3.1.2 Theories Of Corporate Strategy Flashcards
What is corporate strategy?
A medium to long-term plan for achieving corporate objectives
What factors does Ansoff’s matrix consider?
The level of investment in existing and new products.
The exploitation of different markets.
The growth strategy for the business.
The level of risk the business is willing to accept.
What are the benefits of Ansoff’s matrix?
Businesses can identify their current products and markets then consider their options for expansion using matrix - consider opportunities, associated costs, benefits and risks.
Helps to identify potential new markets or marketing strategies
What are the limitations of Ansoff’s matrix?
Only shows part of the picture
Oversimplifies the market
Large MNCs may need thousands of sub options and strategies.
Any organisations using Ansoff’s matrix should conduct a SWOT and PESTLE analysis to see issues from more than one angle.
What is Boston’s matrix?
Marketing planning tool which helps managers to plan for a balanced product portfolio.
Business would place each individual product in its product portfolio onto one of the quadrants of the Boston matrix based on the products relative market share and market growth.
What are the benefits of the Boston matrix
Good starting point when reviewing an existing product line to decide future strategy and budgets.
Helps businesses analyse future opportunities or problems with their product portfolios.
Conclusions drawn are to transfer surplus cash from cash cows to stars and question marks and sell dogs.
Questions marks reveal themselves as either dogs or stars and cash cows become so drained of finance they inevitably become dogs
What are the limitations of the Boston matrix?
Classifies businesses as low and high but generally businesses can be medium.
High market share doesn’t always lead to high profit.
High costs also involved with high market share.
Growth rate and relative market share are not the only indications of profitability
considered to be too simplistic
