2 - Theories of corporate strategy

Question 1

strateic direction

Answer 1

where a business chooses what market it will operate in and which products it will provide

Question 2

ansoff matrix

Answer 2

a startegic tool that the business can use to help the amrekt they wish to operate in and the product sthey will sell.

Question 3

markey penetration

Answer 3

a strategy to boost sales of current products in a current market

Question 4

possible approaches to maket penetration

Answer 4

• increase promotional activities
• change pricing model
• build brand image
• focus on increasing repeat purchase by devloping customer loyalty
• incentivise customer affiliations

Question 5

benefits for market penetration

Answer 5

• low risk
• product and market are familiar to the business
• limited investment required

Question 6

limitatins of market penetration

Answer 6

• possibly limited growth potential
• business becomes vulnerable if it doesnt innovate

Question 7

product devlopment

Answer 7

devloping new products for existing customers

Question 8

possible approaches to product development

Answer 8

• market research to identify areas for imporovement
• use portflio tools like boston matrix
• divert funds into R4D and product development

Question 9

benefits of product devlopment

Answer 9

• familiar with customers
• builds on/innovates current products
• responds to customer needs

Question 10

limitations to product development

Answer 10

• product devlopmen takes time and can be expensive
• product cannibalisation

Question 11

improtance of market development

Answer 11

allows a business to enter new customer markets with an existing product or slighlty modified product - increasing sales potential

Question 12

market development

Answer 12

takes exisiting prodcys ino new market segments (demographic or geographic)

Question 13

possible appraoches to market development

Answer 13

• 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

Question 14

benefits of market development

Answer 14

porential for considerable growth
no need for expensive product development

Question 15

diversification

Answer 15

offer new products to new markets

Question 16

possible appraoches to diversification

Answer 16

• 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

Question 17

benefits of diversification

Answer 17

spreads the business risk by engaging in different markets
business can utilise some of its core competencies and apply them to a new context

Question 18

limitations for diversification

Answer 18

can be extremely high risk
no reputation or expertise in the market

Question 19

aim of portfolio anaylsis

Answer 19

categorise a company’s products with specific characteristics in order to make strategic decisions

Question 20

what will products be assed in

Answer 20

• current and projected sales
• current and projected costs
• the level of competition
• unqiue characteristics and strentghs