Theories of Corporate Strategy (3.1.2) Flashcards
What are the four theories of corporate strategy?
-Ansoff’s Matrix
-Porter’s Strategy Mix
-Boston Matrix
-John Kay’s Distinctive capabilities
What is a Corporate Strategy?
Long-term plan to help the business achieve its Corporate Objectives
What does a successful corporate strategy help to provide a business?
A competitive advantage
What is a competitive advantage?
Is anything that gives a company an edge over its competitors, helping it attract more customers and grow its market share
What are tactics?
Short-term plans to help the business achieve its strategic objectives
Example of Corporate objective, strategy and tactic?
CO- Increase market share by 10%
CS- Market penetration
T- Design a new advertising campaign
What does Ansoff’s Matrix focus on? What does it factor and not factor in?
-Focuses on Products and Markets and is a tool for business with a growth objective
-Used to identify level of risk
-Factors in Risk
-Doesn’t factor in differentiation or cost leadership
What does Ansoff’s Matrix look like?
-Model considers 4 elements, which are broken don into two categories (market + product).
-The market is split into existing and new markets
-The product is split into existing and new products
What are the four parts of Ansoff’s Matrix?
-Market Penetration
-Market Development
-Product Development
-Diversification
Which one of the four is when existing products go into new markets?
Market Development
Which one of the four is when existing products go into existing markets?
Market Penetration
Which one of the four is when new products go into new markets?
Diversification
Which one of the four is when new products go into existing markets?
Product Development
What is the least risky strategy of Ansoff’s Matrix to achieve growth?
Market Penetration- Existing Products in Existing Marketa
What do the four parts of Ansoff’s Matrix actually mean?
1.Market Penetration- Selling more products to existing customers by encouraging more regular use +brand loyalty
2. Market Development- Finding and exploiting new market opportunities for existing products by entering new markets abroad
3. Product Development-Selling new or improved products to existing customers by developing new versions or upgrades and redesigning packaging
4. Diversification- Most risky strategy but involves targeting new customers with entirely new or redeveloped products e.g. Greggs launching range of clothing
What does Porter’s Strategic Mix focus on? What does it factor and not factor in?
-Aims to get a competitive advantage and scope of the market it operates in
-Factors in Market Size
-Doesn’t factor in Market Development
What does Porter’s Strategic Mix look like?
-Looks at Market scope and Competitive advantage
-On the Market Scope side it looks at niche and mass markets
-On the Competitive advantage side it looks at cost and differentiation
-The sections in the middle are cost leadership, differentiation and focus (cost and differentiation)
What is cost focus?
Involves being the lowest cost competitor withing the market
What is differentiation focus?
Involves offering specialized products within the niche market
What is portfolio analysis?
Involves a business carrying out a detailed evaluation of its full range of products in order that appropriate strategies may be identified and pursued
What does the Boston Matrix focus on? What does it factor and not factor in?
-Focuses on Portfolio and market share
-Factors in Product Life Cycle
-Doesn’t factor in how products achieve success, markets or competition
What are the four sections of the Boston matrix and what do they mean?
*= High Market Share + Growth Rate
Cash Cows= High MS + Low MGR
?= Low MS + High MGR
Dogs= Low MS +Low MGR
What does the Boston Matrix look like?
Look in word doc
What does the Boston Matrix have similarities to?
The Product Life cycle
What do each parts of the Boston Matrix correspond to in the Product Life Cycle?
?= Introduction
*=Growth
Cash cows= Maturity
Dogs=Decline
What does John Kay’s Distinctive Capabilities focus on? What does it factor and not factor in?
-Focuses on Performance
-Looks at Competitive advantage
-Doesn’t factor in how products achieve success, markets or competition
What does John Kay’s Distinctive Capabilities look like?
Look in word doc
What does the Architecture section mean?
The relationship between management and employees and external stakeholders
What does the Reputation section mean?
The brand image of the business and its products
What does the Innovation section mean?
The ability to use tech to create new products or raise productivity
