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Business > Unit 8 > Flashcards

Unit 8 Flashcards

1
Q

What is Ansoff’s Matrix used for?

A

A planning tool to help decide on the best strategy to achieve growth

-What product to offer?
-What market to compete in?

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2
Q
  1. Market Penetration
A

-Existing products
-Existing markets
-Trying to increase market share by selling more to existing customers

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3
Q

what are the reasons for using market penetration?

A
  • implemented quickly
  • avoids commitment of expense and time involved with developing new products or new markets
  • does require potential growth within market = if market is saturated heavy promotion needed to compete
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4
Q
  1. Product Development
A

-New products
-Existing markets
-Introducing new products to existing markets to increase sales

Link to Boston Matrix - ‘?’ or ‘problem child’

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5
Q

what are the reasons for choosing product development?

A
  • good for strong brand
  • easier knowledge of customer base, making market research and promo easier
  • gap in the market = innovate = Apple
  • may involve producing an d selling products with limited expertise
  • may be established products
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6
Q
  1. Market Development
A

-Existing products
-New markets
-Finding a new segment or new geographical market to increase customer base

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7
Q

what are the reasons for choosing market development ?

A
  • good for well established brand with good product reputation
  • avoids development of new products = low cost

-may be costly if adaptations need to m=be made to product to fit market

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8
Q
  1. Diversification
A

-New products
-New markets
-Launch new or buy a business in a different industry

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9
Q

what are the reasons for choosing diversification?

A
  • either related or unrelated
  • may be chosen in existing industry in decline which is saturated = spreads risk and enables growth for business
  • greater risk as a business is moving into are with no expertise
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10
Q

what is strategic direction?

A

refers to the course of action or plan that should lead to the achievement of long term goals

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11
Q

what factors influence which markets to compete in and which products to offer?

A
  • undertakes SWOT analysis to examine internal strengths, weaknesses, external opportunities and threats.
  • help choose strategic direction
  • and use Ansoff’s matrix
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12
Q

what internal factors influence choice of strategy?

A
  • costly and likely return for business = diversification more expensive than market penetration
  • objectives and attitude to risk
  • core competencies = how key strengths in business will gain competitive advantage
  • ethics and objectives in business
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13
Q

what external factors influence choice of strategy?

A
  • barriers to entry = tariffs or quotas and political barriers make a market more or less easy to enter
  • competitors actions = have to respond and adapt for success in strategy
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14
Q

what is strategic positioning?

A

relates to how that business is perceived to other businesses in the same market.

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15
Q

what is competitive advantage?

A

an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.

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16
Q

what are the benefits of having competitive advantage ?

A
  • greater sales
  • brand loyalty
  • market share
  • barriers to entry= made harder for new and existing competitors to gin market share
  • profit = econ of scale
  • shareholder value =higher dividends and higher share price
17
Q

What is Bowman’s Clock used for?

A

A strategic tool to help decide on how to compete

18
Q
  1. Low price & Low perceived value
A

-Generic product
-Inferior product
-Relies on high sales volume and economies of scale

19
Q
  1. Low price
A

-Cost leadership position
-Low profit margins
-Some perceived value
-Relies on high sales volume and economies of scale

20
Q
  1. Hybrid
A

-Some differentiation
-Good balance between price and value
-Attracting aspirational customers but still offering a lower price

21
Q
  1. Differentiation
A

-Strong USP
-PED is less sensitive

22
Q
  1. Focussed Differentiation
A

-Niche / specialist market
-Very strong USP
-Premium prices
-High profit margins

23
Q
  1. Risky High Margins
A

-Often new and high tech products attracting early adopters
-Uses skimming pricing strategy
-Focus on innovation

24
Q
  1. Monopoly Pricing
A

-Premium prices for lower value products
-Unsustainable unless in a monopoly position
-Success depends on the power of the regulators

25
Q
  1. Loss of Market Share
A

-Appears to be over priced for products with cheaper alternatives
-Unsustainable unless the business is offering complementary product or its a product reaching the end of its product life cycle

26
Q

What is Porters generic strategy used for?

A

suggests that a business should follow one of three positioning strategies in order to compete within its market.
businesses complete either on:
-Price (cost leadership)
-Uniqueness or value perceived by the customer (differentiation) or
-By focusing on a niche or very specific type of customers (market segmentation)

27
Q
  1. Cost Leadership
A

-Focus on cost minimization
-Large sales volume
-Economies of scale
= patented technology

28
Q
  1. Differentiation
A

-Strong USP
-Focus on innovation
-High profit margins
-Developing brand loyalty

29
Q

3a. cost focus and 3b. differentiation focus

A

focus on one specific segment

30
Q

What does it mean to be ‘stuck in the middle’?

A

Not been the cheapest or not offering strong differentiation means being
= likely to fail

31
Q

what are the difficulties of maintaining a lower price?

A
  • initial investment to scale up production and sell large quantities = econ of scales
  • unable to increase due to inflation= customer expectations
  • HR issues = to minimise costs have min staff on low wage and zero hour contracts = high labour turnover
32
Q

what are the difficulties of maintaining differentiation?

A
  • cost for: R&D research for new products/processes, intellectual property protection, promo, mass customisation
  • cost of high quality
  • development in tech = try stay ahead of innovation of competitors
  • HR having best people in industry is key for innovation

Business (11 decks)

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