Unit 8-choosing strategic direction

Question 1

What is strategic direction?

Answer 1

Deciding which markets to compete in and what products to offer

Question 2

What is Ansoff’s Matrix?

Answer 2

A tool that managers can use to get an overview and compare the strategies they could use

Question 3

What are the 4 categories on Ansoff’s’ Matrix?

Answer 3

Market penetration - existing, existing
Market development - new market, existing product
Product development - new product, existing market
Diversification - new market, new product

Question 4

Name 6 factors that must be considered before choosing strategic direction

Answer 4

How much money the firm has
PEST factors
Competition
Regulation in markets
R and D capacity
Cost of developing new products
The expertise the firm has in new markets
Objectives
The risk involved
Attitude to risk

Question 5

What is strategic positioning?

Answer 5

This is how the firm is going to carry out positioning itself in a market

Question 6

What are the two strategies that Porter identified for strategic positioning?

Answer 6

Cost leadership and differentiation

Question 7

What is Bowman’s strategic clock?

Answer 7

This shows the different strategic positioning options available to firms in terms of price and value for the customer

Question 8

What is competitive advantage?

Answer 8

This is when a firm has an edge over its rivals

Question 9

How can a firm sustain competitive advantage?

Answer 9

Use legal protection, e.g. Patents
Gain control of suppliers
Careful management of links with customers, e.g. Relationship marketing