Tutorial 3 (Week 4) Lecture 3: Evaluating company’s external environment

Question 1

BBB Company

BBB Company is a lamp fixture manufacturer and is planning to enter the China home
furnishings manufacturing industry. A market analysis was conducted and it reveals that of
the 2,000 home furnishings firms in the industry, only 400 have over 20 employees. There are
many players in the industry but no one has a controlling share. The average profit margin of
the firms is between 2 to 4 per cent. The industry is primarily comprised of single-business,
family-owned firms which produce furniture domestically. Various furniture products ranging
from low to high price are being offered to the market. However, the industry is getting more
competitive. Recently, imports of furniture products are increasing at a rapid rate and large
established firms are diversifying into the industry through acquisitions. There is a sharp
increase in the number of suppliers and retailers competing in this market.

Required:

(a) Identify the opportunities and threats facing BBB Company if it enters the home
furnishings manufacturing industry in China. (10 marks)

(b) Explain how intense the degree of rivalry likely to be among the players in the home
furnishings manufacturing industry. (10 marks) [Total: 20 marks]

BBDM2043 BUSINESS STRATEGY 3-1

 Tutorial 3 (Week 4) Lecture 3: Evaluating company’s external environment

Question 2

Hawk Engineering Limited (HEL)

A sound system of environment scanning is of critical importance in the formulation of

strategic plans of any progressive company operating in a fast-changing and competitive
business environment.

Hawk Engineering Limited (HEL) is engaged in the business of manufacturing of small

motors which are installed in printers. HEL has made substantial investments in
manufacturing facilities and R&D and has developed its own in-house technology and
manufacturing processes. This gives HEL competitive advantage over its rivals in terms of
meeting the stringent requirements of its quality conscious customers.

Important customers of HEL are the original equipment manufacturers of precision laser
printers. Although motors account for a nominal proportion of the cost of the laser printers,
their efficient and reliable performance are of crucial importance for HEL’s customers who
provide performance guarantees for their products. HEL is one of the few firms who
manufacture these types of small motors. It is able to achieve high profit margins and returns
on its investments because of the superior quality of its products for which its customers are
willing to pay premium prices.

Required:

Identify and explain briefly ​FOUR (4) ​factors which HEL should monitor closely to
anticipate the emerging business environment in which it operates ​and ​its impact in the
formulation of its strategic plans. (12 marks)

Question 3

Critical Success Factor (CSF)

Critical Success Factors are those elements of strengths in which a firm must excel to outperform its
competitors.

Identify and explain any ​FOUR (4) C

​ ritical Success Factors which in your opinion would be most
important for a global courier company to retain its market leadership position. [Total: 12 marks]
BBDM2043 BUSINESS STRATEGY 3-2