3.1.2 Corporate Strategies

Question 1

what is a strategy

Answer 1

• a long term plan for achieving business objectives
• it can only be put in place AFTER a business has established its aims and objectives

Question 2

what is a tactic

Answer 2

• short term plans or techniques to achieve the strategy
• however they can also be used in reaction to a threat

Question 3

EXAMPLE : a business strategic decision would be to expand its production capacity and a tactical decision may be to employ more staff

Answer 3

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Question 4

what resources do strategic and tactical decisions influence

Answer 4

HUMAN - having a strategy to increase profitability may involve redundancies
PHYSICAL- wanting to increase production capacity may involve investing in new machinery
FINANCIAL- a business would have to fund these decisions

Question 5

what 4 options for strategic growth did Ansoff suggest
(ansoffs matrix)

Answer 5

• market penetration (increase market share in the existing market | same product, same market)
• product development (new products, existing markets)
• market development (existing products, new markets)
• diversification (new products, new markets)

Question 6

how can Ansoff’s matrix be used

Answer 6

• decision making tool to allow managers to select an option for strategic growth whilst considering risk

Question 7

disadvantages of Ansoff’s matrix

Answer 7

• doesn’t consider competitor’s actions so isn’t a dynamic tool
• isn’t useful for large MNCs because they will already be operating in all quadrants

Question 8

Porter suggested 3 generic strategies to help gain a competitive advantage

Answer 8

1 cost leadership- selling the cheapest products
2 differentiation- creating a unique product that allows a business to charge more
3 Focus- a business in a niche market can be either cost focused or differentiation focused

Question 9

how can businesses achieve cost leadership

Answer 9

• achieving economies of scale
• lean production
• constantly looking at low-cost suppliers

Question 10

how can a business achieve differentiation

Answer 10

• great quality and superior performance
• distribution strategy
• customer service, warranties etc.

Question 11

what are the uses of the boston matrix

Answer 11

• this is a portfolio analysis to consider the relative market share and growth of products
• this kind of detailed evaluation of a business’s full range of products allows appropriate strategies to be identified

Question 12

Kay’s model suggests competitive advantage can be reached with 3 distinctive capabilities

Answer 12

1 architecture
2 reputation
3 innovation

Question 13

explain Kay’s 3 distinctive capabilities

Answer 13

1 architecture- good relationship and network with stakeholders
2 reputation- keeping customers satisfied and loyal
3 innovation- new innovative products have USP’s

Question 14

what are distinctive capabilities

Answer 14

these are strengths of a business that is difficult for a competitor to copy

Question 15

whatever strategy is used to gain a competitive advantage it must be sustainable and appropriable (a business can’t copy the strategy)

Answer 15

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