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theme 3 > 3.1.2 Theories of corporate strategy > Flashcards

3.1.2 Theories of corporate strategy Flashcards

1
Q

what are the four segments of Ansoff’s matrix?

A

market penetration
market development
product development
diversification

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2
Q

what is market penetration?

A

a growth strategy where a business aims to sell existing products into existing markets

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3
Q

what is market development?

A

a growth strategy where the business seeks to sell existing products to new markets

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4
Q

what is product development?

A

a growth strategy where the business seeks to sell new products to an existing market

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5
Q

what is diversification?

A

a growth strategy where a business seeks to sell new products to a new market

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6
Q

what are the approaches for market penetration?

A

-maintain/increase market share of current products
(increase sales through branding/advertising)
(encourage products to be bought more often through loyalty schemes)
-restructure a market by driving out competitors

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7
Q

what are the risks of market penetration?

A

-market may already be saturated
-relatively short term
-cannibalisation (products put out too soon, kills sales for another product)

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8
Q

what are approaches for market development?

A

-new country
-new dimensions
(going from single size to family size)
-new distribution channels
(e-commerce vs retail)
-different pricing policies
(attract new customers so new

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9
Q

what are evaluations of market development?

A

-logical idea where existing markets are saturated or in decline
-usually higher risk than product development
(particularly expansion into international markets)
-existing products may not suit new markets
(depends on customer needs)

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10
Q

what are the risks of market development?

A

-alienation of current customers
-may not be understood
-may not be accepted in a new market

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11
Q

what are the approaches of product development?

A

-launch improved versions of existing products
-introduce complementary products
-new innovations

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12
Q

what are the risks of product development?

A

-cannibalisation
-may shorten the product life cycle of existing products
-damage to brand (high R&D costs)

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13
Q

what is needed for product development to be successful?

A

-first to market
-R&D and innovation
-detailed insights to customer needs
(and how they change)

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14
Q

what are the approaches of diversification?

A

-R&D is needed for new products/markets
-acquisition of other businesses

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15
Q

what are the risks of diversification?

A

-relies on heavy investment
-may be cultural differences
-brand name can be diluted
(however it can strengthen trust with customers)

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16
Q

what are the uses of Ansoff’s matrix?

A

-businesses can identify all their current products/services and their markets
-considers future options for expansion
(also considers risk)
-new markets/marketing strategies can be identified

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17
Q

what is Porter’s strategic matrix?

A

a matrix that categorises the marketing strategies a business can adopt to try and achieve a competitive advantage
(analyses low cost vs differentiation)

18
Q

what is Porter’s basic premise?

A

to be one thing or the other, not stuck in the middle

19
Q

what are the approaches for Porter’s strategic matrix?

A

-cost leadership
-differentiation
-focus

20
Q

what is cost leadership?

A

making products at the lowest cost
(can include outsourcing/lean management)
(lowest cost, mass market)

21
Q

what is the importance of cost leadership?

A

if selling prices are broadly similar, the lowest producer will enjoy the highest profit

22
Q

what are the attributes cost leadership?

A

-high levels of productivity/capacity utilisation
-lean production methods (JIT)
-effective use of technology in the production process

23
Q

what are suitable markets for a cost leadership strategy?

A

-standard product
-little product development
-branding relatively unimportant

24
Q

what is cost focus?

A

lowest cost, niche market

25
Q

what is the importance of cost focus?

A

-business seeks lower cost advantage, in just one or a small number of segments
-basic product (similar to high priced products and market leader)

26
Q

what is differentiation?

A

product/service is unique and the USP adds value to a product
(highest differentiation, mass market)

27
Q

what is the importance of differentiation?

A

-business targets much larger markets and aims to achieve competitive advantage across the whole of an industry
-involves selecting one or more criteria used by buyers in a market
-not easy, requires substantial/sustained investment

28
Q

what is the importance differentiation focus?

A

-business aims to differentiate within one or a small number of target market segments
-needs: market segmentation and high quality

29
Q

what is focus?

A

a product/service will have a specific niche and high costs are passed onto customers
(no substitutes)
(divided into cost focus and differentiation focus)

30
Q

what is cost focus?

A

lowest cost, niche market

31
Q

what is differentiation focus?

A

highest differentiation, niche market

32
Q

what is the boston matrix?

A

a marketing planning tool that helps managers plan a product portfolio
(focuses on a product’s market share/growth)

33
Q

what is a star product?

A

-usually in the growth phase, so have high market share and growth
-production should be consistent

34
Q

what is a cash cow product?

A

-mature products, have customer loyalty
-produced until sales fall

35
Q

what are question mark products?

A

-have high market growth but low market share
(recent product?)
-should be invested

36
Q

what are dog products?

A

-in a decline phase
(declining sales in a declining market)
-should be removed from sale

37
Q

what are the uses of a boston matrix?

A

-good to review existing product line to decide future strategy and budgets
-analyse future opportunities or problems with their product portfolio
-can draw conclusions from the analysis
(transfer surplus from cash cow to others and close down/ sell off the dogs)

38
Q

what is kay’s distinctive capabilities theory?

A

argued that three capabilities can create added value and give a business competitive advantage

39
Q

what are kay’s distinctive capabilities?

A

-architecture (relationship with shareholders)
-reputation (customer experience)
-innovation

40
Q

what does thinking strategically mean?

A

-long term direction of the business
-what businesses do to meet aims & objectives
-proactive decision making
-forward thinking, future planning

41
Q

what does thinking tactically mean?

A

-short/medium term decisions
-how the business will implement its strategy
-reactive to competitor’s actions
-present day thinking (what is happening now that needs dealing with)

theme 3 (5 decks)

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