1.1 Identify TWO types of diversification and intensive strategies which were used by USM. Motivate your answer by quoting from the scenario. Use the table below to present your answer TYPE OF DIVERSIFICATION STRATEGY MOTIVATION (a) (b) TYPE OF INTENSIVE STRATEGY MOTIVATION (a) (b) (12) 1.2 Explain how USM has applied Porter's Five Forces model to analyse the market environment. (12) 1.3 Advise the management of USM on the strategic management process. (6) 1.4 Identify TWO Acts that are applicable to the scenario above. Motivate your answer by quoting from the scenario. Use the table below to present your answer ACT a MOTIVATION Scenerio (b) (6) 1.5 Discuss the positive impact of any ONE of the Acts identified in QUESTION 1.4 on USM. (8) 1.6 Name ONE consumer right that has been violated in Zanele's case. (2) 1.7 Propose to the management of USM any TWO steps that they should follow when evaluating a strategy. (4) 1.) A B QUESTION 1 Read the scenario below and answer the questions that follow. Usud Shoe Manufacturer (USM) (Pty) (Ltd) Ulandé and Sudimo, two high school friends with a passion for beautiful shoes, joined forces and started a shoe manufacturing business known as Usud Shoe Manufacturers (Pty) (Ltd). Due to limited capital, they originally started off with basic reliable and comfortable court shoes for women that were sold locally only. The constant change in fashion trends as well as changes in consumer preferences led to a gradual decrease in sales and loyal customers did not retum. They decided to expand their product range to include basic court shoes; stilettos; sandals and boots in bright colours and in sync with fashion trends. USM makes use of genuine sheepskin, suede, ostrich and patent leather in the manufacturing process. They went to a fashion show in Paris, where all the big names in fashion shoes were present. At this event USM made use of local models to introduce their new and improved product range to the world. The reaction to their shoes was so overwhelming that USM entered the international market. They received orders from all over the world. USM decided to sell their new product range at a lower price in order to grow in the international market and attract a bigger market share. USM is currently the only supplier of this unique and durable leather shoes in the country. Only exclusive boutiques stock their shoes, A new shoe manufacturer called Smart Shoes is planning to open a factory in the same town and manufacture shoes that are similar to USM shoes. USM immediately registered patents on their products in order to make it difficult for Smarts Shoes to enter this market, thus preventing Smart Shoes from copying their products. The management of USM has also negotiated bulk discount on leather with their suppliers and this will cut costs. They can therefore continue to offer shoes at lower prices to their loyal customers. USM is planning to differentiate in future by adding matching leather handbags and purses to their shoe collection, as well as a men's range. USM has a strong customer base who they offer attractive credit facilities to. They have also decided to set up a factory shop which will be open to the public. To this end, they advertised a pair of suede leather boots for a special price of R699,99. When Zanele wanted to buy the boots, the salesperson told her the boots was actually marked for R1 699,99. Zanele insisted that she would pay only R699,99 as advertised, arguing that she was protected by law. Zanele threatened USM if her demands were not met.
