Business Ch 10

Strengths and weaknesses in SWOT analysis refer to?

external factors of a business.

How do you calculate market share?

in order to calculate your market share you must have some estimate of the entire market potential.

NAFTA

North American Free Trade Agreement; allows open trade with US, Mexico, and Canada.

How can you replicate a business?

1.building a chain of company-owned sites 2.selling franchises.

Is it best to increase the breadth or depth?

Generally, it is easier and cheaper to increase depth, but less likely to bring new profit from existing customers. Deepening the mix is more likely to be a move in response to competition or changing trends. Offering whole new product lines (more breadth) has greater potential for new profit, but also greater risk.

What is Standards Council of Canada?

A federal Crown corporation that provides information and services related to international product requirements.

What is CCC (Canadian Commercial Corporation)?

A federal Crown corporation that works with many government departments and businesses to facilitate international trade

What is weighted ranking?

A method of numerically ranking competing options on different dimensions (for cost, reliability, comfort, appearance, etc.). Each dimension is weighted for its relative importance (e.g. on a scale of 1-5). The rank of a particular option is multiplied by the weight of that dimension. A total score can be calculated for each option to help choose which is the best option.

What is CSA (Canadian Standards Association?

A non-profit organization whose members are Canadian businesses. The purpose of the organization is to set safety standards for manufactured products at international levels or better and to test and certify products for meeting these standards

What is the renewal part of the business?

A part of the business cycle; the process of refocusing the business, leading to a new phase of growth.

What is a prototype?

A single working sample of a product.

What is a multinational company?

A very large company that typically has supply sources or facilities in several countries and markets their products internationally.

What is a niche?

A very small market segment that a business satisfies with specialized products or services.

What is market share expansion?

Growth by selling more of the same products and services that a business is already selling to the same customer groups that the business already targets; capturing a greater portion of the market potential.

What is product/service expansion?

Growth by selling new products and/or services to the customer groups that a business already targets.

What is market segment expansion?

Growth by selling the products and services that a business already offers to new groups of customers.

What is a master franchise?

An arrangement where a master franchisee buys the right to sell franchises to others within a given territory.

What I an exit interview?

An interview with a departing employee intended to find out any reasons for the employee's dissatisfaction as well as to have the employee leave with positive feelings about the company.

How can you track market potential throughout time?

By historically tracking the market potential, you can have some idea about the future demand for your products or services. An approaching saturation point is a definite warning that you must embark on some form of renewal.

Who protects us from predatory pricing?

Canada's Competition Bureau administers the Competition Act, which forbids predatory pricing as a way of eliminating competition

An increase in your market share must mean a decrease in the market share of each of your competitors.

False

Banks and other lenders are more interested in helping to finance new businesses than in lending to established firms.

False

It is best for a small firm to deal through as many different distribution channels as possible.

False

It is best to expand into several new market segments at one time.

False

It's always best to trust your instincts when looking for new products to resell.

False

Predatory pricing usually benefits a smaller competitor.

False

Products in the maturity stage of the product life cycle require high levels of promotion.

False

The growth stage of the business cycle is characterized by stable sales and profits.

False

What is the difference between feasibility and SWOT?

In your original feasibility research, you knew exactly what you were trying to calculate. In SWOT analysis, you start out not knowing as precisely what you are looking for. What you perceive as your greatest strength may, in fact, just be the industry average

For most industries there are convenient secondary sources an entrepreneur can use to maintain some ongoing sense of what is happening to the size of a particular market. These sources include

Industry publications Economic reports Business periodicals Trends newsletter

Opportunities and threats can arise whenever something in your environment changes. Just a few examples of such changes are

Legislation Demographics Competition Technology

What is PLM (product life-cycle management)?

Methods and systems for organizing and sharing product-related information that can affect the length of time a product can be viable.

How do you expand your market segment?

Remember that at start-up it is safer for your business to specialize in a very narrow group of customers (a specific age range, a particular type of institution, or a defined geographic area) rather than a broad segment. Later, when expanding your range of customers, you should ideally expand one segment at a time. The selection of the appropriate segment to start your expansion should be influenced by the need to disrupt the rest of your marketing mix as little as possible.

What is the SWOT analysis?

Research and drawing conclusions about the strengths and weaknesses of a particular company, as well as about the opportunities and threats that it faces.

What is hypothesis testing?

Research to see whether a particular assumption can be supported by the evidence.

How can you forecast for a new business?

Sales forecasting for a business at start-up is both difficult and inaccurate

Examples of internal issues that would be described as strengths or weaknesses include

Site (less traffic than competitor?) Image Product/service mix People and expertise Financial position

What does the Canadian Commercial Corporation (CCC) offer?

Small Canadian firms can register with the CCC and have their products, services, or capabilities listed in the database that CCC shares with Industry Canada

What is 100 percent capacity?

The maximum amount of sales or production that a company could generate in a year as the company currently stands in terms of space, equipment, and employees.

A business cannot supply products or services beyond 100 percent of its capacity.

True

Market potential is made up of your market share plus the market share of all your competitors.

True

Selling franchises is a faster way to expand than building your own company-owned chain.

True

The break-even point is where a business can start to produce net profit.

True

True or False? "F.O.B. the seller" means that the buyer will be responsible for all shipping costs.

True

The majority of new products fail in the marketplace.

True..over 80% fail

What is predatory pricing?

Where a company loses money on a product or service by charging prices so low as to drive competitors from the market. Then the company recoups its losses by overcharging in a market where it has no competition.

You'd like to know all of this, and just about anything else of strategic value concerning changes in your competition. Techniques for keeping an eye on the direct competition include

■Bookmarking and regularly monitoring the websites of competitors, looking for changes in their marketing mix and for any special announcements. ■Doing regular web searches for recent references to competitors. ■Participating in trade associations where you can meet with other entrepreneurs in the same industry and where the natural lunchtime topic of conversation is business. It's surprising what your competitor may reveal in a social setting. ■Using clipping services to let you know what the media are saying about your competitors (see above). ■"Shopping" competitors regularly by making phone calls requesting information, or taking trips to retail sites. (Note the ethical issue of being careful not to abuse the time of commission salespeople who will think you are a prospective customer.) ■Gathering information from your own sales prospects and new customers (who presumably are or were dealing with your competition). ■Undertaking formal primary marketing research that surveys customer experiences with you and your competitors.

The stages of a business:

■Start-up. Little revenue, high expenses (therefore little or no profit), and a high failure rate are the characteristics of this stage. ■Growth. At this stage the business experiences increasing revenue and profits, plus a declining risk of failure. ■Maturity. The business levels off in this stage, with stable sales and profits, plus a low risk of failure. ■Decline. Here is where profits fall; this stage will ultimately lead to the failure of the business. ■Renewal. This stage is where the business adapts to the changing environment: changes in customer needs, in technology, in the competition, and so on. In many ways it is similar to the start-up stage, with high expenses and very slow growth.

Changes in promotion that you may consider for increasing your market share would include

■increased personal selling, through the hiring of more sales staff or a more aggressive sales approach that could include changing the incentives for your salespeople; ■increased sales promotion and publicity activities, although these tend to have only a short-term effect on sales activities as opposed to a more permanent capture of market share; ■increased advertising, through either greater frequency in currently used media or an expansion to new advertising media.

Typical methods of estimating 100 percent capacity for a business include

■machinery or equipment capacity (the dollar income value of everything your equipment could produce in a year). ■facilities capacity (e.g., the number of seats in your theatre × the number of performances a year × the average ticket price). ■employee capacity (e.g., the maximum number of customers your travel agents can serve in a day × your average commission × the number of working days per year). ■best sales period (e.g., using the best day of sales your business has ever had × the number of selling days per year; or your best week or month or quarter projected to the entire year).

You may decide to fight back through

■market share expansion, perhaps with an advertising and sales promotion campaign mailing discount coupons to consumers in your area; or ■market segment expansion, maybe by trying to get high-volume contracts with local used-car dealers who could use your wash facilities; or ■product/service expansion, possibly by installing your own pumps and selling gasoline.

The warning signs or indicators that your business needs renewal can be either internal or external to the business and include issues relating to

■sales and profits ■employee turnover ■available capacity ■market share/market potential ■competition ■various other cues that might be particular to your own industry.