3.1.2 theories of corporate strategy Flashcards
what is ansoff’s matrix?
identifies 4 strategies that a business can use for growth and the risk associated with them
what is market penetration? (ansoff’s matrix)
- least risky strategy
existing products in existing markets - this can be done through encouraging regular use or other ways to use a product, building brand loyalty to decrease switching.
what is market development? (ansoff’s matrix)
existing product in new market
- this can be done by selling abroad, complementary locations such as m&s food in bp stations, e-commerce
what is product development? (ansoff’s matrix)
new products in existing markets
- new versions, upgrades, re-designing (aesthetics), re-launches e.g christmas editions
what is diversification? (ansoff’s matrix)
-most risky strategy
new products in new markets
e.g tesco mobile, greggs clothing
what is porter’s strategic matrix?
identifies a range of strategies a business my adopt in order to compete successfully
what is cost leadership? (porters strategic matrix)
involves striving to be the lowest cost provider in the market.
- can lower costs by mass producing and taking advantage of economies of scale.
- perfect for mass market businesses
- competitive advantage as prices can be lowered
what is differentiation? (porters strategic matrix)
involves a business developing a usp through innovation, adding value, quality, customer service.
benefits of differentiation?
- businesses charge premium prices if customers value their usp
- if there is a niche market, competition can be reduced
- helps to meet customers needs and satisfaction
- increased sales/profits
disadvantages of differentiation?
- costly
- research and development
- easy to copy in mass market
what is distinctive capability?
a form of competitive advantage that is difficult for competitors to understand & imitate
e.g expertise, networks established, reputation
what boston matrix?
a method of portfolio analysis which considers the market share of a firm’s products.
what are stars?
products with high growth and high market share
(require ongoing investment to maintain market position & potentially become cash cows in the future)
(market penetration is likely to be appropriate)
what are question marks?
products with high growth and low market share
(require significant investment in order to improve snd become stars in the future)
what are cash cows?
products with low growth and high market share
(cash from these products can fund other investments, market development may be used)
what are dogs?
products with low growth and low market share
(little potential for future growth and are likely to be divested)
what are strategies?
long term planning to achieve a business’ objectives
what are tactics?
short term responses to an opportunity or threat in a business
examples of strategic decisions?
- enter a new overseas market
- withdraw an obsolete product from sale
- merge with a competitor
examples of tactical decisions
- production workers receiving a new bonus
- re-decorating premises
