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A Level Business Theme 3 > 3.1.2 Theories of corporate strategy > Flashcards

3.1.2 Theories of corporate strategy Flashcards

1
Q

triangle

A

mission statement
corporate obj
functional obj
strategy

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2
Q

corporate strategy

A

medium to long term actions a business takes to achieve its aims (HOW business achieves aims)

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3
Q

market penetration

A

sells more existing product to existing customer/market
growth strategy

aim: increase market share, sell more existing product to same target customers

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4
Q

market development

A

sells existing product in new market
growth strategy
business seeks to sell existing product in new mkt

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5
Q

product development

A

bus launch new product to existing customers
aims to introduce new products in existing markets
growth strategy

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6
Q

diversification

A

sell new product new market
growth strategy
successful diversification = reduce risk = spread risk across different places
business markets new products in new markets

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7
Q

ansoff’s matrix

A

existing market:& existing product MP
existing market & new product PD
new market & existing product MD
new market & new product D

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8
Q

risk levels on Ansoffs matrix

A 
least: 
market penetration (bus already know both customer and product and experience in area)

product development & marker development (more unknowns lack of knowledge and/or experience of product or market

most:
diversification (no knowledge and/or experience of either products/ or market - mistakes are easy to make = leading to failure

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8
Q

risk levels on Ansoffs matrix

A 
least: 
market penetration (bus already know both customer and product and experience in area)

product development & marker development (more unknowns lack of knowledge and/or experience of product or market

most:
diversification (no knowledge and/or experience of either products/ or market - mistakes are easy to make = leading to failure

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9
Q

methods of market penetration

A
  1. advertise/promote product
  2. sales promotion techniques (coupons, competitions, BOGOFF)
  3. decrease price, use promotional prices
  4. expand channels of distribution e.g. direct to customers & through retailers/wholesalers
  5. open more stores
  6. sign up more retailers to stock product
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10
Q

ADV & DIS of market penetration

A

ADV:
business focus on market and product known = reduce risk
exploit insights on what customers want (& competitors)
unlikely to need significant new market research

DIS:
will strategy allow business to achieve growth objs?
still some risk to strategy

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11
Q

methods of product development

A
  1. product extension strategies (modification/ improvements to existing product/ increase sales after saturation)
  2. umbrella brands/ brand proliferation (business launches independent sub-brands under overall umbrella brand e.g. Unilever = PG tips and walls ice cream
  3. brand extension (new products added under an existing brand e.g. Dove
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12
Q

ADV & DIS of product development

A

ADV:
often plays to strengths of established business = brand loyalty already established = easy to persuade customers to try products
market research techniques = gain insight into existing customer needs

DIS:
expensive (research, develop, launch)
may not be 1st to market = decrease effectiveness of launch
customers dont like new product = affect brand image

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13
Q

methods of market development

A
  1. re-branding existing product = appeal new customer e.g. grab and go soup = aim at different mkt segment
  2. sell into new country setting up retail outlets e.g. M&S opening in India
  3. sell into new country = use local distribution partner or licensing agreement e.g, Coca Cola India or integrating with another business or through joint venture
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14
Q

ADV&DIS of market development

A

ADV:
effective strategy where existing mkts are saturated or in decline (push factors) or where huge potential in emerging mkts (pull factors)
increases global reach & brand awareness when targeting footloose customers

DIS:
more risky than PD = expansion into international = external env/cultures = different
existing product = not suit new market = depend on customer needs e.g. ethnocentric vs geocentric

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15
Q

methods of diversification

A
  1. innovation & R&D = develop new solutions e.g. Amazon - cloud computing
  2. acquire existing business in new market through conglomerate integration e.g. Virgin group buying Telewest
  3. extend existing brand into new market e.g. Tesco Fresh n easy stores in US
16
Q

ADV&DIS of diversification

A

ADV:
high growth potential
done successfully = reduce risk of 1 product/market failing (risk bearing EOS)

DIS:
inherently risk strategy
no direct experience of product/mkt
have few EOS (initially)

17
Q

food retailing market Boston matrix

A

cash cow = UK
rising star = China/vietnam
problem child = Libya
dog= democratic republic of Congo

range of countries as = spread risk, alternative revenue stream

18
Q

porter’s generic strategies

A

find a way of competitive adv (2 strategies = differentiation, low cost) low cost = EOS

  1. cost leadership (selling prices = similar low cost = profit, low price = gain MS)
    (successful; profit increase by cost decrease av prices)
  2. cost focus (not viable)
  3. differentiation leadership
  4. differentiation focus (niche mkt)
19
Q

competitive adv

A

adv over competitors gained by offering consumers greater value (either lower price/greater benefits/service justifying higher price)

20
Q

cost leadership strategy suited for

A
  1. standard product
  2. little product differentiation
  3. branding unimportant
21
Q

ways to achieve low cost

A
  1. bargaining power = negotiate low price
  2. LEAN
  3. efficient, high productivity
  4. high CU
  5. large scale = economies
  6. distribution access wide/important
22
Q

ways to achieve differentiation

A

product distinctively different from competitors (customers value)

  1. branding (loyal)
  2. wide distribution (major channels)
  3. superior product quality (features)
  4. sustained promotion (advertise/sponsor)
23
Q

product differentiation

A

business uses to make product stand out from competing products
marketing
design
quality

point of differentiation cant be copied
lose competitive adv = customer loyalty = fail strategy

24
Q

mass vs niche market.

A

mass: mkt for goods on large scale for significant no of consumers
niche: segment of larger mkt defined by own unique needs/preference/identity = different from larger mkt

25
Q

distinctive capability

A

form of competitive advantage that is sustainable as it is difficult for other firms to replicate this

26
Q

3 types of distinctive capability

A

John Kay foundation of corporate success (1995)

  1. architecture (strength of relationships within organisation between employees, also with suppliers)
  2. reputation (build strong brand image)
  3. innovation (develop new products/processes)
27
Q

strategy

A

long term
refers to achieving an overall goal or target of a business

e. g. ansoffs, porters, Boston
e. g. mergers/takeovers/joint ventures

28
Q

tactic

A

shorter term actions
help achieve strategy

e. g. existing distribution channel = reach new mkt
e. g. method of promotion
e. g. which SOF
e. g. whether to drop price
e. g. which retailers to sell through

29
Q

functional areas

A
  1. human (recruit, re-skilling, training, redundancy, restructure)
  2. physical/operations (purchase new equip/machines, location, outsource)
  3. financial (costs, cash flow, new SOF)

A Level Business Theme 3 (16 decks)

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