Business pre-mock

Question 1

Factors affecting corporate strategy

Answer 1

Level of investment in new & current products
Growth strategy of the business
Level of risk willing to be accepted by the business
Exploitation of different markets

Question 2

Ansoff’s matrix - risk increases…

Answer 2

…the further a business strays from its existing products & customers

Question 3

Market penetration

Answer 3

Existing products, existing markets
Least investment = least risky
e.g. strengthening brand loyalty > minimises customer use of substitutes (e.g. Costa loyalty card scheme)

Question 4

Product development

Answer 4

New /modified products in existing markets
Appropriate when product life cycle = short + rapidly developing tech capabilities
-Innovation & continuous development
Heavy R&D = high cost
Heavy promotion = high cost
>Risky

Question 5

Market development

Answer 5

Existing products, different markets
e.g. entering new geographical markets (though can just be DIFFERENT markets
Relies upon understanding of different needs, tastes & preferences for different markets

Question 6

Diversification

Answer 6

New products, new markets
MAY enable spreading of risk to increase safety
Business = outside its expertise > highest risk
Large corporations & conglomerates - considerable capital, extensive business networks, STRONG brand
e.g. Virgin moving from airways to banking

Question 7

Organic growth

Answer 7

A business growing naturally by selling more of its own resources

Question 8

Inorganic growth

Answer 8

When businesses join together, in the form of a merger or takeover