflation
Unemployment Rates

3. Social Factors
PESTEL analysis also takes into consideration social
factors, which are related to the cultural and
demographic trends of society. Social norms and
pressures are key to determining consumer behavior.
Factors to be considered are the following:
Cultural Aspects & Perceptions
Health Consciousness
Populations Growth Rates
Age Distribution
Career Attitudes
4. Technological Factors

Technological factors are linked to innovation in the

industry, as well as innovation in the overall economy.
Not being up to date to the latest trends of a particular
industry can be extremely harmful to operations.
Technological factors include the following:

R&D Activity
Automation
Technological Incentives
The Rate of change in technology

5. Environmental Factors
Environmental factors concern the ecological impacts
on business. As weather extremes become more
common, businesses need to plan how to adapt to
these changes. Key environmental factors include the
following:

Weather Conditions
Temperature
Climate Change
Pollution
Natural disasters (tsunami, tornadoes, etc.

6. Legal Factors

There is often uncertainty regarding the difference

between political and legal factors in the context of a
PESTEL analysis. Legal factors pertain to any legal
forces that define what a business can or cannot do.
Political factors involve the relationship between
business and the government. Political and legal
factors can intersect when governmental bodies
introduce legislature and policies that affect how
businesses operate.
Legal factors include the following:
Industry Regulation
Licenses & Permits
Labor Laws
Intellectual Property

 Q.10 RESOURCE BASED VIEW MODEL

Q.11 GE MATRIX

The GE McKinsey Matrix comprises two axes. The

attractiveness of the market is represented on the y-
axis and the competitiveness and competence of the
business unit are plotted on the x-axis. Both axes are
divided into three categories (high, medium, low) thus
creating nine cells. The business unit is placed within
the matrix using circles.
  Invest/ grow
Growth is facilitated by expanding the market or
making investments.

 Hold
By making careful investments, the current market is
consolidated.

 Harvest / sell
No extra investments but mainly focusing on
maximizing returns. By assigning a weight to each
factor, the GE McKinsey Matrix can be used more
effectively. Based on these weights, the scores for
competitiveness and market attractiveness can be
calculated more accurately for each business unit.
Q.12. FIVE GENERIC COMPETITIVE STRATEGY

The Five Generic Competitive Strategies

1. A low-cost provider strategy – striving to achieve

lower overall costs than rivals and appealing to a
broad spectrum of customers, usually by under
pricing rivals.
 2. A broad differentiation strategy – seeking to
differentiate the company’s product offering from
rivals’ in ways that will appeal to a broad spectrum
of buyers.

3. A best-cost provider strategy – giving customers

more value for their money by incorporating
good-to-excellent product attributes at a lower
cost than rivals; the target is to have the lowest
(best) costs and prices compared to rivals offering
products with comparable attributes.

4. A focused (or market niche) strategy based on

low costs – concentrating on a narrow buyer
segment and out competing rivals by having lower
costs than rivals and thus being able to serve niche
members at a lower price.

5. A focused (or market niche) strategy based on

differentiation – concentrating on a narrow buyer
segment and out competing rivals by offering niche
members customized attributes that meet their tastes
and requirements better than rivals’ products.
Each of these five generic competitive approaches
stakes out a different market position. The decision on
which generic strategy to employ is conceivably the
most vital strategic commitment for your company.
This commitment will drive the rest of the strategic
actions that your company agrees to and it sets the
entire tone for your quest of a competitive advantage
over competitors while “Creating Your Own Lane” in
business success.