Chapter 4

Question 1

Define Corporate Strategy

Answer 1

Strategies determined at main board level for the business as a whole

Question 2

Define Business Strategy

Answer 2

Strategies for Strategic Business Units (SBUs) and individual markets e.g. how to gain a competitive advantage

Question 3

Define Functional/Operational Strategies

Answer 3

Strategies for the main functions within each SBU (operations, finance, HR).

Question 4

What are the 4 main stages of strategic planning?

Answer 4

Strategic Analysis
Strategic choice
Strategy Implementation
Review & Control

Question 5

What is the difference between a static and dynamic environment?

Answer 5

Static environments have slow change with simple technology. Normally single products/markets

Dynamic environments are fast paced with diverse products/markets.

Question 6

What does PESTEL stand for?

Answer 6

Political
Economic
Social
Technological
Environment
Legal

Question 7

What is PESTEL analysis used for?

Answer 7

It reveals the key influences in the organisation’s macro-environment rather than its market.

Question 8

What is Porter’s 5 Forces analysis used for?

Answer 8

Assessing the attractiveness of an industry in terms of LR profitability

Question 9

What are Porter’s 5 forces?

Answer 9

Threat of new entrants
Bargaining power of suppliers
Threat of substitutes
Bargaining power of customers
Competitive rivalry

Question 10

What are the 4 types of competitors according to Philip Kotler?

Answer 10

Brand - similar size firms with similar products
Industry - similar products but different markets
Form - different products that satisfy the same needs
Generic - different products but compete for the same customer

Question 11

What are the 4 reaction profiles to competitors according to Kotler?

Answer 11

Laid back - no response
Tiger - Aggressive responses
Selective - reacts to some threats in some markets but not to others
Stochastic - difficult to predict how the will act

Question 12

What is Value Chain Analysis used for?

Answer 12

A form of internal analysis used to analyse the sequence of business activities which add value to production.

Question 13

Define a Star on the BCG Matrix

Answer 13

High market growth, High Market share. Business should build position

Question 14

Define a question mark on the BCG matrix

Answer 14

Low market share, high market growth. Business should either harvest or build

Question 15

Define a cash cow on the BCG Matrix

Answer 15

High market share, Low Market growth. Business should hold or harvest

Question 16

Define a dog on the BCG matrix

Answer 16

Low market share, low market growth. Business should divest or hold

Question 17

What is Ansoff’s matrix?

Answer 17

Highlights the different growth strategies available.

Question 18

Define Market penetration

Answer 18

More sales of existing products to existing markets

Question 19

Define product development

Answer 19

Offering new products for existing markets

Question 20

Define market development

Answer 20

Finding new markets for existing products

Question 21

Define diversification

Answer 21

Developing new products for new markets.

Question 22

What is the difference between a Hold and a Harvest strategy?

Answer 22

Hold - continuing to support the product financially to maintain it’s position
Harvest - running down investment in the product and just managing cash flow