Question Tag: Competitive Advantage

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CSME – Nov 2023 – L2 – Q1 – Business-Level Strategies

Analyze DITA’s strategy consistency with Porter’s six principles of strategic positioning and classify its strategic position.

Adeoye Oladejo was an exceptionally brilliant student. He graduated from the Department of Wildlife and Ecotourism in the Second-Class Upper Division. He was fortunate to undertake his youth service in Lagos with Dovic International Travel Agency (DITA), which apart from sales of tickets and hotel reservations, is reputed for organizing tours for individuals and groups to different parts of the world. By dint of hard work and impressive results in attracting clients to the travel agency, Adeoye was made a sales manager immediately after completing his service year. He held this position for two years, after which he was made a senior operations manager, a position he held before becoming the CEO.

The motto of the company is “service optimized,” and the company is very clear about its primary strategic goal, which is to optimize profit in the short, medium, and long terms. Hence, Adeoye, as the company CEO, undertook a specialized MBA course in International Business Management. He also wrote a book titled Optimizing Profit in International Tourism. In addition, he employed a business manager and an operations manager with very strong backgrounds in financial planning and strategic thinking, apart from the vast experience they acquired in the field of international tourism.

To ensure that DITA remains highly competitive in the global tourism arena, the company has different tourism packages for its clients from all parts of the world. These include cheap airfares, highly-rated hotels at unbelievably low prices, amazing tourist attractions, and the inclusion of rated artists (musicians, comedians, etc.) for the pleasure of their clients. What is quite significant is the fact that DITA has been able to establish excellent working relationships with airlines, hotels, and various service providers in the tourism industry, enabling it to provide world-class services at unbelievably cheap rates that its competitors find difficult to match.

Of course, the services that DITA offers are similar to those of its competitors in the tourism industry, but DITA has been able to introduce special flavors into its packages that render them more attractive than those of its competitors. These include free massages, horse riding, scuba diving, exquisite dinners, welcome parties, limousine airport shuttles, and much more.

However, DITA’s business strategies have trade-offs, which in the short, medium, and long terms offer it some competitive advantage. For instance, it does not offer services to large groups of people exceeding 50 at a time. Thus, it does not offer pilgrimage services. Nonetheless, DITA has become very popular among rated organizations, family groups, groups of friends, and other relatively small teams interested in organized tours to special places worldwide. Another trade-off of DITA’s strategies is that it does not sell travel tickets to individuals, only to groups.

Over two years, the CEO of DITA, in conjunction with the business and operations managers, has successfully established a synergy of all the elements of their business, making them intricately and seamlessly linked together, resulting in great success and a high return on investment for DITA.

To ensure continuity of its strategic direction, DITA organizes periodic training retreats for its staff and sends them on specialized training to enhance their productivity and commitment to the vision, strategic goals, and core values of the company. By doing so, it is systematically creating an impressive organizational culture that is key to its success. Overall, DITA has become a huge success story and a remarkable leader in the international tourism industry.

Required:

a. Discuss how the operations of DITA are consistent with Porter’s six principles of strategic positioning and how individual firms can achieve sustainable competitive advantage. (24 Marks)

b. A business entity can be classified as any one of the FOUR types in terms of strategic position.

i. Identify and briefly explain each of these types. (3 Marks)

ii. To which of these does DITA belong? (3 Marks)

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FM – Nov 2022 – L3 – Q5 – Business Valuation Techniques

Calculate the equity value of APL using SVA and outline three methods for funding the MBO.

Aderupoko Plc (ADP), a large listed media group, has been the holding company of Adamu Publishers Limited (APL) since 2015. The publishing company (APL) is 100% owned by ADP since inception.

Recently, the directors of APL informed ADP’s board of their readiness to make a management buy-out (MBO) of APL. Accordingly, ADP’s board decided to value APL using the shareholder value analysis method (SVA). ADP’s board estimates that APL has a four-year competitive advantage over its competitors (to 30 September 2024) and the following data regarding APL’s value drivers and additional financial information has been collected:

Year to 30 September 2021 2022 2023 2024 2025+
Sales growth (%) 5% 4% 3% 2% 0%
Operating profit margin 8% 9% 10% 10% 10%
Incremental non-current asset investment (% of sales increase) 5% 6% 3% 2% 0%
Incremental working capital investment (% of sales increase) 6% 5% 4% 4% 0%

Financial Information:

  • Sales for the current year to 30 September 2020: ₦80 million
  • Annual depreciation (equal to annual replacement of non-current asset expenditure): ₦2.0 million
  • Par value of 6% debentures in issue (current market value ₦95.00, nominal value ₦100): ₦10.0 million
  • Short-term investments held: ₦0.8 million
  • Company tax rate: 20%
  • Current WACC: 10%

Required:

a. Calculate the value of APL’s equity using SVA.

(12 Marks)

b. Outline three methods by which APL’s directors might raise the funds necessary for the proposed MBO of the company. (3 Marks)

(Total 15 Marks)

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MGE – Nov 2014 – L2 – Q5 – Innovation and Strategic Renewal

Developing strategies for recruiting and retaining innovative staff to sustain competitive advantage.

Hi-Tech Industries Limited is a leading manufacturer of computers and mobile phones in the country. The company is considering the implementation of low-cost, differentiation, and innovation strategies aimed at sustaining and improving its competitive position. Hi-Tech plans to make its flagship product, Zeta Phone, the mobile phone of choice, offering innovative and cutting-edge technology to its consumers.

For the company to transform into an innovative organization as the business strategy requires, it must employ staff workgroups with highly skilled, innovative, and energetic people who can bring life to new ideas quickly and inject the same into the organization.

A skills audit recently conducted by the company showed that the company does not have enough staff that possess those qualities. To address this deficit, the management decided to train existing staff, employ, and retain the best candidates that the labor market can offer.

Required:

Formulate strategies that Hi-Tech Industries may adopt in its policy for employment and retention of human resources.

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CSME – May 2023 – L1 – SA – Q1 – Strategic Implementation

Strategies for market expansion, sustainable advantage, and industry environment for a medium-scale food processing firm.

Oyinbo Industries Limited is a medium-scale enterprise involved in the processing and packaging of local (traditional) food items for the Nigerian market. Its product portfolio includes Instant Elubo Powder, Instant Pounded Yam Powder, and Instant Beans Powder, all of which have been successful in the Nigerian market. The company hopes to expand its market coverage to the United States, United Kingdom, France, Canada, and the United Arab Emirates, which are believed to be viable new markets for the products.

To achieve these goals, the company plans to strengthen its position in the Nigerian market, focusing on increasing market share, sales growth, and profitability. Recently, it expanded its product range by introducing Instant Plantain Powder, Instant Soya Beans Powder, and Garri Ijebu. The table below shows current market and sales growth for each product:

*Products introduced into the market in 2021

The company’s current market growth rate for each product is over 10%, largely due to population growth and concerns about food hygiene in open markets. Oyinbo Industries seeks to leverage this opportunity to become a leader in processed and packaged foods in Nigeria.

However, competitors are mainly cottage industries and small-scale producers who, despite limited resources, control substantial market share. These firms primarily depend on small rural farmers for raw materials, which are abundant but lack regulation.

As part of its growth plan, Oyinbo Industries intends to secure a raw material supply by acquiring farmland in Kwara State. It also aims to collaborate with a local fabricator for its processing equipment. In the next phase, the firm plans to leverage its distribution network and internal capabilities to expand market share in Nigeria and increase sales of new products. However, challenges such as frequent power outages and equipment breakdowns remain.

Required:

  1. (a) Advise on strategies for each product that align with the company’s strategic direction using Ansoff Growth Vector Analysis. (13 Marks)
  2. (b) Explain how to achieve sustainable competitive advantage using Michael Porter’s Six Principles. (6 Marks)
  3. (c) Describe key business environment elements using the PESTEL framework. (6 Marks)
  4. (d) Identify the type of integration strategy being pursued and discuss potential drawbacks. (5 Marks)

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PM – Nov 2016 – L2 – Q6 – Strategic Management Accounting

This question discusses how firms can monitor buyer bargaining power, reduce threats of new entrants, and reasons for continuing operations in low-return industries.

Michael Porter, in his book “Competitive Advantage: Creating and Sustaining Superior Performance,” suggested that a firm must assess the industry’s market attractiveness by considering the following:

  • The extent of the rivalry between existing competitors;
  • The bargaining power of suppliers;
  • The bargaining power of buyers;
  • The threat of substitutes; and
  • The threat of new entrants.

Required:
a. Recommend FIVE factors that should be included in the monitoring system implemented by the firm if a firm wishes to monitor the bargaining power of buyers. (5 Marks)

b. Explain FOUR different methods whereby a firm can reduce the threat of new entrants to an industry. (7 Marks)

c. Explain the reason why firms often continue to operate in an industry that is generating below-normal returns in the short run. (3 Marks)

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BMF – MAY 2015 – L1 – SA – Q13 – Basic Management Functions

Primary objective of strategic planning in business.

ONE of the primary objectives of strategic planning is to achieve:

A. Business strategy
B. A sustainable competitive advantage
C. Purpose of production
D. An aspiration
E. Business idea

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BF – Nov 2015 – L1 – SA – Q13 – Basic Management Functions

Identifying the term for superior performance relative to rivals.

The appropriate term for anything that a firm does better especially when compared to rival firms is called:
A. Opportunities
B. Core competence
C. Performance
D. Competitive advantage
E. Capability

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BMIS – NOV 2019 – L1 – Q3c – Marketing Functions

Explain five functions performed by the marketing department that enable an organization to gain competitive advantage.

The marketing department performs several functions that enables an organization to gain competitive advantage.

Required: Explain FIVE (5) of these functions. (5 marks)

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BMIS – Nov 2019 – L1 – Q4b – Economic Factors in the Macro-Environment

State and explain five economic factors that influence opportunities or threats for organizations in the macro-environment.

4. (b) The macro-environment contains several conditions and factors that systematically present opportunities or pose threats to organizations in their effort to gain competitive advantage. The factors in the macro-environment for the purpose of effective analysis are grouped using the PEST model, which represents political, economic, socio-cultural, and technological factors. Understanding these factors will influence the kind of strategies business organizations would formulate.

Required:
State and explain FIVE (5) economic factors which determine the nature of opportunities or threats that organizations may face.

 

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SCS – Nov 2019 – L3 – Q1b – Competitive Advantage

Discuss the competitive advantage of Ghanalux in the tourism industry.

i) Discuss what you consider to be the main competitive advantage of Ghanalux in its industry.
(5 marks)

ii) Discuss how a balanced scorecard approach to performance measurement might help Ghanalux to improve its profitability.
(3 marks)

iii) Recommend performance measures that might be used by Ghanalux if it adopts a balanced scorecard system.
(8 marks)

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: SCS – Nov 2019 – L3 – Q1a – Environment analysis

Analyze the competitive disadvantage of Ghana’s tourism industry using Porter’s Diamond model.

i) Discuss the view that the tourism industry in Ghana might currently be at a disadvantage and under-developed compared to other countries.
Note: Use Porter’s Diamond to structure your answer.
(8 marks)

ii) Assess the two suggestions about expanding the business of Ghanalux outside Ghana and into conferencing, from the perspective that strategy should be suitable, feasible, and acceptable.
(6 marks)

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SCS – MAR 2024 – L3 – Q4a – Strategy implementation

Explain how Prestige could leverage ICT using the four broad stages of e-business development to compete.

Prestige’s Board has shifted from their long-standing reluctance to venture into foreign markets to seriously consider the possibility of expansion overseas. An important implication of this decision is that as the size of the market increases, competition becomes international. The main rivals are no longer local suppliers to a domestic market.

Required:
Using the four broad stages of development to a full e-business model, explain how Prestige could leverage ICT to compete.

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SCS – MAR 2024 – L3 – Q2 – Competitive advantage

Apply and appraise Porter’s three strategies for sustaining competitive advantage for Prestige Designers Ltd.

A strategic clock can be used to consider different business strategies for gaining competitive advantage, based on providing a combination of price and perceived benefits. Porter has suggested three strategies for sustaining competitive advantage over rival firms and their products or services. They are a cost leadership strategy, a differentiation strategy, and a focus strategy.

Required:
Apply and appraise how effective the suggested three strategies for sustaining competitive advantage over rival firms would be useful to Prestige. (10 marks)

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SCS – May 2021 – L3 – Q3b – Competitive forces

Draw and explain the Strategic Clock with five broad business strategies that can help SBL gain a competitive advantage.

Draw a strategic clock and explain using the FIVE (5) broad groups of business strategy to help SBL gain a competitive advantage. (7 marks)

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SCS – Nov 2021 – L3 – Q2 – Environment Analysis

Analyze and present factors negatively impacting the strategic position of COM from both external and internal perspectives.

The board members discussed the future of the BRIGHT strategy of the company in the context that the strategic position of the company continues to evolve at a rather unpredictable rate. The board is interested in gaining a thorough insight into the factors that will pose material downside and upside risk to the strategic position of the company. The chairman of the board would like to discuss the draft memorandum of the company’s strategic position with the CEO prior to the next plenary board meeting.

Required:
Prepare a draft presentation explaining to the Board Chairman the current factors that are negatively impacting the strategic position of the company from the general external environment and internal perspectives.

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SCS – Dec 2022 – L3 – Q6a – Internal analysis

Draw Shell Directional Policy Matrix and recommend strategies for TCWL products based on their performance.

The Consultant undertook analysis of the performance of TCWL products using Shell Directional Policy Matrix. The management of the company is interested in receiving a report that contains the matrix and the strategies to be adopted for each product.

Required:

i) Draw Shell Directional Policy Matrix and clearly locate each product in an appropriate quadrant/cell in the matrix based on the product’s performance. (2 marks)
ii) Recommend and explain the appropriate strategy or strategies that TCWL should adopt for each product as suggested by Shell Directional Policy Matrix. (8 marks)

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SCS – Dec 2022 – L3 – Q2 – Competitive forces

Using Porter’s Diamond model to evaluate the factors influencing the competitiveness of TCWL in Ghana.

The competitiveness of a business operating in a country is determined by the presence of a combination of some factors and conditions. The management of TCWL wants to understand the factors in Ghana that have influenced its success or otherwise over the years and which should be considered as it expands to Kenya and South Africa.

Required:

Using Porter’s model for determining national competitive advantage (Porter’s Diamond), evaluate FOUR (4) factors that have influenced the competitiveness of TCWL in Ghana for which the management must consider as it expands its operations internationally. (10 marks)

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SCS – Apr 2022 – L3 – Q3 – Competitive advantage

Analyse how HPC can achieve competitive advantage using Porter’s six principles when expanding to Nigeria and Togo.

Consistent with its strategic ambition to expand its business into other countries, HPC is considering expanding to Nigeria and Togo.

Required:
Using Porter’s six principles of strategic positioning, analyse how HPC can achieve sustainable competitive advantage if it decides to expand the business to Nigeria and Togo. (10 marks)

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SCS – Nov 2023 – L3 – Q1b – Competitive advantage

Application of Johnson and Scholes’ six-step approach to achieve competitive advantage in the Shito industry.

Mr. Martinson highlights the company’s CSFs to include lasting customer satisfaction, consistent taste, unrivaled quality, operational efficiency, and compliance with regulatory requirements. These are very essential considering the highly competitive environment within which NSL operates.

Required:
Using Johnson and Scholes’ six-step approach to using CSFs, explain the six-step approach NSL could employ to effectively achieve competitive advantage in the Shito industry.
(10 marks)

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BMF – May 2017 – L1 – SB – Q1a – Business and Organizational Structures and Choices

Discusses how strategic alliances and joint ventures can be used to gain competitive advantage, and briefly explains restricting competition and cartel concepts.

In order to survive and achieve a competitive advantage, companies may need to enter into collaboration with stakeholders.

Required:

Using Strategic Alliances and Joint Ventures, explain how collaboration can be used in business to achieve competitive advantage.

 

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