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Business- Catley > 3.1.2 Theories of corporate strategy > Flashcards

3.1.2 Theories of corporate strategy Flashcards

1
Q

describe corporate strategy

A

Corporate strategy is the course or route that a business has chosen to follow in order to achieve its corporate objectives

This will in part be informed by an assessment of the business’ internal strengths and weaknesses and external opportunities and threats

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2
Q

Corporate strategy will influence which markets a business chooses to compete in and which products to offer
This will be influenced by:

A 
Corporate objectives
Distinctive capabilities
Competitive environment
Leaders’ attitudes to risk
Local, national and global economic environment
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3
Q

describe Igor Ansoff’s Matrix

A

Ansoff looked at the degree of risk and potential for reward from different strategic options
He recognised that as a business moved away from what it knows best i.e. its current product and current market the degree of risk increased
However trying to just sell more of an existing product in an existing market is unlikely to bring about substantial growth opportunities

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4
Q

describe Igor Ansoff’s Matrix 4 potential strategies

A

Market penetration
Market development
New product development
Diversification

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5
Q

describe Ansoff’s Matrix – market penetration

A

Trying to sell more of an existing product to the existing market
Low risk strategy but limited potential reward

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6
Q

describe Ansoff’s Matrix – market penetration

possible approaches

A

Gain market share from competitors
Encourage customers to buy/consume more
Changes to the marketing mix
Extension strategies

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7
Q

describe Ansoff’s Matrix – market penetration

potential dangers

A

Competitors’ reactions
Relatively short term only
Market may already be saturated
Cannibalisation

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8
Q

describe Ansoff’s Matrix – product development

A

Selling new and better products to existing customers

Risk comes from not knowing the products, high R&D costs and competitors’ reactions

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9
Q

Ansoff’s Matrix – product development

possible approaches

A

Launch substantially improved version of existing products
Introduce complementary products
New product innovations

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10
Q

Ansoff’s Matrix – product development

possible dangers

A

Risk of cannibalisation
May shorten product life cycle of existing products
Damage to brand

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11
Q

describe Ansoff’s Matrix - diversification

A

Selling new products to new markets
High risk strategy as 2 elements are unknown - the market and the product
High risk but also greatest potential for reward

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12
Q

Ansoff’s Matrix - diversification

possible approaches

A

R&D into new products and market research into new markets
Acquisitions of other businesses

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13
Q

Ansoff’s Matrix - diversification

possible dangers

A

Relies on heavy investment
Cultural differences may exist
brand name may be diluted

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14
Q

National and global ; global contexts of market penetration

A

A business already operating internationally has wider potential
Existence in a segment of a market may help market penetration e.g. a foothold in Europe

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15
Q

National aND global contexts of product development

A

May tap into expertise for R&D

Identify country leading in product development

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16
Q

National AND ; global contexts of market development

A

Identify rising star countries

Easier if new areas have similar expectations and cultures

17
Q

National and global contexts of diversification

A

Continues to be highest risk strategy especially in an international context

18
Q

Michael Porter’s Strategic Matrix(generic strategy

A

A matrix that categorises the marketing strategies a business can adopt to try and achieve a competitive advantage
Analyses low cost v. differentiation
Porter’s basic premise is to be one thing or the other and not stuck in the middle
He emphasises the danger of the middle ground, almost as if it is a “no mans’ land” where there is little protection
He believes that businesses must put their flag in one camp and remain clearly focused on this
Marketing messages must be clear and non contradictory

19
Q

describe porters generic strategy - low cost

A

Porter states that a strategy of low cost can be successful in either a mass or niche market
He refers to this as cost leadership, in the mass market, and focused cost leadership, in a niche market
Cost leadership means being able to offer your good or service at the lowest cost possible
Price is a key element in the marketing mix
Both operational and financial objectives must focus on cost minimisation
A business that operates with the lowest cost can charge the lowest prices but does not necessarily have to

20
Q

describe porters generic strategy - differentiation

A

Porter states that a strategy of differentiation can be successful in either a mass or niche market
He refers to this as differentiation, in the mass market, and focused differentiation, in a niche market
Differentiation means being able to offer a good or service that stands out from the competition
Product – has to appear better than the competition e.g. USP or patents
Promotion – create desire, exclusivity, brand loyalty
Operational objectives will focus on R&D and innovation

21
Q

define product portfolio analysis

A

looks at the range of products and brands that a business has under its control
This type of analysis can help a business identify where every single one of its products is positioned in the market

22
Q

aims of portfolio analysis include

A 
Reach a wide audience through product and market development
Spread risk
Objective of growth
Identify and fill gaps in the market
Economies of scale
23
Q

Achieving competitive advantage through distinctive capabilities

A

Combined expertise, knowledge and experience of the leaders and founders of a business
Collective learning and technical expertise
Leads to a competitive advantage
Unique characteristics to a business
Architecture – the relationship with key stakeholders
Reputation – based on customer experience
Innovation – new products and process
Difficult to imitate by others

24
Q

Effect of strategic and tactical decisions on human resources

A

Workforce planning

Training

Flexible workforce

Organisational design

Leadership

Motivation

Entrepreneur to leader

25
Q

Effect of strategic and tactical decisions on physical resources

A

Productivity

Efficiency

Capacity utilisation

Stock control

Quality management

26
Q

Effect of strategic and tactical decisions on financial resources

A

Internal and external finance

Liquidity

Profitability

Budgets

27
Q

what are porters 5 forces

A 
Threat of new entrants to a market
Bargaining power of suppliers
Bargaining power of customers ("buyers")
Threat of substitute products
Degree of competitive rivalry

Business- Catley (21 decks)

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