Page 6 - CIMA SCS Workbook February 2019 - Day 1 Suggested Solutions

CIMA FEBRUARY 2019 – STRATEGIC CASE STUDY

2018. Furthermore, Vita sees the popularity of smartphone options as the greatest risk that the
company faces.

Conclusion: the threat of substitutes is high.

Competitive rivalry

The market is described as highly competitive; there are many organisations that produce similar
products and at varying price points (from the premium end of the market to budget products).
New organisations continue to enter the market, attracted by growth potential and good returns.
There is a constant need to innovate, requiring investment continually in research and
development. Having a strong brand is likely to be critical to long term success.

Conclusion: competitive rivalry is high

Overall conclusion: the main forces that Vita need to focus on are the degree of competitive
rivalry in the industry and the threat of substitutes, mainly that posed by smartwatches. It will
need to ensure that it retains its best staff and not allow them to be attracted to competitors.

EXERCISE 3

Strengths

• Quoted company, meaning access to capital markets if further finance required

• Rapid growth over just 7 years

• Portfolio of 5 products of differing functionality means many different user requirements
are addressed

• New products brought regularly to market means company can continue to innovate

• Collaborative relationship with suppliers based on trust and mutual support enables growth

• Focus on staff welfare means one of the lowest staff turnover rates in the industry

• Low financial gearing means further debt finance can be raised if required

• Commitment to R&D spend should mean Vita continues to innovate

46 KAPLAN PUBLISHING