useful extra knowledge theme 3

Question 1

4 quadrants of Ansoffs Matrix

Answer 1

• market development - new market, existing product
• market penetration - existing market, existing product
• product development - existing market, new product
• diversification - new market, new product

Question 2

define Porter’s Generic Strategies (Strategic Matrix)

Answer 2

DEFINITION - tool that managers can use to strategically position their business in a market

EXPLANATION - model that highlighted importance of product differentiation or cost minimisation, to gain competitive advantage

Question 3

4 quadrants of Porter’s generic strategies

Answer 3

• cost leadership - (mass market, low cost strategy)

• low production cost- EoS, capital intensive, control over suppliers, cost minimisation
• charge competitive price but low production cost, so high profit margin

• differentiation leadership - (mass market, differentiation strategy)

• unique in industry- usp, quality, brand image and loyalty
• premium price, paying for added value

• cost focus - (niche market, low cost strategy)
- focus on one segment

• differentiation focus - (niche market, differentiation strategy)
- focus on one segment

Question 4

what are the two axes for porters generic strategies

Answer 4

• source of competitive advantage (cost, diffferentiation)

* competitive scope - broad focus (mass), narrow focus (niche)

Question 5

describe the stuck in the middle strategy, suggested by Porter

Answer 5

• where firms aren’t focusing on individual strategies but addressing them all to a low extent
• leads to mediocre business performance
• unsustainable stagey for successful firms

Question 6

ways for firms to differentiate

Answer 6

• quality of product or service
• brand perception
• wide distribution- across all major channels
• renowned product development
• USP

Question 7

define a distinctive capability

Answer 7

• special qualities within a business that are better than their rivals and cannot be easily copied.

• can provide competitive advantage

Question 8

describe John Kay’s model for distinctive capabilities

Answer 8

distinctive capabilities require 3 important ideas:

• architecture - managerial skills that build good consumer, staff and supplier relationships
• reputation - customer perception of brand/ product
• innovation - development of new and improved products/ technology
• suggested that the more distinctive capabilities a business has, the more sustainable their competitive advantage is

Question 9

why may businesses focus on short term performance

Answer 9

• stock market focuses on latest financial performance
• bonus based culture focuses on short term performance
• frequent changes in leadership and strategy- new leaders or strategy need quick results or they’ll be scrapped

Question 10

Difficulties in changing corporate culture

Answer 10

• stubbornness or difficulty to adapting to change
• self interests and ambitions
• experienced employees may disagree with proposed changes
• fear of unknown (loss of job, income)

Question 11

Describe CSR

Answer 11

Corporate social responsibility is when companies go beyond the legal minimum in order to be good social citizens

Question 12

positives of CSR

Answer 12

+creates advantage in marketing (can be USP)

+positive effect on workplace

  - employee motivation
  - attract better qualified 
  - low staff turnover (less cost on recruitment, training)
  - publicity

Question 13

negative of CSR

Answer 13

+reduced profit

+harder to grow ethically in long term (have to reject some opportunities)

+ people may see through CSR as PR tool (hide true moral actions or purpose (e.g. Barclays tax avoidance through setting up operations in tax havens, or even Waitrose continuing to sell food at high prices during recession)

Question 14

what is a business’s code of practice called

Answer 14

ethical trading policy

Question 15

define consumerism

Answer 15

when consumers expect more from the businesses they buy from