2 - Theories of corporate strategy Flashcards
strateic direction
where a business chooses what market it will operate in and which products it will provide
ansoff matrix
a startegic tool that the business can use to help the amrekt they wish to operate in and the product sthey will sell.
markey penetration
a strategy to boost sales of current products in a current market
possible approaches to maket penetration
- increase promotional activities
- change pricing model
- build brand image
- focus on increasing repeat purchase by devloping customer loyalty
- incentivise customer affiliations
benefits for market penetration
- low risk
- product and market are familiar to the business
- limited investment required
limitatins of market penetration
- possibly limited growth potential
- business becomes vulnerable if it doesnt innovate
product devlopment
devloping new products for existing customers
possible approaches to product development
- market research to identify areas for imporovement
- use portflio tools like boston matrix
- divert funds into R4D and product development
benefits of product devlopment
- familiar with customers
- builds on/innovates current products
- responds to customer needs
limitations to product development
- product devlopmen takes time and can be expensive
- product cannibalisation
improtance of market development
allows a business to enter new customer markets with an existing product or slighlty modified product - increasing sales potential
market development
takes exisiting prodcys ino new market segments (demographic or geographic)
possible appraoches to market development
- new poettnial pricing to enter the new market
- heavy promotion
- strategic alliance or takeover with a business
- develop new channels of distrubtion to reach new customers
benefits of market development
porential for considerable growth
no need for expensive product development
diversification
offer new products to new markets
possible appraoches to diversification
- often applies to conglomerate with considerable financial power and economies of scale
- business may have a particular asset (such as a patent) that allows them to be competive without having particular expertise
- could be achieved through external growth merger or takeover
benefits of diversification
spreads the business risk by engaging in different markets
business can utilise some of its core competencies and apply them to a new context
limitations for diversification
can be extremely high risk
no reputation or expertise in the market
aim of portfolio anaylsis
categorise a company’s products with specific characteristics in order to make strategic decisions
what will products be assed in
- current and projected sales
- current and projected costs
- the level of competition
- unqiue characteristics and strentghs
