3.1.2 Theories of Corporate Strategy Flashcards
What is a corporate strategy?
plans and policies developed to meet company’s objectives
How does a business develop it’s corporate strategy/
It looks at what the business has done and what it needs to do in future to achieve corporate objectives
What 2 tools do businesses use to develop corporate strategy?
Ansoff’s matrix and Porters strategic matrix
What does Ansoff’s matrix look at?
4 possible strategies that business may adopt with the key issue being risk
Name the 4 different parts of Ansoffs matrix and the names down the side?
On top = PRODUCT, existing and new
On side = MARKET, existing and new
- Market penetration
- Product development
- Market development
- Diversification
Define Market penetration? What is one way a business can achieve this?
achieving growth with already existing product in existing market
increase brand loyalty
Define Product development? One way a firm can do this?
Bringing new product into same market
Product innovation
Define market development? What will business have to consider when doing this?
Same product in different market
tastes and culture/preferences of new target audience
Define diversification?
developing new product into new market
What is Porters Strategic Matrix?
identifies sources of competitive advantage that a business could achieve
What are the three components of Porters matrix?
Cost leadership
Differentiation
Focus
Define cost leadership?
when business tries and minimises its costs to be lowest provider in market
What is differentiation?
adopts unique position in mass market instead of lowest cost position
What is focus?
targeting narrow range of customers in niche market
What are the 2 types of focus?
Cost focus and Differentiation focus
What is distinctive capability?
form of competitive advantage that is difficult for competitors to understand
What is the aim of portfolio analysis?
aim of categorising all of the products and services a firm offers
In a portfolio analysis - what are the products evaluated by?
their competitive position and potential growth rates
What information does Boston Matrix get of the products?
gathers market share and growth-rate
What are the 4 areas of the Boston Matrix?
Stars
Question marks
Cash cows
Dogs
Define a star in BM?
high growth rate and market share with the potential to turn into cash cow
Define question mark in BM?
High market growth and low market share - consume a lot of cash but give little return
Define Cash Cows in BM?
low growth products and high market share - generate more cash
Define Dogs in BM?
low market share and low growth which either need to be disinvested or sold
Define a strategy?
long term managerial decision- making
Define tactics?
short term day to day decisions
