business 3.1.2 Flashcards
strategic direction
this is what a business will consider when choosing which markets it will operate in. t
what is ansoffs matrix
it is a strategic tool that is used to choose which market to operate in as well as products too.
what are the four strategies of ansoffs matrix
market penetration
diversification
market development
product development
what is market penetration
this is a strategy too up the sales of a current product in its current market
what are the benefits of market penetration
- low risk - products are familiar to people
- limited investment required
limitation: limited growth potential - business is vulnerable without true innovation
define product development
this is developing new products in an existing market
what are some benefits and limitations of product development
benefits- familiar customers, limited investment required
limitations- possibly limited growth. business is vulnerable if it doesn’t innovate
what are some approaches to product development?
conduct market research
promotions
what is market development?
this is taking an existing product to a new market segment.
what are the benefits and limitations of market development?
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
what are some approaches of market development?
use of penetration pricing
Mergers or takeover
what is diversification?
offers a new product to a completely new market.
what are some benefits and limitation for diversification?
benefits- allows for more variety ad options for products and services.
limitation- extremely high risk
what are the three strategies businesses can use according to porter?
that a business should focus on cost, differentiation and segmentation.
what is differentiation?
differentiation is offering a unique product or service to the market or a niche. having added value on your product.
what are the benefits and limitation of differentiation?
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.
what is segmentation?
segmentation is when you target a specific groups of customers and not to the general market.
what are the benefits and limitation of segmentation?
benefits- it is easier to target a specific group
limitation- customer loyalty is integral to survive.
what is cost leadership?
this is being the lowest cost operator in a market.
what are the benefits and limitation of a cost leadership.
benefits- low cost leadership can lead to higher profit margins.
limitation- few businesses can lead in price setting.
what are some factors a business may consider when choosing a strategy?
- expected cost
- anticipated returns
- risk assessment
- external enviroment
