Strategic options Flashcards
What is SWOT analysis used for?
To evaluate the strategic position of the organisation
What does SWOT stand for?
Strengths
Weaknesses
Opportunities
Threats
What are Porter’s generic strategies?
Cost leadership - seeking to be lowest cost producer
Differentiation - creating products customers are willing to pay more for
Focus - utilising either of above in a narrow profile of market segments
How can you achieve cost leadership?
Economies of scale
Seaking cheaper sources of supply
Reduced labour cost
Used value chain to identify and reduce non-key activities
What are the benefits of cost leadership strategy?
Earn higher profits by charging same price as competitors
Economies of scale create barriers to entry
What are the risks of cost leadership strategy?
Only room for one cost leader
Cost advantage may be lost due to inflation
Consumers may pay extra for a better product
How can you become a differentiator?
Strong branding
Product innovation
Quality
Product performance
Potential benefits of a differentiation strategy
Products command premium price so higher profit margins
Fewer substitutes - less competition
Risks of adopting differentiation strategy
Cheap copies
Being out-differentiated
Customers unwilling to pay extra (recession)
What is Ansoff’s matrix?
Looks at growth by considering opportunities to sell/develop products and building market share in existing/new markets
Ansoff’s matrix - Existing products in an existing market
Market penetration - price cuts, effective marketing, small product improvements
Ansoff’s matrix - Existing products in a new market
Market development - new customer segments, industrial vs consumer markets, new regions of the country, foreign markets
Ansoff’s matrix - New products in an existing market
Product development- R&D, acquire rights ro make other firms’ products, joint developments
Ansoff’s matrix - New products in a new market
Diversificatio - developing new products or markets
