3.1.2 theories of corporate strategy Flashcards
ansoff’s matrix (def.)
a strategic model that helps a business determine its product and market strategy
what are the four elements of ansoff’s matrix?
market penetration
market development
product development
diversification
market penetration (def.)
selling existing products in existing markets
least risky strategy but less rewarding
market penetration adv.
lowering the price = increase in quantity demanded
lower unit costs = lower price for consumers = retained profits
if PED is elastic = sales will increase = increased market share and revenue
market penetration dis.
lack of innovation = no USP
staff may feel discouraged/bored = increased staff turnover (long-term)
market development (def.)
selling existing products in new markets
mid/high risk option
market development adv.
established product and business = increased brand awareness
can reach new customers = more sales = more revenue and market share
can de done through e-commerce/opening new stores = more convenient for customers = added value
market development dis.
market research is needed = increases costs
lack of innovation
product development (def.)
selling new products in existing markets
medium/high risk option
product development adv.
little/no market research is needed = no extra costs
already established in market = can charge higher prices
shows high innovation = encourages investment = creates USP
improved customer relations = increased product portfolio = more choice for consumers/meets consumer needs
product development dis.
researching new products = high cost to test
no guarantee of success
diversification (def.)
selling new products in new markets
highest risk option
diversification adv.
reach/find new markets = low competition = can exploit market = increased market share
staff are excited/encouraged = increased motivation and productivity
creates USP/innovative = increased brand image and awareness globally
diversification dis.
market research = can be costly
