3.1.2 - Theories of CORPORATE STRATERGY Flashcards
What is CORPORATE STRATEGY
the OVERALL SCOPE and DIRECTION of a BUSINESS and the WAY in which Various Business Operation WORK TOGETHER to ACHIEVE Particular GOALS
What is ANSOFF’s MATRIX
Theory Relating to HOW a COMPANY can LOOK for GROWTH Can CHOOSE their MARKETING STRATEGY
Explain ANSOFF MATRIX - MARKET PENETRATION
- EXTISTING MARKET and EXISITING PRODUCT
- LOW RISK
- INCREASE the SALES to EXISTING MARKET - Penetrate - SELL MORE to EXISITING CUSTOMERS - encourage order more often
Explain ANSOFF MATRIX - PRODUCT/Service DEVELOPMENT
- EXISTING MARKET and NEW PRODUCT
- MODERATE RISK
- NEW PRODUCT is DEVELOPED for EXISTING MARKETS : means R&D of NEW PRODUCTS to sell
Explain ANSOFF MATRIX - MARKET DEVELOPMENT
- NEW MARKET and EXISITING PRODUCT
- MODERATE RISK
Explain ANSOFF MATRIX - DIVERSIFICATION
- NEW PRODUCT sold in NEW MARKET
What is a USE of ANSOFF MATRIX
+ IDENTIFIES POTENTIAL NEW MARKETS or MARKETING STRAGETIES
What is LIMITATIION of ANSOFF MATRIX
- OVERSIMPLIFIES MARKET
- LARGE MNC’s May NEED THOUSANDS of SUB OPTIONS and STRATERGIES
What did PORTER suggest in his STRATEGIC MATRIX
3 GENERIC BUSINESS STRATEGIES that Would GET COMPETITIVE ADVANTAGE :
- COST LEADERSHIP
- DIFFERENTATION
- FOCUS
Explain PORTER MATRIX - COST LEADERSHIP
- 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
Explain PORTER MATRIX - DIFFERENTIATION
- 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
Explain PORTER MATRIX - FOCUS
- 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
USES and LIMITATIONS of PORTER’s MARTIX
+ ESTABLISHES a CLEAR DIRECTION to GO IN
+ IDENTIFIES when BUSINESS is IN TROUBLE
- NOT as RELEVANT in VERY DYNAMIC MARKETS
- OVERSIMPLIES the MARKET STRUCTURE
What is DISTINCTIVE CAPABILITY
- the FORM of COMPETITIVE ADVANTAGE that is SUSTAINABLE as it CANNOT be REPLACED by a COMPETITOR
State the 3 DISTINCTIVE CAPABILITIES that CREATE ADDED VALUE and GIVE a COMPETITIVE ADVANTAGE
- ARCHITECTURE - relationships with employees, suppliers, customers
- REPUTATION - through the customer experience
- INNOVATION - bringing invention to market
What is a STAR?
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
What is a CASH COW?
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
What is a QUESTION MARK?
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
What is a DOG
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
