3.1.2 Theories Of Corporate Strategy Flashcards
What does a successful corporate strategy help with?
Competitive advantage
What does an effective corporate strategy consider
SWOT (strengths, weaknesses, opportunities, threats) (the internal and external environment)
What are examples of internal and external factors?
Internal factors - human and capital resources available (distinctive capabilities)
External factors - economic and political environments
What are the two strategic models used to develop a corporate strategy?
Ansoff’s Matrix
Porter’s Strategic Matrix
What is ansoffs matrix used for?
It’s a tool for businesses with a growth objective
What does ansoffs matrix identify
an appropriate corporate strategy and the level of risk associated with the chosen strategy
What does ansoffs matrix consider?
The market - existing and new markets
The product - existing and new products
What is meant by market penetration ?
Existing product in an existing market by encouraging more usage of a product
Benefits to market penetration?
-increases brand loyalty
-least risky
What is market development?
New market for an existing product
(Overseas markets, sell to different customer profiles e.g other businesses/resellers, or seeking complementary locations like Waitrose at shell garage)
What is product development
New products to existing customers through innovation or heritage products (e.g Christmas themed stuff)
What is diversification
New product in a new market by expanding product portfolio
Drawbacks with diversification?
Most risky e.g Greggs clothing line ?
What’s porters generic strategic matrix help with ?
Identifying what strategies to adopt considering its source of competitive advantage (cost or differentiation) and the market scope (mass, niche)
According to porter if a business is operating in a mass market what strategy should they adopt to achieve their aim?
Either a cost or differentiation leadership strategy , depending on what it is that makes them stand out from competitors
Why would a mass marketed business use cost leadership ?
They can exploit what they already have
Like if they’re operating at max efficiency they have the economies of scale that allows them to undercut consumer prices
Why would a mass marketed business use differentiation leadership ?
If they can’t compete on cost, and if it’s smth they’re already good at
If a business operates in a niche market, what focus strategy should they adopt?
Cost focus (by being lowest cost provider)
Differentiation focus (offering specialised products )
What is portfolio analysis?
Where a business carries out a detailed evaluation of its product portfolio to decide what
strategies to pursue
What is the tool used for portfolio analysis
Boston
What does the boston matrix consider?
- The relative market share of a firm’s products
- The rate of market growth within the products market
What is a star product? 🌟
Products with high market share in a high-growth market
What ansoff strategy would aid the star
Market penetration to increase revenue and marketsharemaxx
What is a cash cow? 💸🐮
Low growth market, high market share
What ansoff strategy can be applied to cash cow
Market development
What is a question mark
High growth market, but product has low market share
It’s an enigma bc it could becoming a rising star or a dog
What’s a dog 🐶
Low growth market, low market share
What should be done with a dog
Divest it
What is meant by distinctive capability
The particular strength of a business that is very difficult for competitors to copy
Whys it useful to know ur distinctive capabilities?
determine aims and objectives of the business and the strategies it will pursue to achieve them
E.g if you have significant operational skills and expertise what strategy will u pursue?
Good product design team = ease of doing business = first mover advantage =Product development ansoff
E.g if you have close relationships with suppliers what strategy will you pursue?
Good relationships with suppliers = cheaper prices on goods = less unit costs = sell cheaper so porters LOW COST strategy
if you have a strong reputation what can u do
Use it to develop new markets orrr focused differentiation
What are the three kinds of resources in businesses?
- HR
- Financial resources
- Production resources
What can influence a change in these resources
Strategic decisions
E.g if u make the strategic decision to enter an overseas markets what the impact on the three resources
Financial : increase marketing budget
Human : need bilingual staff, need staff for more output
Production : glocal , more output = more machines needed
E.g if u make the strategic decision to withdraw an obsolete product what’s the impact on the three resources?
Financial : money, or redundify staff that made those
Human : redundancy or redeployment
Production : sell assets + lower C.U
E.g if u make the strategic decision to merge with competitors what’s the impact on the three resources?
Human : more promotional opps, redundancies, redeployment
Financial : profit synergies = nicer balance sheet + cash flow
Production : share experience
Difference between strategic and tactical decisions?
Tactical is short term quick thinking type shi
Tactical : workers are given a bonus to complete a last minute order . Impacts ?
Tactical : business premises to be decorated following negative reviews . Impacts?
What to remember with strategic and tactical decisions?
Strategic = aid corporate aims n objectives
Tactical = short term to aim strategic goals
U HAVE 2 KNO
