Business Unit 8

Question 1

What is the Ansoff matrix

Answer 1

The matrix is used to map the best way to penetrate new or existing markets with their products/services. To allow a strategic direction.

Question 2

What are the four strategies in the matrix

Answer 2

-Market penetration- Selling a more of a product in an existing market. To allow a market share increase.
- Market development- Finding new markets in which their existing product can thrive in the most suitable segmentation of their product.
- New product development- New products made for a existing market (Medium risk)
- Diversification- A new product into a new market which is high risk due to limiting data available if product could be successful

Question 3

Pros of the matrix

Answer 3

• Allows stakeholders to be aware of the level of risk
• Simple and easy to understand

Question 4

Cons of the matrix

Answer 4

• Cannot be used as a standalone forecast due to not be entirely accurate. Due to internal factors and external factors that could occur later in the chosen development.

Question 5

What is Porters Generic Strategies

Answer 5

Are ways of gaining a competitive advantage in different industries and organisations

Question 6

Low-cost leadership

Answer 6

Involves being the low-cost leader in the industry.
- The business needs to be confident that they can maintain low costs whilst being the leader.
- Business may need capital to allow investment in technology to reduce cost

Question 7

Differentiation

Answer 7

This involves a business making products/services which provide more attractive to their competitors.
This is achieved by:
- Branding ( recognisable branding is more likely to be more successful)
- Product quality ( Quality which is different to competitors)
- Wide distribution channels( Allows product to dominate their market)
-Promotion methods being strong and iconic

Question 8

Pros of compeitive advantage

Answer 8

• Sales
  -Profit margins
• Shareholder value
• Customer domination/Brand loyalty

Question 9

Cons of competitive advantage

Answer 9

• Too much focus on profits may cause short-termism
• Constant investment which limits business cash flow and could cause higher gearing etc.
• Human resources- Constant training required to maximise the best of the advantages a business needs. Could damage the culture.
• Too much short term investment can lead to a lack of investment in the long-term

Question 10

Bowmans strategic clock

Answer 10

it shows how price is seen as a variable rather than a strategic cost and how price/value dictates the likelihood of each strategy

Question 11

What the clock includes

Answer 11

1) Low price/low added value such as poundland
2) Low price such a Lidl and Aldi
3) Hybrid mix of low cost but with moderate differentiation such as Ikea
4) Differentiation such as Nike and BMW with high perceived value at a reasonable price.
5) Focused differentiation such as Gucci and Rolex. With high value and high price.
6)Increased price/standard product meaning the value hasn’t changed but the price has
7) High price/low value such as the Royal Mail or and monopolistic companies.
8) Low value/standard price- Suggests a business is losing sales.

Question 12

Pros of the strategy clock

Answer 12

• Allows to help which method is suitable for competitive advantage
• Helps business identify how to remain in the market place.

Question 13

Cons of the strategic clock

Answer 13

• Overcomplicated and rarely used in businesses in modern times
• Lacks guidance on how to improve their strategy