3.1.2 - Theories of Corporate Strategy Flashcards

1
Q

What is Ansoff’s Matrix?

A

Tool for businesses with an objective of growth

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2
Q

What is Ansoff’s Matrix used for?

A

Used to identify an appropriate corporate strategy and identify the level of risk associated with the chosen strategy

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3
Q

What strategy is existing markets and existing products?

A

Market Penetration Strategy

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4
Q

What is Market Penetration Strategy?
(Def, Ex, Pros, Cons)

A

Boost sales of current products in current market
1. Increased promotion
2. Build brand image
3. Pricing
4. Improving customer loyalty

PROS
- Low risk
- Low investment

CONS
- Limited growth material
- Vulnerable if not innovative

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5
Q

What is Market Development Strategy?
(Def, Ex, Pros, Cons)

A

Enter a new market with existing products to increase sales
1. Heavy promotion
2. Penetration pricing to enter new markets

PROS
- Potential for large growth
- No expensive product development

CONS
- Limited consumer understanding of needs
- Competing against established businesses

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6
Q

What is Product Development Strategy?
(Def, Ex, Pros, Cons)

A

Developing new products for existing consumers
1. Market research
2. Invest in R&D

PROS
- Familiar with customers
- Can respond to customer needs

CONS
- Takes time
- Could be expensive

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7
Q

What is Diversification?
(Def, Ex, Pros, Cons)

A

New products to new customers in a new market
1. Needs considerable financial resources and economics of scope
2. Merger or takeover

PROS
- Spreads risk by engaging in different markets

CONS
- Extremely high risk
- Costly
- No reputation or expertise in a new market

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8
Q

What strategy is existing markets and new products?

A

Product Development

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9
Q

What strategy is new markets and existing products?

A

Market Development

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10
Q

What strategy is new markets and new products?

A

Diversification

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11
Q

What is Porter’s strategies?

A

Identifies a range of strategies a business might adopt considering
- Its source of competitive advantage and its scope of the market

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12
Q

What are his 3 strategies and the middle?

A
  1. Differentiation
  2. Cost Leadership
  3. Focus
  4. Stuck in the middle
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13
Q

What is differentiation and pros/cons?

A

Offering a unique product

PROS
- Brand can stand out from competitors
- Adds value so can increase price

CONS
- Other businesses may copy the strategy

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14
Q

What is cost leadership and pros/cons?

A

Advantages by being the lowest cost operator

PROS
- Can maintain selling price
- Lower price can gain market share

CONS
- Most businesses don’t compete directly on cost

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15
Q
A
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16
Q

What is Focus and pros/cons?

A

Focusing on a specific group of customers (niche)

PROS
- Easier to target a narrow sector
- Better understanding of customers

CONS
- Needs loyalty so may not be enough customers

17
Q

What are distinctive capabilities?

A

When a business has a particular strength that is very difficult for competitors to copy

18
Q

What are 3 distinctive capabilities and explanation?

A
  1. Innovation – Ability to create new and unique products
  2. Architecture – Links to synergy between the business and their customers, suppliers
  3. Reputation - Business may develop an excellent reputation for quality
19
Q

What is strategic decision making?

A

Involves medium- to long-term planning to achieve corporate and functional objectives and establishes the actions that the business intends to take to achieve its goals

20
Q

What does strategic decisions making have an impact on?

A

Business’s human, financial and production resources