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business > 3.1.2 Theories of corporate objectives > Flashcards

3.1.2 Theories of corporate objectives Flashcards

1
Q

What is a corporate strategy?

A

A plan or policy developed to meet a company’s objectives which affect the overall direction of the business

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2
Q

Draw Ansoff’s Matrix

A
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3
Q

What is market penetration?

A

Marketing existing products in existing markets

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4
Q

What are 2 main objectives of market penetration?

A
  • Maintain/ increase market share of current products
  • Secure dominance of growth markets
  • Increase usage by existing customers
  • Restructure a mature market by driving out competitors
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5
Q

What is a positive of market penetration?

A

Doesn’t require much investment in new market research

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6
Q

How can a business achieve market penetration? (2)

A
  • Increase brand loyalty
  • Encourage more frequent use of product
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7
Q

What is diversification?

A

Marketing new products in new markets

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8
Q

What does diversification allow for?

A

Not relying on existing markets + products - risk spread

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9
Q

What is a positive of diversification?

A

If one product fails, a successful product in another market may prevent business overall facing problems

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10
Q

What is product development?

A

Marketing new products into existing markets

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11
Q

How can Ansoff’s matrix be used by businesses?

A

Helps them determine a product and market growth strategy

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12
Q

Draw Porter’s Strategic Matrix

A
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13
Q

How can businesses use Porter’s Strategic Matrix?

A

To identify the sources of competitive advantage a business might achieve in a market

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14
Q

Why might differentiation not be a guarantee of success?

A

Customers may not want to buy the differentiated product

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15
Q

What are the 2 forms of focus?

A

Cost focus
Differentiated focus

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16
Q

When does cost focus occur?

A

When businesses drive down its costs in the market segment to undercut the prices of competitors

17
Q

What are 2 positives of Porter’s Strategic Matrix?

A
  • Establishes a clear direction for the business to go in
  • Identifies when a business may be in trouble
18
Q

What are 2 negatives of Porter’s Strategic Matrix?

A
  • Not as relevant in highly dynamic markets
  • May not be useful in a crisis situation
19
Q

Draw the Boston Matrix

A
20
Q

How can the Boston Matrix help businesses?

A

Product portfolio tool which helps a business analyse their existing portfolio to decide which products should receive more/ less investment

21
Q

What are stars (Boston matrix)?

A
  • Market leaders
  • Lots of sales
22
Q

What are question marks (Boston matrix)?

A
  • Sit in a growing market but have low market share
  • Generally unprofitable
23
Q

What are dogs (Boston matrix)?

A
  • Low market share in low growth markets
  • Kept as long as they continue to create cash
24
Q

What are cash cows (Boston matrix)?

A
  • In low growth markets e.g. mature
  • High market share and profitability
25
Q

Draw Kay’s model of distinctive capabilities

A
26
Q

How can Kay’s model help businesses?

A

Helps them think about how they can stand out + beat competition

27
Q

Explain reputation (Kay’s model)

A
  • Powerful distinctive capability
  • Not easy to develop
28
Q

Explain innovation (Kay’s model)

A
  • Helps companies stay ahead of competition
  • Helps build brand loyalty
29
Q

Explain architecture (Kay’s model)

A
  • For architecture to become a distinctive capability, the structure of business needs to provide value to the business
30
Q

What are strategic decisions?

A

Long term direction of business

31
Q

What are tactical decisions?

A

Shorter term actions that help reach the strategy - how the business will implement its strategy

32
Q

What 3 resources do strategic and tactical decisions affect?

A

HR
Physical
Financial

33
Q

What is an example of a strategic decision that would affect physical resources?

A

Moving factory location to achieve long term objective of cost cutting + profit

34
Q

What is an example of a tactical decision that would affect physical resources?

A

Moving factory layout to accommodate new product being manufactured

35
Q

What is an example of a strategic decision that would affect human resources?

A

Hiring new staff as part of long term strategy to improve productivity

36
Q

What is an example of a tactical decision that would affect human resources?

A

Having to hire new network manager because old one quit

37
Q

What is an example of a strategic decision that would affect financial resources?

A

Issuing shares to raise capital to achieve long term objective of growth + expansion

38
Q

What is an example of a tactical decision that would affect financial resources?

A

Agreeing an overdraft with the bank to cover a shortfall in a cashflow forecast

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