Unit 8 (not on paper 3)

Question 1

Strategic choice

Answer 1

involve deciding the direction in which a business should move + the methods which it should pursue this plan

Question 2

Ansoff Matrix

Answer 2

Market penetration: boost sales of existing products in existing markets, boost market share eg change pricing strategy. Aldi with new stores.

Market development: offering existing products but new market segments eg geographical area, demographic – age. Starbucks in China.

New product development: new products for existing customers, may be responding to customer requirements. Coca Cola Life

Diversification: offering new products to new customer groups, high level of risk as target market and products quite unfamiliar. However, may reduce risks as business may be less vulnerable to changes in one of its market segments. Alphabet,

Question 3

Strategic positioning

Answer 3

refers to how it is perceived relative to other businesses in the industry.

Question 4

Porters’ strategies not on paper 2

Answer 4

Competitive business strategy = being different either differentiation or cost leadership

Question 5

porters generic strategy not on paper 2

Answer 5

sources of competitive adv vs markets where it competes
costs + broad = cost leadership eg Poundland
costs + narrow = cost focus
differentiation + broad = differentiation eg Costa, apple, Dyson
differientation + narrow = differentiation focus

Question 6

bowman strategic clock not on paper 2

Answer 6

1. Not very competitive, not differentiated, bargain basement strategy
2. Profit margins on each product are low, if you can achieve economies of scale may achieve high overall profits – price wars eg Aldi and Tesco
3. Low price but also come product differentiation, effective if value added is offered consistently
4. Highest level of perceived value, branding = key role, loyalty, high product
5. Highest price levels bc of high perceived value eg luxury brands -> highly targeted segmentation, promotion and distribution eg Louis Vuitton
6. High risk, high prices without offering anything extra in terms of perceived value, customers may find better positioned products that offers more value for lower price
7. Monopoly in the market, only one business offering the product
8. Setting a middle range price for a low perceived value

Question 7

Sustainable competitive advantage not on paper 2

Answer 7

When a business creates value for its customers that is both greater than the costs of supplying the benefits it offers + is superior to that of other businesses.

Question 8

how may cost leadership be achieved? not on paper 2

Answer 8

lower input costs
economies of scale
experience (experience curve)
product design

Question 9

sources of sustainable competitive advantage not on paper 2

Answer 9

innovation
relationship between suppliers + customers
reputation

Question 10

strategic direction

Answer 10

sets out which markets a business will compete in + what products it will offer

Question 11

what influences what market a business decides to operate in?

Answer 11

• type of product eg B2B or B2C
• level of comp low level rather than saturated
• attitude to risks eg risk adverse or not

Question 12

what influences the product a business plans?

Answer 12

• R+D, strong RD = innovative products
• competitors
• technology available + what competitors have

Question 13

what affects positioning strategy?

Answer 13

product itself
state of economy
company’s image + resources
mission

Question 14

cost advantage not on paper 2

Answer 14

selling a similar product at a lower cost than its rivals eg Easyjet + Ryanair ‘no frills’ approach to keep costs at min

Question 15

differentiation advantage not on paper 2

Answer 15

selling better products at slightly higher price, offering a product that consumers see as different from its competitors product can make consumers think its better -> product differentiation