topic 8- strategic direction Flashcards
what is a strategy ?
medium or long term plan for achieving a business objectives
what is strategic direction ?
decisions made regarding the market that is operates in and the products that it offers
what is Ansoff Matrix for ?
a marketing planning model that helps determine its products and market strategies for a business
what are the 4 strategies of Ansoff Matrix ?
- market penetration
- product development
- market development
- diversification
what are the 7 factors to consider when deciding on a strategy ?
- expected costs
- expected return
- opportunity cost
- risk
- fit w the business and resource mix
- impact on stakeholders
- ethical issue involved
what is market penetration ?
existing products
existing markets
- selling more to existing products to the same customers
what is the aim for market penetration ?
increase market share
how do you increase market share in market penetration ?
- selling most
- sales promotion
- advertising
- extension strategies
why does market penetration have the least amount of risk ?
no research is needed to be done for products or markets so saves the costs
what are 3 strengths of market penetration ?
- focus on products and markets that they know
- know what consumers want
- don’t need significant market research
what are 2 weaknesses of market penetration ?
- but will it allow the business to achieve a growth objective
- difficult in saturated markets
what is product development ?
new products
existing markets
why is product development medium risk ?
- as it same market so no market research
but - new products so need research and time spending developing so costs will rise
what does selling new products do ?
- brand loyalty
- market research
- extension strategies as new features and updates
- high cash flow mean can finance the research and development
what can make it able for product development to use lean design ?
if an efficient and effective research team
what is a lean design for a product ?
you get the product first to the market
what are 3 strengths for product development ?
- helps with product life cycle and growth
- know about existing markets
- can strengthen and establish the brand
what is the weakness for product development ?
market research needs to be effective so it is expensive
what is market development ?
existing products
new markets
- new geographical markets and new distribution channels
why is market development got a medium risk ?
- same products so avoid the need for research and development
- different market so need to do market research so it increases costs and may not work
what 3 things can be used to help in market development ?
- core competency is the product
- advertising to grow the remark
- multi channel distributions
why is the core competency being the product for the market development strategy beneficial ?
as it can be better positioned business so can understand how to use that product in a different market as understand the product
why is using multi channel distribution useful in the market development strategy ?
most cost effective way to penetrate a new market
what is the 1 advantage of market development ?
logical strategy where existing markets are saturated or in decline
what are the 2 weaknesses of market development ?
- more risks than product development as expansion international markets
- existing products may not suit new markets
what is diversification ?
new products
new markets
why is diversification the most risk ?
new markets and products to need market research and development not products so the costs increase
why is diversification usually thought to be used as a strategy ?
usually think of it as a distressed business or one that needs to change it strategy as need to increase profit or growth
- as a saturated market or product is in decline and can just been used to grow
what are the 3 strengthens for diversification ?
- if successful then risk is spread
- extend an existing brand
- innovation and research and development to use new solution
what are 2 weaknesses of diversification ?
- no direct expense
- fewer economic of scale
what is strategic positioning ?
how a business is perceived relative to other business in the industry
what is competitive advantage ?
sustainable advantage that a business has over competitors that enables it to succeed in the market
what place does a sustainable competeive advantage do for a business ?
it is more likely to be above average in the industry for profitability
what are porters 2 sources of competitive advantage ?
- cost leadership
- differentiation
what is cost leadership ?
where a business is able to produce its product at a lower costs than the competition
what is cost leadership based by ?
operations
what are the 4 areas of operations that cost leadership is based by ?
- economies of scale
- capacity utilisation
- labour productivity
- lean production
what is differentiation ?
where a business is able to differentiate its products from the competition such that customers perceive superior value
- they aim to offer a product that is distinctively different
what are 5 different ways to achieve differentiation ?
- superior product quality
- branding
- wide distribution
- sustained promotion
- innovation
what are the 2 narrow competitive scopes ?
- cost focus
- differentiation focus
what is cost and differentiation focus used for ?
focusing on one specific segment of cost leadership or differentiation
what is the competitive scope ?
the amount the market is targeted
what are the 2 different competitive scopes ?
- broad
- narrow
what are the 2 broad competitive scopes ?
- cost leadership
- differentiation
what did porter say you shouldn’t do ?
shouldn’t be ‘stuck in the middle’ and that you need to choose 1 between cost leadership and differentiation
what are 3 influences on positioning a strategy ?
- competition as does it want to compete head on or position itself in the market away from direct competition
- external factors
- strengths and competences of a business
why is being ‘stuck in the middle’ bad according to porter’s model ?
the business is therefore at risk of a fail
- needs to be clear in terms of what it wants to do and how it wants to be positioned in the market
what are 3 ways of protecting competitive advantage ?
- legal protection
- control over resources
- a particular culture
what is repositioning ?
the process of altering the existing space of the brand occupies in the brain of customers
why may a business need to repositioning themselves ?
internal and externa conditions change
- may take time to alter
