Theories of Corporate Strategy 3.1.2

Question 1

Why does a business need a corporate strategy?

Answer 1

A successful corporate strategy helps to provide a competitive advantage. It requires careful consideration of a range of internal and external factors of the business.

Question 2

What is Ansoff’s Matrix?

Answer 2

A marketing planning model that helps a business determine its product and market strategy.

Question 3

Market Penetration

Answer 3

Where a business aims to sell existing products into existing markets.

Question 4

What are the aims of market penetration?

Answer 4

• maintain/ increase market share of current products
• secure dominance in growth markets
• restructure mature markets to drive out competitors
• increase usage by existing customers
• encourage brand loyalty by customers

Question 5

Market Development

Answer 5

Where a business aims to sell existing products in new markets.

Question 6

What are the approaches of market development?

Answer 6

• new geographical markets
• repositioning the product to sell to different customer profiles
• new distribution channels
• different pricing policies to attract different customers or create new market segment

Question 7

Product Development

Answer 7

Introducing new products into existing markets.

Question 8

How can a business achieve product development?

Answer 8

• developing new versions or upgrades of existing successful products
• redesigning packaging and aesthetic features
• relaunching heritage products at commercially convenient intervals

Question 9

Diversification

Answer 9

Targeting new customers with entirely new or redeveloped products.

Question 10

What is Porter’s Generic Strategic Matrix?

Answer 10

It identifes a range of strategies a business might adopt considering its source of competitive advantage (cost or differentiation) and the scope of the market in which it operates (mass or niche).

Question 11

What strategy should a business operating in a mass market adopt?

Answer 11

• Cost Leadership - have a significant cost advantage over competitors
• Differentiation - businesses that have products that can be distinguished from competitors

Question 12

What strategy should a niche market business adopt?

Answer 12

• Cost focus - involves being th e lowest cost competitor within the niche market
• Differentiation focus - offering specialised products within the niche market

Question 13

What is Product Portfolio analysis?

Answer 13

A business carries out a detailed evaluation of its full range of products so that appropriate strategies may be identified and pursued.

Question 14

The Boston Matrix

Answer 14

A portfolio analysis tool that considers the relative market share of a firm’s products and the rate of growth within the market in which each product is sold.

Question 15

Boston Matrix categories

Answer 15

• Star - products sold in high-growth markets and have a high level of market share
• Cash Cows - sold in lower-growth markets and have a high market share
• Question Marks - sold in high-growth markets and have a relatively low market share
• Dogs - sold in low-growth markets and have a relatively low market share

Question 16

What are Distinctive Capabilities?

Answer 16

When a business has a particular strength that is very difficult for competitors to copy.

Question 17

Distinctive Capability exmaples

Answer 17

• Operational skills and expertise within the business
• Relationships and networks established within and around the business
• Reputation and image of the business
• Innovation and the ability to change

Question 18

What are strategic decisions?

Answer 18

Long-term plan based on the business’s vision. It is designed to achieve corporate objectives.

Question 19

Examples of Strategic decisions

Answer 19

• Enter new market overseas
• Withdraw an obsolete product
• Merge with a competitor

Question 20

What are tactical decisions?

Answer 20

Tend to be short term responding to opportunities and threats.