3.1.2-Theories of corporate strategy

Question 1

Corporate Strategy

Answer 1

The overall scope and direction of a business and the way in which its various business operations work together to achieve particular goals

Question 2

Ansoffs Matrix Grid- label axis and the contents of the 4 boxes

Answer 2

Refer to any source

Question 3

Uses of Ansoffs Matrix

Answer 3

Ansoff’s matrix helps to identify potential new markets or marketing strategies for a business

Question 4

Limitations of Ansoffs matrix

Answer 4

• It only shows part of the picture
• It oversimplifies the market
• Large MNCs may need thousands of sub options and strategies

Question 5

Porters strategic matrix- label axis and what’s in each of the four boxes

Answer 5

Refer to any source for answer

Question 6

Porters strategic matrix- label axis and what’s in each of the four boxes

Answer 6

Refer to any source for answer

Question 7

Porters 3 strategies to gain competitive advantage

Answer 7

• Cost leadership; making products at the lowest cost, may include outsourcing, lean management, standard no frills low cost products
• Differentiation; the product or service is unique and the USP adds value to the product
• Focus; the product or service will serve a very small specific niche, high costs are passed on to customers, no close substitutes (Divided into cost focus and differentiation focus)

Question 8

Cost leadership

Answer 8

• Useful in highly competitive markets where there are homogenous products
• Customers may frequently switch supplier to gain best value
• New entrants to the market will use low process to build a customer base

Question 9

Differentiation

Answer 9

• Useful strategy in highly technological markets where there are rapidly changing and evolving features of products and services
• Where customers needs are very diverse
• Where the competitors in the market are all following a similar differentiation strategy

Question 10

Cost Focus

Answer 10

• Useful strategy when the business wants to offer very low prices to a small market segment
• Niche marketing but at very low cost

Question 11

Differentiation Focus

Answer 11

• Useful strategy when the business wants to offer products and services to a small market segment
• Products or services will be differentiated and aimed at a niche market

Question 12

Uses of Porters Strategic Mix

Answer 12

It establishes a clear direction for the business to go in

Identifies when a business may be in trouble e.g. Woolworths and BHS both got “stuck in the middle”

Question 13

Limitations of Porters Strategic Mix

Answer 13

• Not as relevant in very dynamic markets
• May not be useful in a crisis situation
• Over simplifies the market structure

Question 14

Kay’s Distinctive Market

Answer 14

He also argued that there were 3 distinctive capabilities (DC) that could create added value and give a business competitive advantage. These were:
• Architecture – relationships with employees, suppliers, customers • Reputation – through the customer experience
• Innovation – bringing inventions to market