Strategic Scope Flashcards
What is the definition for an organizations scope
The range of activities that a firm performs internally, the breadth of its product and service offerings, the extent of its geographic market presence, and its mix of businesses
What is market penetration
When the organization pursues a larger market share in the existing market with the same product
What is product development
When the organization focuses on growing within its existing market by introducing new products
What is market development?
When the organization decides to sell its existing products in a new market
What is diversification
When the organization decides to extend its scope, to start performing entirely new activities
What is diversification strategy
The expansion of the scope of the product line to exploit new markets. A key objective is to spread the companys risk over several product lines
When would an organization pursue a diversification strategy
When their original markets are saturated or declining
Strategic fit exists when:
There is a potential for sharing expertise or assets
Assets can be shared to lower costs
Brand identity can be transferred to support customer recognition
What is the industry attractiveness test for diversification
When analysts use the five forces framework to assess the intensity of competitive forces and market growth trends
What is the cost of entry test for diversification
Will the potential profit outweigh the investment
What is the better off test for diversification
Whether diversifying the organization creates synergy
What are some reasons a global strategy can be attractive
-It can provide access to new customers
-It can lower costs and improve competitive position
-It can be a response to negative conditions in the home country
What is a profit sanctuary?
Created when an organization expands into a foreign market and enjoys a strong and protected competitive position
What are the three major types of international strategies
Multidomestic, global, and transnational
What is a multicountry strategy
Where each countrys market is self-contained
