Unit 8

Question 1

What is Ansoff’s Matrix?

Answer 1

Helps managers consider how to grow their business through existing or new marks and existing or new products.

Question 2

What are the strategies in Ansoff Matrix?

Answer 2

Market Penetration (Lowest risk)
- Existing product in existing market.
Market Development
- Existing product in a new market.
New product development
- New product in an existing market.
Diversification (Highest risk)
- New product in a new market.

Question 3

What are factors that can have an impact on choice of strategic direction?

Answer 3

Objectives and attitude to risk
Cost
Barriers to entry
Competitors actions
Ethics involved

Question 4

What is some reasons for and against choosing market penetration as a strategic direction?

Answer 4

Can be implemented quickly with limited risk
Avoids commitment of expense and time with new product development and analysing new markets
Does require potential for growth
- If market is saturated heavy promotion may be needed to entice customers

Question 5

What is some reasons for and against choosing market development as a strategic direction?

Answer 5

good for business with a well established brand name e.g Starbucks or coca cola
Product is already proven, new market entry should be easier
Avoids development of new products which can be costly
Depends on markets being accessible and could be costly if modifications are required to suit the new market

Question 6

What is some reasons for and against choosing new product development as a strategic direction?

Answer 6

Good for organisation that has strong brand name such as Virgin or apple
Benefit from knowing their customer base, making market research and promotion easier.
Required if an existing product has become obsolete
Possibility go new innovative products to be produced

Question 7

What is some reasons for and against choosing diversification as a strategic direction?

Answer 7

May be related diversification (alcoholic drinks moving into soft drinks) or unrelated (where there is no industry experience).
If existing industry is in decide or has become saturated
Can enable further growth and spread risk
Great risk as business moving into an area that has no experience

Question 8

What is Porter’s generic strategies?

Answer 8

Low cost strategy
Differentiation strategy
Differentiation focus strategy
Cost focus strategy

Question 9

What are influences on the choice of a positioning strategy?

Answer 9

The business itself - relates to the size, skills, asses and culture of business.
Competition - relates to the strengths and weaknesses of competitors.
Customers - relates to customers needs and current trends
External environment

Question 10

What are benefits of having a competitive advantage?

Answer 10

Greater sales
Brand loyalty
Profit
Shareholder value

Question 11

What are difficulties of maintaining a competitive advantage?

Answer 11

Developments in technology
- Failure to see or embrace tech change eg Thomas Cook and Kodak
Investment
Expensive, failure to constantly update products and processes may lead to loss of differentiation and cost advantages
Human resources
Having high skilled and loyal workforce and not maintained may lead to loss
Financial constraints
Short-termism
A focus on short term profit could lead to a lack of focus on sustaining a long term competitive advantage