Short Question 1. Price Discrimination & Dumping a) What is price discrimination?

Price discrimination is the practice of selling the same good or service at different prices to different consumers. b) Under what kind of situation, a Price Discrimination Strategy will become non ethical and illegal? Price Discrimination Strategy will become non ethical and illegal when i) the practice violates countrys laws ii) the market cannot be divided into segments iii) the practice results in extreme customer dissatisfaction c) Examples i) Taxi driver gives extra discount to get more customers. This is a competitionharming price discrimination which violates local laws. All taxi drivers should charge their customers in accordance with the taxi meter at approved fare scales. d) What is Dumping Strategy? Dumping is the sale of products in foreign markets at low prices that do not cover all the costs of exporting the products. It occurs for a variety of reasons i) allows a company to enter a market quickly ii) capture a large market share iii) domestic market for a firms product is too small to support an efficient level of production iv) technologically obsolete products that are no longer salable in the country of origin e) How a Dumping Strategy can be implementing successful? A Dumping Strategy can be implementing successfully if it is supported by the government. 2. What is the difference between Vision & Objectives? What is the difference between Strategic and Operational Tasks / Activities at work? Vision is a visualized blueprint of the organizations desired future. It is long term and is not necessary measurable or difficult to measure; Objectives are a basic tools that underlying all planning and strategic activities. They are short term desires which must be SMART and can be measured by using KPI. Long-Term Objectives/Strategic Objectives - Strategic Tasks deal with the relationship between the organization and its environment. - Affect the long-term sustainable position of the organization. - Deal with issues of primary concern to top management. - Strategic Objectives arise out of an analysis of organizational resources, environmental trends and the influence of key stakeholders. *Example: Corporate-level / business-level

Short-Term Objectives / Operational Objectives - Improve the functional efficiency of the organization and often act as support to the important strategic initiative. - Help to make long-term objectives, corporate and business strategies become a reality. - Deal with issues of primary concern to middle or functional management. - Arising out of an analysis of the organizations value chain. *Example: Sales turn over/5P/Operational-level Long Question a. What is an industry? In terms of Five Forces Analysis, what an industry consists of? An industry is a market in which similar or closely related products are sold to buyers. In terms of Five Forces Analysis, an industry should consist of a.1 a supply chain that involves suppliers & buyers of these similar or closely related products; a.2 competition among the current competitors and with the new entrants; a.3 threat of substitute b. How to determine whether the threat of substitute is serious or not for an industry? What kind of key factors can be evaluated? Threat of substitutes- substitutes refer to products from other industries. Eg. Mobile handset with built-in camera is a substitute for digital camera The following factors can be used to determine whether the threat of substitute is serious or not for an industry b.1 Switch cost of the status quo product: threat of substitute is larger when switch cost is low. Eg. With the support from the government, Gasoline Mini Vehicle is a substitute for GAS Mini Vehicle. b.2 Substitutes product features: threat of substitute is larger when substitute has an enhanced function. Eg. DVD recorder is a substitute for VHS recorder. b.3 Whether the substitute is created by a disruptive technology/ innovation: disruptive technology/ innovation is a product, or service that eventually overturns the existing dominant technology or status quo product in the market. Eg. Typewriter is substituted by computer & printer. c. What are the characteristics of the mature stage of the Product Life Cycle? Customers have good knowledge of the product. With so many companies now in the market, the competition for customers becomes fierce. Profitability fall as a result of pressure to lower prices and the increased cost of holding or building market share. Market approaches saturation in the maturity stage with many manufacturers offering many models of the product. Marginal and inefficient companies begin to drop out as they see profits turn to losses. Only the best companies and their products survive in the maturity stage.

d. What should you do in front of each stage of the Product Life Cycle? a.1 Pruning the product line- Pruning marginal products from the line lowers costs and permits more concentration on items whose margins are highest and/or where the company has a competitive advantage. a.2 A stronger focus on cost reduction- Cutting the low value activities out of the value chain. Eg. Push suppliers for better prices, switch to lower price components, streamline distribution channels, and reengineer the internal processes. a.3 Expanding internationally- As its domestic market matures, in order to maintain/ or improve the economies of scales, company may seek to enter foreign markets where attractive growth potential exists a.4 Improving the perceived value of current products- Try to minimize the threat of price war by differentiate the product from competitors. Offering customers products of superior quality or with enhanced functions/ features to satisfy their needs and expectations.

LQ 1. A. SWOT Analysis
What is SWOT? SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the environmental Opportunities and Threats facing that firm. SWOT analysis is a historically popular technique through which managers create a quick overview of a companys strategic situation. It is based on the assumption that an effective strategy derives from a sound fit between a firms internal resources (strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firms strength and opportunities and minimizes its weaknesses and threats. The interactions of strengths and weaknesses and opportunities and threats can be the most revealing aspects of using a SWOT analysis as part of a strategic plan. This analysis also requires entrepreneurs to take an objective look at their businesses and the environment in which they operate. How to use SWOT to improve companys revenue? Firstly to identify companys strengths and weaknesses by benchmarking it against market leader. Then find out the Opportunities and Threats by analyzing the external factors with PEST or Five forces analysis.

LQ 1. B. Revamping the Makeup of the Value Chain

The primary ways companies can achieve a cost advantage by reconfiguring their value chains include:

1. Simplifying product design (utilizing computer-assisted design techniques, reducing the number of parts, standardizing parts and components across models and styles, shifting to an easy-to-manufacture product design). 2. Stripping away the extras and offering only a basic, no-frills product or service, thereby cutting out activities and costs of multiple features and options. 3. Finding ways to bypass the use of high-cost raw materials or component parts 4. Using direct-to-end-user sales and marketing approaches that cut out the often large costs and margins of wholesalers and retailers. 5. Relocating facilities closer to suppliers, customers, or both to curtail inbound and outbound costs. 6. Reengineering core business processes to consolidate work steps and cut out low-value-added activities.