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Business > 3.1.2 Theories Of Corporate Strategies > Flashcards

3.1.2 Theories Of Corporate Strategies Flashcards

1
Q

Ansoffs Matrix

A

Marketing planning tool to find best strategy for a business is

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2
Q

Ansoffs Matrix components

A 
“MMPD”
Market Penetration 
Market Development 
Product Development 
Diversification
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3
Q

Market penetration

A

Increasing market share in current markets with current products

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4
Q

Market development

A

Entering NEW markets with EXISTING products

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5
Q

Product development

A

Launching NEW products in CURRENT market

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6
Q

Diversification

A

RISKY

NEW markets with NEW products

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7
Q

Porters Strategic Matrix

A

Tool to identify the sources of competitive advantage that a business may have in a market
- any business that does NOT adopt one of these strategies of competitive advantage will be unlikely to succeed

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8
Q

Porters Strategic Matrix Components

A
  • Cost Leadership
  • Differentiation
  • Focus
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9
Q

Cost Leadership

A

Businesses aiming to be the lowest cost provider in the market.
2 ways of competitive advantage:
- Increase profits whilst charging market level prices
- Increase market share whilst charging lower prices (still make profit because their costs are lower)

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10
Q

Differentiation

A

Business adopting a unique position in the mass market instead of the lowest cost position.

  • making product unique from its competitors
  • USP (adding value with design and quality and branding)
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11
Q

Advantages of Differentiation

A
  • Can charge premium prices if customers value the USP

- Easier to make a USP than get raw materials for cheap (cost leadership)

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12
Q

Disadvantages of Differentiation

A
  • If USP is NOT valued by customer they won’t pay the premium price, customers may not buy the product
  • Requires a lot of market research (timely and costly)
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13
Q

Focus

A

Strategy that focuses on a narrow range of customers in one of 2 ways:

  • Cost Focus
  • Differentiation Focus

In the niche market can give competitive advantage.

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14
Q

Cost Focus

A

Cost minimisation in a focused market

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15
Q

Differentiation Focus

A

Different strategies with in a Focus market

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16
Q

Distinctive Capability

A

Form of competitive advantage, that’s difficult for competitors to imitate. Not easily replicated.

17
Q

3 types of Distinctive capability

A
  • Architecture
  • Reputation
  • Innovation
18
Q

Architecture

A

The relationships and contracts with in and around an organisation

  • business relationship with its suppliers
  • Useful relationship
19
Q

Reputation

A

The positive connotations linked with a brand or business name.

20
Q

Innovation

A

Sustainable competitive advantage that arises when a business can innovate by developing a new product.
Timely, costly, lost of researched needed for innovation.

21
Q

Portfolio Analysis

A

Method categorises “portfolio” and decides where each fits in its strategic plans.

22
Q

Portfolio

A

All products and services of a business

23
Q

Process of portfolio analysis

A
  • overview of all products in current business portfolio
  • Look at performance of each product by examining:
  • current and projected sales
  • current and projected costs
  • current competitor activity and future competition
  • risk that may affect performance
24
Q

Boston Matrix

A 
Advanced tool used for portfolio analysis. Categories products in 1 of 4 categories. Based on current and potential market share or market growth. 
Components:
- Stars 
- Cash Cows 
- Problem Child 
- Dogs
25
Q

Stars

A

High market growth
High market share

  • require investment
  • become cash cows
26
Q

Cash Cows

A

Low market growth
High market share

  • generate more cash than consumed
  • provide return for investors
  • provide investment for other areas
27
Q

Problem Child

A

High market growth
Low market share

  • consume a lot of cash
  • give little return
  • hopefully become stars
28
Q

Dogs

A

Low market growth
Low market share

  • may break even
  • time and effort
  • little prospect of growth
  • not worth time

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