Evaluate the usefulness to UBH of Porter's Five Forces analysis as a framework for developing its business strategy.

Mark scheme

Marking points from the official mark scheme (Feb/Mar 2022). The mark or mark type is shown in brackets.

1. [1] (Knowledge) Explanation of Porter's Five Forces analysis – analyses competitive rivalry in a market.
2. [1] (Knowledge) Explanation of other strategic analysis techniques – SWOT, PEST, Boston Matrix, core competencies.
3. [1] (Knowledge) Place of strategic analysis techniques in strategic management.
4. [1] (Application) Porter's Five Forces applied to UBH.
5. [1] (Application) Limited real estate available gives landlords power in the market over UBH.
6. [1] (Application) Multinational clients have substantial financial power. This makes it difficult for UBH as a supplier to control price.
7. [1] (Application) High capital costs reduce entry into the industry.
8. [1] (Application) Use of other strategic analysis techniques such as SWOT.
9. [1] (Application) Strengths e.g. brand reputation of UBH.
10. [1] (Application) Weaknesses e.g. high gearing above 50%.
11. [1] (Application) Opportunities e.g. market growth in country W.
12. [1] (Application) Threats e.g. change in fiscal policy.
13. [1] (Analysis) Analysis is about the use of the techniques to shape strategy.
14. [1] (Analysis) Analysis of how techniques might guide strategic decisions.
15. [1] (Analysis) UBH lack power in negotiating with corporate (MNCs) clients which reduces their ability to set price and that makes option 2 less desirable.
16. [1] (Analysis) Limited land available for expansion may mean that UBH faces higher leasing costs for the expansion.
17. [1] (Analysis) Threat of substitutes is quite high with digital technology making working from home more feasible and therefore the need for co-working space less attractive.
18. [1] (Analysis) UBH can differentiate its products making the threat of new entrants less of a concern.
19. [1] (Analysis) Competitive rivalry is high for option 2 due to threat of substitutes and power of landlords and corporate clients thus making this strategy less attractive.
20. [1] (Analysis) Analysis of how other SA techniques can shape strategy.
21. [1] (Analysis) Focus on strengths and core competencies in choosing strategy will reduce risk to the business.
22. [1] (Analysis) Identification of weaknesses that need to be addressed when making decisions or alternative sought e.g. financing.
23. [1] (Analysis) Anticipating changes to the external environment will enable UBH to take decisions to reduce risk and take advantage of opportunities.
24. [1] (Evaluation) Clear conclusion as to the importance of Porter's Five Forces and strategic analysis including: Critical comments on the techniques such as subjectivity.
25. [1] (Evaluation) Importance of understanding where the business is now in order to generate ideas and/or support for expansion.
26. [1] (Evaluation) Comments that Porter on its own is not enough to develop strategy.
27. [1] (Evaluation) Subjective interpretation of the models – one manager's opinion of SWOT may be very different to another's.
28. [1] (Evaluation) UBH operate in a dynamic environment so analysis may quickly become outdated.
29. [1] (Evaluation) Need to understand the external environment – requiring a detailed PEST analysis.
30. [1] (Evaluation) Ranking the usefulness of the techniques in relation to expansion plans.
31. [1] (Evaluation) An assessment of the importance of timing and a timescale in carrying out analysis.