3.1.2 - Theories of CORPORATE STRATERGY

Question 1

What is CORPORATE STRATEGY

Answer 1

the OVERALL SCOPE and DIRECTION of a BUSINESS and the WAY in which Various Business Operation WORK TOGETHER to ACHIEVE Particular GOALS

Question 2

What is ANSOFF’s MATRIX

Answer 2

Theory Relating to HOW a COMPANY can LOOK for GROWTH Can CHOOSE their MARKETING STRATEGY

Question 3

Explain ANSOFF MATRIX - MARKET PENETRATION

Answer 3

• EXTISTING MARKET and EXISITING PRODUCT
• LOW RISK
• INCREASE the SALES to EXISTING MARKET - Penetrate - SELL MORE to EXISITING CUSTOMERS - encourage order more often

Question 4

Explain ANSOFF MATRIX - PRODUCT/Service DEVELOPMENT

Answer 4

• EXISTING MARKET and NEW PRODUCT
• MODERATE RISK
• NEW PRODUCT is DEVELOPED for EXISTING MARKETS : means R&D of NEW PRODUCTS to sell

Question 5

Explain ANSOFF MATRIX - MARKET DEVELOPMENT

Answer 5

• NEW MARKET and EXISITING PRODUCT
• MODERATE RISK

Question 6

Explain ANSOFF MATRIX - DIVERSIFICATION

Answer 6

• NEW PRODUCT sold in NEW MARKET

Question 7

What is a USE of ANSOFF MATRIX

Answer 7

+ IDENTIFIES POTENTIAL NEW MARKETS or MARKETING STRAGETIES

Question 8

What is LIMITATIION of ANSOFF MATRIX

Answer 8

• OVERSIMPLIFIES MARKET
• LARGE MNC’s May NEED THOUSANDS of SUB OPTIONS and STRATERGIES

Question 9

What did PORTER suggest in his STRATEGIC MATRIX

Answer 9

3 GENERIC BUSINESS STRATEGIES that Would GET COMPETITIVE ADVANTAGE :
- COST LEADERSHIP
- DIFFERENTATION
- FOCUS

Question 10

Explain PORTER MATRIX - COST LEADERSHIP

Answer 10

• Making PRODUCTS at LOWER COST
• HELD by a BUSINESS as it REQUIRES HAVING a SIGNIFICANT MARKET SHARE in order to achieve Lowest Cost
• ACHIEVE LOWEST COST by OPERATING on LARGE SCALE and THEREFORE Levergaging EOS
• BUSINESS has a CLEAR FOCUS through Negotation with Suppliers, Efficiency

Question 11

Explain PORTER MATRIX - DIFFERENTIATION

Answer 11

• MASS PRODUCTION but ADAPTING a UNIQUE PRODUCT POSITION Instead of Low Cost
• USP - ADDDS VALUE (e.g. quality, brand identity) -> can CHARGE PREMIUM PRICES
• HOWEVER is DIFFICULT to GUARANTEE that REWARDS of DIFFERENTATION will JUSTIFY ORIGINAL COST -> e.g. Good Market Reseach

Question 12

Explain PORTER MATRIX - FOCUS

Answer 12

• TARGETING a NARROW RANGE of CUSTOMERS - NICHE
• GAIN COMPETITIVE ADVANTAGE by UNDERSTANDING CUSTOMER NEEDS WELL -> HIGHER level of CUSTOMER SATISFACTION + LOYALTY
• DONE Through : COST FOCUS e.g. Aldi and DIFFERENTIATION FOFUS e.g. Ferrari

Question 13

USES and LIMITATIONS of PORTER’s MARTIX

Answer 13

+ ESTABLISHES a CLEAR DIRECTION to GO IN
+ IDENTIFIES when BUSINESS is IN TROUBLE

• NOT as RELEVANT in VERY DYNAMIC MARKETS
• OVERSIMPLIES the MARKET STRUCTURE

Question 14

What is DISTINCTIVE CAPABILITY

Answer 14

• the FORM of COMPETITIVE ADVANTAGE that is SUSTAINABLE as it CANNOT be REPLACED by a COMPETITOR

Question 15

State the 3 DISTINCTIVE CAPABILITIES that CREATE ADDED VALUE and GIVE a COMPETITIVE ADVANTAGE

Answer 15

• ARCHITECTURE - relationships with employees, suppliers, customers
• REPUTATION - through the customer experience
• INNOVATION - bringing invention to market

Question 16

What is a STAR?

Answer 16

HIGH Market Share
HIGH Market Growth
Star products need to maintain their current marketing spend to keep sales high
Stars should become cash cows in time

Question 17

What is a CASH COW?

Answer 17

HIGH Market Share
LOW Market Growth
Products are good sellers and need little or no new investment
Cash Cows need monitoring in case they become dogs

Question 18

What is a QUESTION MARK?

Answer 18

LOW Market Share
HIGH Market Growth
Product have lots of potential to become stars if they are managed correctly
Need lots of investment in marketing and promotion - if they’re to succeed

Question 19

What is a DOG

Answer 19

LOW Market Share
LOW Growth Market
Products require no investment as they’re in the DECLINE PHASE of their LIFECYCLE
The product may have become obsolete or replaced
The business may consider discounting or withdrawing the product