8.

Question 1

What model is associated with choosing which market to compete in and which services to offer

Answer 1

Ansoff’s Matrix

Question 2

What is Ansoff’s matrix used for

Answer 2

A strategic tool to help choose which market to operate in and what products they should sell

Question 3

Name the 4 sections of Ansoff’s matrix

Answer 3

Market penetration
Market development
Product development
Diversification

Question 4

Explain market penetration and give 1 pro and 1 con

Answer 4

• Aim is to increase market share in an existing market
• Eg. Promotion, build brand image, develop customer loyalty
+ Low risk as product and market are familiar
- Limited growth potential

Question 5

Explain product development strategy and give 1 pro and 1 con

Answer 5

• Aim is to introduce new products and improve competitiveness
• Eg. market research to identify areas for improvement, use product portfolio tools
+ Familiar with customers
- Product development is expensive and takes time

Question 6

Explain market development and give 1 pro and 1 con

Answer 6

• Aim is to enter a new market with an existing product
• Eg. penetrating the market, heavy promotion
+ Growth potential
- Competing against established businesses

Question 7

Explain diversification and give 1 pro and 1 con

Answer 7

• Aim is to utilise core strengths to move to totally new areas
• eg. merge, takeover
+ Good growth potential
- Most risks

Question 8

Define strategic decision

Answer 8

Looking into the long term future for long term success. It involves choosing what products to provide and which market to operate in

Question 9

Name 2 pros and 1 con of Ansoff’s matrix

Answer 9

+ Helps illustrate risks involved in strategic decisions
+ Helps choose which strategy to choose for success

• The decision might not fit into one strategic option

Question 10

Name 5 factors to consider when choosing a strategy

Answer 10

• Core competencies
• External environment
• Stakeholder needs
• The financial availability
• Anticipate returns

Question 11

What does Ansoff’s matrix suggest about entering international markets

Answer 11

That the risk depends on how different the new market is from the business home market

Question 12

What model would you use when discussing strategic direction

Answer 12

Ansoff’s Matrix

Question 13

Name all of Porter’s strategies

Answer 13

Cost leadership
Differentiation
Market segmentation

Question 14

Define cost leadership

Answer 14

Achieving an advantage by being the lowest cost operator in the market

Question 15

Define differentiation

Answer 15

Competing by offering a unique product of service to the market or a niche

Question 16

Define segmentation

Answer 16

Segmentation is achieved though ether cost leadership or differentiation. It involves targeting a specific group of customers and not the whole market

Question 17

Name 4 ways you can achieve cost leadership

Answer 17

• Economies of scale by growing
• Control the supply of a product
• Operate a scale that keeps average costs low
• Have unique access to technology, skills or raw materials

Question 18

Name 2 benefits and 1 drawback of cost leadership

Answer 18

+ Helps achieve high profit margins as cost per unit is kept low
+ It can help lower price and acquire market share
- Few businesses can operate as the cost leader means multiple businesses cannot directly compete on cost

Question 19

Name 4 ways you can achieve differentiation

Answer 19

• Quality
• Customer service
• Speed and efficiency
• Meeting the unique needs of the specific market niche

Question 20

Name 2 benefits and 1 drawback of differentiation

Answer 20

+ Helps develop a unique brand image
+ Adds value to the product and higher prices can be charged
- Other businesses can copy the strategy if the product isn’t defensible (eg copyright)

Question 21

Name 2 benefits and 2 drawbacks of a narrow segmentation strategy

Answer 21

+ Communication and marketing can be focused on a narrow segment
+ You can understand customer needs better and the smaller segments mean narrower interests and needs and characteristics
- Customer loyalty is vital
- The market may disappear

Question 22

What does Bowman’s strategic clock show

Answer 22

It outlines different strategies in terms of perceived benefits and price.

Question 23

What are the different axis on Bowman’s strategic clock

Answer 23

Y - Perceived added value

X - Price

Question 24

Name 1 pro and 1 con of Bowman’s strategic clock

Answer 24

+ Helps outline competitive strategies

- Too complex, too many strategies

Question 25

Define strategic positioning

Answer 25

How the business intends to compete within the market. It will involve deciding on the right mix of product benefits and matching it against the price

Question 26

What model is associated with strategic positioning

Answer 26

Porter’s strategies

Question 27

What is the aim of Porter’s strategies

Answer 27

To position a business relative to its competition

Question 28

Name 2 pros and 2 cons of Porter’s strategies

Answer 28

+ Helps identity and analyse a strategy and it’s value
+ Low cost V Differentiation is good for: cars, grocery shops, airlines

• Must be aware of size, core competencies and market
• You don’t always fit into a sector of the model

Question 29

Sketch Ansoff’s matrix

Answer 29

Clockwise: 
Market penetration
Product development
Market development
Diversification

Question 30

What are the 4 titles to each sector of Ansoff’s matrix

Answer 30

Existing products
New products
New markets
Existing markets