business 3.1.2

Question 1

strategic direction

Answer 1

this is what a business will consider when choosing which markets it will operate in. t

Question 2

what is ansoffs matrix

Answer 2

it is a strategic tool that is used to choose which market to operate in as well as products too.

Question 3

what are the four strategies of ansoffs matrix

Answer 3

market penetration
diversification
market development
product development

Question 4

what is market penetration

Answer 4

this is a strategy too up the sales of a current product in its current market

Question 5

what are the benefits of market penetration

Answer 5

• low risk - products are familiar to people
• limited investment required

limitation: limited growth potential - business is vulnerable without true innovation

Question 6

define product development

Answer 6

this is developing new products in an existing market

Question 7

what are some benefits and limitations of product development

Answer 7

benefits- familiar customers, limited investment required

limitations- possibly limited growth. business is vulnerable if it doesn’t innovate

Question 8

what are some approaches to product development?

Answer 8

conduct market research

promotions

Question 9

what is market development?

Answer 9

this is taking an existing product to a new market segment.

Question 10

what are the benefits and limitations of market development?

Answer 10

benefits- potential for considerable growth, no need for expensive development
limitation- limited understanding of a new market may make them struggle, competing against established businesses in that market

Question 11

what are some approaches of market development?

Answer 11

use of penetration pricing

Mergers or takeover

Question 12

what is diversification?

Answer 12

offers a new product to a completely new market.

Question 13

what are some benefits and limitation for diversification?

Answer 13

benefits- allows for more variety ad options for products and services.
limitation- extremely high risk

Question 14

what are the three strategies businesses can use according to porter?

Answer 14

that a business should focus on cost, differentiation and segmentation.

Question 15

what is differentiation?

Answer 15

differentiation is offering a unique product or service to the market or a niche. having added value on your product.

Question 16

what are the benefits and limitation of differentiation?

Answer 16

benefits- makes the business stand out, helps develop a USP, adds value to the product
limitation- other businesses can take your ideas if you do not patent your idea.

Question 17

what is segmentation?

Answer 17

segmentation is when you target a specific groups of customers and not to the general market.

Question 18

what are the benefits and limitation of segmentation?

Answer 18

benefits- it is easier to target a specific group

limitation- customer loyalty is integral to survive.

Question 19

what is cost leadership?

Answer 19

this is being the lowest cost operator in a market.

Question 20

what are the benefits and limitation of a cost leadership.

Answer 20

benefits- low cost leadership can lead to higher profit margins.
limitation- few businesses can lead in price setting.

Question 21

what are some factors a business may consider when choosing a strategy?

Answer 21

• expected cost
• anticipated returns
• risk assessment
• external enviroment