PAST YEAR QUESTION CHAPTER 1 & 2

MARCH 2012

QUESTION 2

Five forces in Porter's Five Forces Model :

1. Buyer Power

 

• Assessed by analyzing the ability of buyers to directly impact the price they are willing to pay for an item 

• High - when buyers have many choices of whom to buy
• Low - when their choices are few 
• Example : rewards on free airline tickets or hotel stays
• Ways to reduce buyer power include

- switching costs  : cost that can make customers reluctant to switch to another product or service- loyalty program : rewards customers  based on the amount of business they do with a particular organization

 2. Supplier Power

• Assessed by the suppliers' ability to directly impact the price they are charging for supplies (including materials, labor, and services) 
• High - when buyers have few choices of whom to buy from
• Low - when their choices are many
• Example : Business to Business (B2B) marketplace - private exchange allow a single buyer to posts it needs and then open the bidding to any supplier who would care to bid. Reverse auction is an auction format in which increasingly lower bids

3. Threat Of Substitute Products and Servies

• High - when there are many alternatives to a product or service
• Low - when there are few alternatives from which to choose
• Example : electronic product - same function different brands

4. Threat Of New Entrants

• High - when it is easy for new competitors to enter a market
• Low - when there are significant entry barriers to entering a market
• Entry barriers is a product or service feature that customers have come to expect from organizations and must be offered by entering organization to compete and survive

• Example : new bank (online paying bills, account monitoring)

5. Rivalry Among Existence Competitors

• High - when competition is fierce in a market
• Low - when competition is more complacent
• Example : the airline industry faces serious threats from airlines operating in bankruptcy, who do not pay on the debts while slashing fares against those healthy airlines who do pay on debt ( MAS & AIR ASIA)

OCTOBER 2012

QUESTION 1

(a) Four organizational information cultures :

1. Information-Functional Culture

• Employees use information as a means of exercising influence or power over others. For example, a manager in sales refuses to share information with marketing. This causes marketing to need the sales manager's input each time a new sales strategy is developed

2. Information-Sharing Culture

• Employees across departments trust each other to use information (especially about problems and failures) to improve performance

3. Information-Inquiring Culture

• Employees across departments search for information to better understand the future and align themselves with current trends and new directions

4. Information-Discovery Culture

• Employees across departments are open to new insights about crisis and radical changes and seek ways to create competitive advantages

 QUESTION 2

(a) Three Porter Generic Strategies :

1. Cost Leadership

  

• Becoming a low-cost producer in the industry allows the company to lower prices to customers
• Competitors with higher costs cannot afford to compete with the low-cot leader on price
• Example : TESCO (shelf book)

2. Differentiation

• Create competitive advantage by distinguish their products on one or more features important to their customers
• Unique features or benefits may justify price differences and/or stimulate demand
• Example : i-care by Proton

3. Focused Strategy

• Target  to a niche market
• Concentrates on  either cost leadership or differentiation
• Example : Payless Shoes-BATA (low cost, narrow market), Tiffany & Co. Jewellery (high cost, narrow market)