29th March exam Flashcards
corporate strategy definition
it is a medium to long term action a business takes to achieve its aims
what are the different parts of ansoff’s matrix?
Ansoff introduced 4 main growth strategies for businesses which have a varying amount of risk tied to them.
Market penetration- bringing your existing product to your existing market, this is the safest option
Product development- the process of introducing a new product to your existing market
Market development- introducing your current product to a new market
Diversification- introducing a new product to a new market, this is the riskiest strategy
what are the 4 parts of porter’s strategic matrix?
1) Cost leadership (lower cost in broad market, e.g. ford)
- this is done by being the lowest cost producer and they aim for cost advantages through EOS or implementing superior working practises
2) Differentiation (differentiation in broad market, e.g. apple)
- they aim to create unique products that if done successfully they will be able to charge a premium price and build loyalty to its brand
3) Cost focus (lower cost in narrow market, e.g. Poundshops)
- achieve a cost advantage in niche segments
4) Differentiation focus (differentiation in narrow market, e.g. Bentley)
- seeks to create highly customised/unique products in niche segments
he assumes that differentiation will mean higher prices
explain porter’s strategic matrix
‘Strategy is about making choices, trade-offs, it’s about deliberately choosing to be different’
- porter argues that a business should adopt a competitive strategy which is intended to achieve some form of competitive advantage for the business
- The main challenge for business strategy is to find a way of achieving a sustainable competitive advantage over the other competing products and firms in a market, e.g. through offering lower prices or giving them greater benefits that justifies higher prices
- You either choose low cost (cost efficiency, lean production) or differentiation through standing out (ethics) and whether to go for a broad (mass) or narrow (niche) market
what is Taylor’s motivation
theory?
- His theory is associated with manufacturing and factory work
- He believed that people only work for money and so emphasised the need for managers to maximise efficiency to generate a higher profit and so the workers will be able to be payed a higher wage
- Workers don’t enjoy work and so they should be closely supervised
- High division of labour is needed
- Workers should be paid by piece rate so they are encouraged to work hard and maximise productivity
What is Mayo’s motivation theory?
- An experiment he undertook showed that employees are motivated by relational factors rather than monetary rewards
- Workers must believe that the managers are interested in them, this is known as the ‘hawthorne effect’
- He concluded the main things needed for motivation are better communication, greater participation from managers and more teamwork
- Involving workers in decisions means they will be more motivated
What is Maslow’s motivation theory?
- He believed that there is a hierarchy of needs where people have different methods of motivations depending on where they are on the pyramid, when employees earn enough to satisfy their needs they have a new method of motivation
- The levels of hierarchy go from physical needs to safety needs to social needs to esteem needs to self-actualisation
- In very low-paid jobs, money may be a motivator but once money needs have been met health, safety and job security become more important
What is Herzberg’s motivation theory?
- He asked employees for 5 changes that would increase motivation and for 5 changes that would decrease motivation
- Things that increased motivation included recognition for achievement, work itself, responsibility, advancements and achievement whilst things that decreased motivation included working conditions, interpersonal relations, salary, supervision, company policy and administration
- He believed a business has to provide the hygiene factors otherwise employees will be dissatisfied, these increase pay, working conditions and social status
- He introduced the method of job enrichment which was a way of motivating staff. This was down by varying jobs to make it more varied and challenging.
what is Handy’s theory?
- Handy implied that there are 4 types of cultures within a business: power, role, task and person
what is a power culture?
- Power cultures involved an autocratic leadership style where power is concentrated at the centre where it allows for quick decision making and only a few people have decision making power
what is a role culture?
- Role cultures links to having a tall structure and long chain of command whereby employees have clearly defined roles within a formal structure and high control, it has a autocratic/paternalistic style with power deriving from someone’s role in the business
what is a task culture?
- Task cultures involve a paternalistic/democratic style where they operate a matrix organisation where teams are formed to solve problems/work on projects, power comes from expertise within a project and has a very dynamic culture where organisational structure changes depending on the project, flat structure
what is a person culture?
- Person culture has a democratic style and is when individual employees believe themselves to be superior to the business and employees are highly skilled with professional qualifications and training and experience, here they have a laissez-faire approach and it is seen in partnerships and in the law and accountancy industry
explain the Boston matrix
It is a product portfolio strategy
- It helps a business to identify where to invest as well as identifying gaps in the market
- dogs are low growth and low market share, get rid of them
- stars, high market share in high growth
- question marks, low share in high growth
- cash cows, high share in low growth
in terms of using it for markets, it can be used through high/low growth and high/low wealth
what are the methods of market penetration?
- Advertise/promote the product
- Use sales promotion techniques such as coupons, competition and BOGOF
- Reduce price, or use promotional prices
- Expand the channels of distribution, e.g. direct to customers as well as through retailers and wholesalers
- Open more stores
- Sign up more retailers to stock your product
