3.1.2 Theories of corporate objectives

Question 1

What is a corporate strategy?

Answer 1

A plan or policy developed to meet a company’s objectives which affect the overall direction of the business

Question 2

Draw Ansoff’s Matrix

Question 3

What is market penetration?

Answer 3

Marketing existing products in existing markets

Question 4

What are 2 main objectives of market penetration?

Answer 4

• Maintain/ increase market share of current products
• Secure dominance of growth markets
• Increase usage by existing customers
• Restructure a mature market by driving out competitors

Question 5

What is a positive of market penetration?

Answer 5

Doesn’t require much investment in new market research

Question 6

How can a business achieve market penetration? (2)

Answer 6

• Increase brand loyalty
• Encourage more frequent use of product

Question 7

What is diversification?

Answer 7

Marketing new products in new markets

Question 8

What does diversification allow for?

Answer 8

Not relying on existing markets + products - risk spread

Question 9

What is a positive of diversification?

Answer 9

If one product fails, a successful product in another market may prevent business overall facing problems

Question 10

What is product development?

Answer 10

Marketing new products into existing markets

Question 11

How can Ansoff’s matrix be used by businesses?

Answer 11

Helps them determine a product and market growth strategy

Question 12

Draw Porter’s Strategic Matrix

Question 13

How can businesses use Porter’s Strategic Matrix?

Answer 13

To identify the sources of competitive advantage a business might achieve in a market

Question 14

Why might differentiation not be a guarantee of success?

Answer 14

Customers may not want to buy the differentiated product

Question 15

What are the 2 forms of focus?

Answer 15

Cost focus
Differentiated focus

Question 16

When does cost focus occur?

Answer 16

When businesses drive down its costs in the market segment to undercut the prices of competitors

Question 17

What are 2 positives of Porter’s Strategic Matrix?

Answer 17

• Establishes a clear direction for the business to go in
• Identifies when a business may be in trouble

Question 18

What are 2 negatives of Porter’s Strategic Matrix?

Answer 18

• Not as relevant in highly dynamic markets
• May not be useful in a crisis situation

Question 19

Draw the Boston Matrix

Question 20

How can the Boston Matrix help businesses?

Answer 20

Product portfolio tool which helps a business analyse their existing portfolio to decide which products should receive more/ less investment

Question 21

What are stars (Boston matrix)?

Answer 21

• Market leaders
• Lots of sales

Question 22

What are question marks (Boston matrix)?

Answer 22

• Sit in a growing market but have low market share
• Generally unprofitable

Question 23

What are dogs (Boston matrix)?

Answer 23

• Low market share in low growth markets
• Kept as long as they continue to create cash

Question 24

What are cash cows (Boston matrix)?

Answer 24

• In low growth markets e.g. mature
• High market share and profitability

Question 25

Draw Kay's model of distinctive capabilities

Question 26

How can Kay's model help businesses?

Answer 26

Helps them think about how they can stand out + beat competition

Question 27

Explain reputation (Kay's model)

Answer 27

- Powerful distinctive capability - Not easy to develop

Question 28

Explain innovation (Kay's model)

Answer 28

- Helps companies stay ahead of competition - Helps build brand loyalty

Question 29

Explain architecture (Kay's model)

Answer 29

- For architecture to become a distinctive capability, the structure of business needs to provide value to the business

Question 30

What are strategic decisions?

Answer 30

Long term direction of business

Question 31

What are tactical decisions?

Answer 31

Shorter term actions that help reach the strategy - how the business will implement its strategy

Question 32

What 3 resources do strategic and tactical decisions affect?

Answer 32

HR Physical Financial

Question 33

What is an example of a strategic decision that would affect physical resources?

Answer 33

Moving factory location to achieve long term objective of cost cutting + profit

Question 34

What is an example of a tactical decision that would affect physical resources?

Answer 34

Moving factory layout to accommodate new product being manufactured

Question 35

What is an example of a strategic decision that would affect human resources?

Answer 35

Hiring new staff as part of long term strategy to improve productivity

Question 36

What is an example of a tactical decision that would affect human resources?

Answer 36

Having to hire new network manager because old one quit

Question 37

What is an example of a strategic decision that would affect financial resources?

Answer 37

Issuing shares to raise capital to achieve long term objective of growth + expansion

Question 38

What is an example of a tactical decision that would affect financial resources?

Answer 38

Agreeing an overdraft with the bank to cover a shortfall in a cashflow forecast