Corporate strategy (P2)

Question 1

What is the Ansof matrix

Answer 1

Ansoff’s Matrix is a marketing planning model that helps a business determine its product and market growth strategy.

Question 2

Show the risk levels in ansoff matrix

Answer 2

1. market penetration-> existing market and product
   2a. Market development -> new market+existing product
   2b. Product development->existing market+new product
2. Diversification->new product and market

Question 3

1 benefit of market development

Answer 3

requires little r and d

Question 4

2 negatives of product development

Answer 4

1. brand may be damaged if products fail

2. requires lots of R and D

Question 5

2 ways how does one achieve market development

Answer 5

1. operating online

2. selling in new geographical areas

Question 6

How is diversification achieved

Answer 6

Organic growth or through mergers and takeovers

Question 7

Negatives of diversification

Answer 7

High risk and few economies of scale

Question 8

Porters strategic matrix definition

Answer 8

Finding a way a achieve competitive advantage

Question 9

show porters strategic matrix

Answer 9

mass market |—cost leadership–|-differentiation

niche market |—cost focus——–|–differentiation focus

——————–|—-cost—————-|—differentiation

Question 10

What does success of cost leadership depend on

Answer 10

price elasticities of demand

If the product is elastic a change in price Is likely to result in a heavy change in quantity demanded

Question 11

How is cost leadership achieved

Answer 11

economies of scale
bargaining power from suppliers
high levels of efficiency

Question 12

porters 5 forces

Answer 12

1. threat of entrants
2. threat of substitutes
3. bargaining power of suppliers
4. bargaining power of buyers
5. level of competition

Question 13

examples of low bargaining power of suppliers

Answer 13

eg tesco have a large buyer power over farmer. As they occupy such a large proportion of their sales they may be able to force them to lower prices

Question 14

features of a high profit making industry

Answer 14

1. weak suppliers
2. weak buyers
3. high barriers to entry
4. weak rivalry

Question 15

Examples of barriers to entry to reduce the threat of substitutes

Answer 15

1. economies of scale
2. Brand loyalty
3. expertise and access to the best tech

Question 16

examples of industries with high barriers to entry

Answer 16

1. Sports shoe market- Nike has brand loyalty
2. oil- high set up costs
3. pharmaceuticals- expensive

Question 17

what is porters 5 forces

Answer 17

a tool which can help inform a business whether the market they are going to enter is going to be profitable

Question 18

What is SWOT analysis

Answer 18

a framework used to evaluate a company’s competitive position and to develop strategic planning.

Question 19

WHAT DOES SWOT MEAN

Answer 19

Strengths (internal)
Weakness (internal)

Opportunities (external factors)
Threats (external)

Question 20

when is there likely to be high supplier power

Answer 20

if a the supplier has little number of substitutes (no competition) they become very powerful. They have pricing power making it expensive to operate

eg de Beers and diamonds

Question 21

negatives of using porters 5 forces

Answer 21

1. its hard to measure buyer and supplier power

Question 22

examples of barriers to entry

Answer 22

1. patents preventing competition
2. customer and brand loyalty
3. economies of scale

Question 23

what is vertical integration

Answer 23

when a firms takes owner ship of various stages of the production process

1. backward vertical integration is like Tescos buying a farm
2. forward vertical integration

Question 24

when is there likely to be high buyer power

Answer 24

when there are may sellers and only few buyers

Question 25

when is there likely to be high buyer power

Answer 25

when there are may sellers and only few buyers. these buyers can just switch.

but it assumers that competition sells a homogenous product.
for example there may be brand Loyalty an buyer may be bounded by location act

Question 26

how can one overcome strong buyer power

Answer 26

1. differentiate products
2. target new market segments
3. promotion

Question 27

how to overcome strong supplier power

Answer 27

1. negotiate long term contracts which fix prices which may give the business better certainty
2. offer to merge as have backward vertical intergration

Question 28

how to lower threat of substitutes

Answer 28

1. cost leadership

2. brand loyalty

Question 29

What is porters generic strategy

Answer 29

a tool to help businesses adopt a position in the market to gain sales over consumer

Question 30

problems with diversification

Answer 30

1. little existing experience
2. little economies of scale
3. lots of investment required

Question 31

why may lower costs benefit a business

Answer 31

1. may mean they can lower prices and maintain profit margins.
2. increased profit margins may be used in product development or advertising
3. higher dividends to shareholders may stimulate investment in the long term