3.1.2 - theories of corporate strategies

Question 1

business strategy

Answer 1

plans and policies developed to meet a company’s objectives

Question 2

ansoff matrix

Answer 2

• a strategic tool that helps a business achieve growth
• illustrates new and existing products and markets
• useful decision making tool

Question 3

market penetration

Answer 3

• business focuses on markets and products it knows well
• can find out what customers want
• don’t need new market research

Question 4

product development

Answer 4

• a strategy that plays to the strengths of an established business
• strong emphasis on effective market research
• exploits customer base
• being first to market is important

Question 5

market development

Answer 5

• a logical strategy where existing markets are in decline
• often more risky than product development
• existing products may not suit new markets

Question 6

diversification

Answer 6

• risky strategy: no experience of the product or market
• approaches to diversification: innovation & r&d, existing business in the market

Question 7

competitive advantage

Answer 7

an advantage over competitors gained by offering consumers greater value

Question 8

porter’s low-cost strategy

Answer 8

• the objective is to become the lowest-cost operator
• involves production on a large scale which enables a business to exploit economies of scale
• examples: aldi, poundland, ryanair

Question 9

porter’s differentiation strategy

Answer 9

• aims to offer a product that is distinctively different from the competition
• superior product quality, branding, wide distribution, sustained promotion
• examples: apple, costa, dyson

Question 10

porter’s stuck in the middle strategy

Answer 10

• involves targeting a narrow range of customers in one of two ways
• used by small or very specialist firms
• examples: mcdonald’s, sony, morrisons

Question 11

portfolio analysis

Answer 11

• method of categorising all the products and services of a business
• allows a business to decide where each of its products and services fit in its strategic plan

Question 12

boston matrix

Answer 12

stars - high growth market, high market share
question marks - high growth market, low market share
cash cows - low growth, high market share
dogs - low growth market, low market share

Question 13

distinctive capabilities

Answer 13

a form of competitive advantage
- architecture
- reputation
- innovation