3.1.2 Theories Of Corporate Strategies Flashcards
(28 cards)
Ansoffs Matrix
Marketing planning tool to find best strategy for a business is
Ansoffs Matrix components
“MMPD” Market Penetration Market Development Product Development Diversification
Market penetration
Increasing market share in current markets with current products
Market development
Entering NEW markets with EXISTING products
Product development
Launching NEW products in CURRENT market
Diversification
RISKY
NEW markets with NEW products
Porters Strategic Matrix
Tool to identify the sources of competitive advantage that a business may have in a market
- any business that does NOT adopt one of these strategies of competitive advantage will be unlikely to succeed
Porters Strategic Matrix Components
- Cost Leadership
- Differentiation
- Focus
Cost Leadership
Businesses aiming to be the lowest cost provider in the market.
2 ways of competitive advantage:
- Increase profits whilst charging market level prices
- Increase market share whilst charging lower prices (still make profit because their costs are lower)
Differentiation
Business adopting a unique position in the mass market instead of the lowest cost position.
- making product unique from its competitors
- USP (adding value with design and quality and branding)
Advantages of Differentiation
- Can charge premium prices if customers value the USP
- Easier to make a USP than get raw materials for cheap (cost leadership)
Disadvantages of Differentiation
- If USP is NOT valued by customer they won’t pay the premium price, customers may not buy the product
- Requires a lot of market research (timely and costly)
Focus
Strategy that focuses on a narrow range of customers in one of 2 ways:
- Cost Focus
- Differentiation Focus
In the niche market can give competitive advantage.
Cost Focus
Cost minimisation in a focused market
Differentiation Focus
Different strategies with in a Focus market
Distinctive Capability
Form of competitive advantage, that’s difficult for competitors to imitate. Not easily replicated.
3 types of Distinctive capability
- Architecture
- Reputation
- Innovation
Architecture
The relationships and contracts with in and around an organisation
- business relationship with its suppliers
- Useful relationship
Reputation
The positive connotations linked with a brand or business name.
Innovation
Sustainable competitive advantage that arises when a business can innovate by developing a new product.
Timely, costly, lost of researched needed for innovation.
Portfolio Analysis
Method categorises “portfolio” and decides where each fits in its strategic plans.
Portfolio
All products and services of a business
Process of portfolio analysis
- overview of all products in current business portfolio
- Look at performance of each product by examining:
- current and projected sales
- current and projected costs
- current competitor activity and future competition
- risk that may affect performance
Boston Matrix
Advanced tool used for portfolio analysis. Categories products in 1 of 4 categories. Based on current and potential market share or market growth. Components: - Stars - Cash Cows - Problem Child - Dogs
