3.1.2 Flashcards
(13 cards)
What does a business need to know before it can develop a strategy?
○ Before attacking another business, expanding or trying to achieve the corporate objectives a business to be able to see their current position
○ Corporate strategy is the process of planning in the long term to achieve the aims of the entire business
○ What would a good business strategy look like
What is a strategy?
The plan to achieve the objectives
What is Ansoff’s Matrix ?
A market planning model that helps a business determine its product and market strategy - it is a useful decision-making tool to allow owners of a business to consider several factors that determine corporate strategy
What is Porter’s Matrix?
○ How to complete in terms of benefits and price
○ Porter suggested two overall business strategies that could be followed in order to gain competitive advantage
○ Porter argued that differentiation and low cost are effective strategies for firms to gain competitive advantage
What are Porter’s generic strategies?
Cost leadership, cost focus, differentiation leadership, differentiation focus
What is cost leadership?
The aim is to have the lowest production cost
What is cost focus?
A business will try to beat the competition based on low price, but in smaller market segments
What is differentiation leadership?
Businesses aim to achieve differentiation to beat competition, but across an entire industry
What is differentiation focus?
The business aims to differentiate their products within one or a small number of market segments
What does Ansoff’s Matrix help to identify?
- Level of investment in existing and new products
- The exploitations of different markets
- The growth strategy for a business
- The level of risk
What are the 4 areas of Ansoff’s Matrix?
New and existing markets, and, new and existing customers
What is a competitive advantage?
Competitive advantage is where a product has features which are seen more favourable compared to the competitors
What is are distinctive capabilities?
Distinctive capabilities is a competitive advantage which is difficult for the competitors to understand
