3.8.1 strategic direction

Question 1

what is strategic direction?

Answer 1

the decisions made regarding the markets the business competes in and the products it offers
they are long term and high risk decisions

Question 2

what is the ansoff matrix?

Answer 2

a model that considers a firm’s strategy in terms of the products it offers and the markets it operates in

Question 3

what are the 4 strategic directions of the ansoff matrix?

Answer 3

market penetration
new product development
market development
diversification

Question 4

which part of the ansoff matrix has the most risk?

Answer 4

diversification

Question 5

market penetration:

Answer 5

existing product in an existing market.

the emphasis is on increasing market share through promotions, effective marketing and creating customer value

Question 6

product development:

Answer 6

new product in an existing market.

focuses on the needs of current customers. replace existing products/provide complementary products/sell other products the customer buys to add convenience

Question 7

market development:

Answer 7

existing products in new markets.

opening up previous excluded market segments through pricing policies, new distribution channels, new geographic markets

Question 8

diversification:

Answer 8

new products in a new market.

related markets - logic about the move
unrelated markets - relies on existing strengths of the business/may require new resources and capabilities

Question 9

factors to consider when selecting a strategy:

Answer 9

costs
expected returns
opportunity cost
financial risk
impact on stakeholders
ethical issues