business theories and model flashcards
What is Ansoff’s Matrix?
Ansoff’s Matrix is a marketing planning model that helps a business determine its product and market growth strategy, based on whether it markets new or existing products in new or existing markets.
What are the four growth strategies in Ansoff’s Matrix?
Market Penetration
Market Development
Product Development
Diversification
What is Market Penetration?
Market penetration is a strategy where a business focuses on selling existing products into existing markets.
What are the main objectives of Market Penetration?
Maintain or increase market share
Secure dominance of growth markets
Restructure mature markets by driving out competitors
Increase usage by existing customers (e.g., loyalty schemes)
What is Market Development?
Market development is a strategy where a business seeks to sell its existing products into new markets.
What are some approaches to Market Development?
New geographical markets (e.g., exporting to a new country)
New product dimensions or packaging
New distribution channels (e.g., moving to e-commerce)
Different pricing policies to attract new customers or market segments
What is Product Development?
Product development is a strategy where a business introduces new products into existing markets.
What are the key factors in Product Development?
Research & development and innovation
Understanding customer needs and how they change
Being first to market
What is Diversification?
Diversification is a growth strategy where a business markets new products in new markets, which is inherently riskier due to a lack of experience in both product and market.
What are the risks and considerations of Diversification?
Diversification is a higher-risk strategy, requiring a clear understanding of what the business expects to gain, and an honest assessment of the risks involved.
What is the Balanced Scorecard?
A strategic management tool developed by Kaplan & Norton that measures business performance using both financial and non-financial data.
What are the main objectives of the Balanced Scorecard?
Align business activities with strategy, improve communication, and monitor performance against strategic goals.
Why was the Balanced Scorecard developed?
To provide a more comprehensive measure of organizational health beyond financial metrics.
What are the four perspectives of the Balanced Scorecard?
Financial, Customer, Internal Processes, and Learning & Growth.
What is the Financial Perspective in the Balanced Scorecard?
It focuses on measuring financial performance, such as revenue growth, profitability, and cost reduction.
What is the Customer Perspective in the Balanced Scorecard?
: It evaluates customer satisfaction, retention, market share, and brand reputation.
What is the Internal Process Perspective in the Balanced Scorecard?
It assesses the efficiency and effectiveness of internal operations, such as production quality and innovation.
What is the Learning & Growth Perspective in the Balanced Scorecard?
It focuses on employee skills, organizational culture, and innovation to ensure long-term success.
How does the Balanced Scorecard help businesses?
It provides a holistic view of business performance and aligns operations with strategic objectives.
What are Kotter & Schlesinger’s six approaches to overcoming resistance to change?
Education & Communication, Participation & Involvement, Facilitation & Support, Co-option & Manipulation, Negotiation & Bargaining, and Explicit & Implicit Coercion.
Why is Education & Communication important in change management?
: It helps people understand the logic behind change, corrects misinformation, and builds long-term support for the change.
What is a limitation of Education & Communication in change management?
It requires time and consistency to be effective; short-term results are unlikely.
How does Participation & Involvement help reduce resistance to change?
It brings people on board by allowing them to contribute, increasing commitment rather than just compliance.
What is a challenge of using Participation & Involvement in change management?
: Too much involvement can cause delays and obstacles in the change process.
How does Facilitation & Support help employees cope with change?
:By providing training, counselling, mentoring, and listening to concerns to reduce fear and anxiety.
: When is Facilitation & Support especially important?
When fear and anxiety are at the core of resistance to change.
What is Co-option in change management?
Bringing specific individuals into roles that support the change to gain their buy-in.
How does Manipulation influence change?
It selectively uses information to guide people toward supporting change, though it can be seen as unethical.
What is the purpose of Negotiation & Bargaining in change management?
To offer incentives (e.g., financial rewards) to encourage people to accept or leave the change program.
When is Negotiation & Bargaining commonly used?
During business restructuring, such as delayering.
What is Explicit Coercion in change management?
Clearly stating the negative consequences of resisting change.
What is Implicit Coercion in change management?
Suggesting negative consequences without making direct threats.
What is a major drawback of using Coercion to enforce change?
It damages trust and morale within the organization.
What is Carroll’s CSR Pyramid?
A framework that outlines four levels of corporate social responsibility (CSR): Economic, Legal, Ethical, and Philanthropic.
What are the four levels of Carroll’s CSR Pyramid?
Economic, Legal, Ethical, and Philanthropic responsibilities.
What is the Economic Responsibility in Carroll’s CSR Pyramid?
The foundation of the pyramid – businesses must be profitable to survive and meet their financial obligations.
What is the Economic Responsibility in Carroll’s CSR Pyramid?
The foundation of the pyramid – businesses must be profitable to survive and meet their financial obligations.
Why is Economic Responsibility the base of the CSR Pyramid?
A business must generate profit to support all other responsibilities; without financial success, it cannot fulfill legal, ethical, or philanthropic duties.
Can you give an example of Legal Responsibility in business?
Following employment laws, health & safety regulations, and consumer protection laws.
What is the Legal Responsibility in Carroll’s CSR Pyramid?
Businesses must obey laws and regulations set by governments, ensuring fair operations and compliance.
What is the Ethical Responsibility in Carroll’s CSR Pyramid?
Businesses should go beyond the law to do what is fair, just, and right, even when not legally required.
Give an example of an Ethical Responsibility in business.
Paying fair wages, reducing environmental impact, and treating workers and suppliers fairly.
What is the Philanthropic Responsibility in Carroll’s CSR Pyramid?
The top level – businesses should voluntarily give back to society through donations, community projects, and social initiatives.
How can businesses fulfill Philanthropic Responsibility?
Donating to charities, supporting local communities, funding education programs, or promoting sustainability initiatives.
Why is Carroll’s CSR Pyramid useful for businesses?
It helps businesses understand their responsibilities and balance profitability with social impact.
How does Carroll’s CSR Pyramid link to corporate reputation?
Businesses that fulfill all levels of the pyramid build trust, attract customers, and gain competitive advantage.
: What criticism does Carroll’s CSR Pyramid face?
Some argue businesses prioritize profit over ethics, and CSR may just be a PR strategy rather than genuine responsibility.
What are the three elements of Elkington’s Triple Bottom Line?
People, Planet, Profit
What does the ‘People’ element of the TBL represent?
It refers to a business’s impact on employees, customers, and the wider community, including fair wages, working conditions, and social responsibility.
What does the ‘Planet’ element of the TBL represent?
It focuses on the environmental impact of a business, including sustainability, carbon footprint, waste management, and resource use.
What does the ‘Profit’ element of the TBL represent?
: It measures the financial success of a business, ensuring it is profitable while also considering social and environmental impacts.
Why is Elkington’s Triple Bottom Line model useful for businesses?
It helps businesses balance financial performance with social and environmental responsibilities, promoting long-term sustainability.
How does the Triple Bottom Line model differ from traditional business performance measurement?
Traditional models focus mainly on financial profit, whereas TBL considers social and environmental impacts as well.
What is a criticism of the Triple Bottom Line model?
It can be difficult to measure and balance all three elements effectively, and some businesses may use it as a PR tool rather than genuinely committing to sustainability.
: How does the Triple Bottom Line relate to corporate social responsibility (CSR)?
It is a framework that supports CSR by encouraging businesses to consider their wider impact beyond profit.
What is Lewin’s Force Field Analysis Model?
A change management model that identifies and analyses forces that drive or resist change within a business.
What are the two types of forces in Lewin’s model?
Driving forces (push change forward) and restraining forces (work against change).
What happens if driving forces are stronger than restraining forces?
Change is likely to occur successfully.
What happens if restraining forces are stronger than driving forces?
Change is unlikely to happen or will face resistance.
Give an example of a driving force in a business change situation.
New technology, market competition, government legislation, or customer demand.
Why is Lewin’s Force Field Analysis useful for strategic decision-making?
It helps businesses assess whether change is feasible and identify key areas to focus on.
Give an example of a restraining force in a business change situation.
Employee resistance, lack of resources, financial costs, or existing company culture.
How can businesses use Force Field Analysis to implement change?
By strengthening driving forces and reducing restraining forces to make change more effective.
What is Herzberg’s Two-Factor Theory?
A motivation theory that identifies two types of factors affecting employee motivation: motivators and hygiene factors.
What is a potential limitation of the Force Field Analysis model?
It may oversimplify complex change processes and not consider unexpected external factors.
What are motivators in Herzberg’s theory?
Factors that directly increase motivation and job satisfaction, encouraging employees to work harder.
Give examples of motivators in Herzberg’s theory.
Achievement, recognition, responsibility, personal growth, and meaningful work.
What are hygiene factors in Herzberg’s theory?
Factors that prevent dissatisfaction but do not actively motivate employees if improved.
Give examples of hygiene factors in Herzberg’s theory.
Salary, company policies, working conditions, job security, and relationships with managers.
How do hygiene factors and motivators work together?
Hygiene factors must be present to prevent dissatisfaction, but motivators must be added to drive motivation and performance.
How does Herzberg’s theory link to Maslow’s hierarchy of needs?
Motivators relate to higher-level needs (esteem & self-actualization), while hygiene factors relate to lower-level needs (physiological & safety).
What is a limitation of Herzberg’s Two-Factor Theory?
It assumes all employees are motivated in the same way and may not apply to all job roles or cultures.
What is Porter’s Five Forces Model?
A framework for analyzing the competitive intensity and attractiveness of an industry.
How can businesses apply Herzberg’s theory in the workplace?
Improve job enrichment (e.g., more responsibility) and job design to include more challenging and fulfilling work.
What are the five forces in Porter’s model?
A: 1. Threat of new entrants
2. Bargaining power of suppliers
3. Bargaining power of buyers
4. Threat of substitutes
5. Rivalry among existing competitors
What does the threat of new entrants force analyse?
How easy or difficult it is for new firms to enter the industry and compete
What factors can make it harder for new entrants to enter an industry?
High start-up costs, strong brand loyalty, government regulations, and economies of scale.
What does the bargaining power of suppliers force analyze?
How much power suppliers have over prices and availability of materials.
When is supplier power high?
When there are few suppliers, switching costs are high, or suppliers offer unique products.
What does the bargaining power of buyers force analyze?
How much influence customers have over prices and product quality.
When is buyer power high?
When customers have many alternatives, products are undifferentiated, or switching costs are low.
What does the threat of substitutes force analyse?
The risk of customers switching to alternative products or services.
When is the threat of substitutes high?
When there are many alternatives, substitutes are cheaper or better, and switching costs are low.
What does the rivalry among existing competitors force analyse?
The intensity of competition between businesses in the same industry.
What factors increase competitive rivalry?
Many competitors, slow market growth, low customer loyalty, and high fixed costs.
How can businesses use Porter’s Five Forces Model?
To assess industry attractiveness, develop competitive strategies, and identify opportunities or threats.
What is Maslow’s Hierarchy of Needs?
A motivation theory that suggests employees have five levels of needs that must be fulfilled in a specific order.
What are the five levels of Maslow’s Hierarchy of Needs (from lowest to highest)?
Physiological needs
2. Safety needs
3. Social needs (Belongingness)
4. Esteem needs
5. Self-actualization
What are physiological needs in Maslow’s theory?
Basic survival needs such as food, water, rest, and a fair salary.
How can businesses fulfill employees’ physiological needs?
Paying fair wages, providing comfortable working conditions, and ensuring rest breaks.
What are safety needs in Maslow’s theory?
The need for security, stability, and protection from harm.
How can businesses fulfill employees’ safety needs?
Job security, health & safety policies, pensions, and employment contracts.
What are social needs (belongingness) in Maslow’s theory?
The need for relationships, teamwork, and a sense of belonging.
How can businesses fulfill employees’ social needs?
Encouraging teamwork, social events, and good workplace communication.
What are esteem needs in Maslow’s theory?
The need for recognition, respect, and self-confidence.
How can businesses fulfill employees’ esteem needs?
Employee recognition programs, promotions, and responsibility in the workplace.
What is self-actualization in Maslow’s theory?
The highest level—achieving personal growth, creativity, and fulfilling potential.
What is a limitation of Maslow’s Hierarchy of Needs?
Not all employees have the same needs, and needs may not always follow a strict order.
How can businesses help employees achieve self-actualization?
Providing opportunities for training, career development, and challenging work.
How does Maslow’s theory apply to motivation in the workplace?
Businesses should identify and meet employees’ needs at different levels to improve motivation and productivity.
What are Porter’s pricing strategies?
A: 1. Cost Leadership
2. Differentiation
3. Focus (Niche) Strategy
How can a business achieve Cost Leadership?
Economies of scale
Efficient production
Cost-cutting in operations
Bulk purchasing
What is Cost Leadership in Porter’s pricing strategies?
A strategy where a business aims to be the lowest-cost producer in the industry to attract price-sensitive customers.
What is a benefit of the Cost Leadership strategy?
Allows the business to compete on price and maintain profitability, even in price wars.
What is a risk of the Cost Leadership strategy?
If another firm finds a way to lower costs even more, the business may lose its advantage.
What is Differentiation in Porter’s pricing strategies?
: A strategy where a business makes its product unique and higher value so customers are willing to pay a premium price.
How can a business achieve Differentiation?
Strong branding
High-quality products
Innovation & unique features
Excellent customer service
What is a benefit of the Differentiation strategy?
Less price competition, allowing the business to charge higher prices and increase profitability.
What is a risk of the Differentiation strategy?
If the differentiation is not strong or valued by customers, they may choose cheaper alternatives.
What is Focus Strategy in Porter’s model?
A business targets a specific niche market using either Cost Leadership or Differentiation within that niche.
What are the two types of Focus Strategies?
Cost Focus (low-cost strategy in a niche market)
Differentiation Focus (unique product in a niche market)
What is a benefit of the Focus Strategy?
The business can specialize and meet specific customer needs better than larger competitors.
What is a risk of the Focus Strategy?
A bigger competitor may enter the niche market and take customers away.
Why is it important for businesses to choose one of Porter’s pricing strategies?
Businesses that don’t choose a clear strategy risk being “stuck in the middle” with no competitive advantage.
