Strategic choices

Question 1

What are the three competivie strategy options?

Answer 1

Cost leadership
Differentiation
Focus (niche)

Question 2

a) What are the first two points on the strategy clock?

b) Which customers to they attract?

c) Where do they fall on the clock?

Answer 2

1. No frills
2. Low Price

b) Price conscious people

c) Low price (x) and Low perceived added value (y)

Question 3

a) What are points 3 4 and 5 on the strategy clock?

b) Which customers to they attract?

c) Where do they fall on the clock?

Answer 3

3. Hybrid
4. Differentiation
5. Focused differentiation

b) Customer who require customised products

c) High perceived added value (y)
3. Low price
4. Mid price
5. High price

Question 4

What are points 6-8 on the clock?

Answer 4

Strategy fails.

High price with low perceived added value.

Question 5

How do you sustain competitive advantage?

Answer 5

Ensuring strategic capabilities are….

Valued
Rare
Robust

Question 6

What must an organisation consider in securing their competitive position?

Answer 6

• Price based strategies
• Further differentiation
• New product, process and service
  developments
• Lock-ins

Question 7

What is the other name for Ansoff’s matrix?

Answer 7

PENMEN

Question 8

What is the grid for Ansoffs matrix?

Answer 8

Top: Exisitng products / New Products
Side: Exisiting Markets/ New Markets

Market Penetration, PRoduct Development
Market developement, Diversification

Question 9

What are the advantages of Related (horizontal and vertical) diversification?

Answer 9

Lower suppier bargaining power (Backwards)

Stronger relationships with final customer (forward)

Share of profits at all stages

Creation of barriers to entry

Question 10

What are the disadvantages of Related (horizontal and vertical) diversification?

Answer 10

All eggs in same basket

Failure to benefit from economies of scale because requirements in each industry are different.

Question 11

What are the advantages of unrelated (conglomerate) diversification

Answer 11

Diversifies risk

Avoids anti-monopoly legislation

Increase flexibility

Able to grow quickly

Question 12

What are the disadvantages of unrelated (conglomerate) diversification

Answer 12

No synergy

Lack of management focus

No advantage over small firms

Question 13

Why do companies look overseas for diversification?

Answer 13

• Lots of opportunities from overseas markets
• Useful if local markets have become saturated
• Spreads risk in terms of economic conditions locally
• Organisation make take advantage of locations and markets eg low labour costs.

Question 14

What are the three strategies for geographical diversification?

Answer 14

Multi-domestic - Products/services tailored to individual countries. (McDonalds)

Global - standard products (phones)

Hybrid - Combination of the above

Question 15

Name the method of strategy evaluation?

Answer 15

SAF

Suitability
Acceptability
Feasibility

Question 16

What is suitability concerned with?

Answer 16

Whether a proposed strategy addresses the circumstances in which an organisation is operating ( it’s strategic position).

Does strategy respond to influences in the external environment and exploit its internal competences?

Question 17

What is acceptability?

Answer 17

It is concerned with the expected performance outcomes of a strategy in terms of risk, return, and stakeholder reactions.

Question 18

What is feasibility?

Answer 18

Whether an organisation has the resources and competences to deliver a strategy.

I.e Finanical feasibility, man power, skill set, materials