3.8 Choosing strategic direction

Question 1

Strategy

Answer 1

a long-term plan of how a business sets out to achieve its aims and objectives

Question 2

Ansoff’s Matrix

Answer 2

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

It suggests that a business’ growth strategy depends if whether it markets new or existing products in new or existing markets

Question 3

Porter’s Generic Five Forces

Answer 3

This includes strategies that could be adopted in order to gain competitive advantage. The strategies relate to the extent to which the scope of a business’ activities are narrow versus broad and the extent to which a business seeks to differentiate its products

Question 4

Bowman’s Clock Strategy

Answer 4

A model that explores the options for strategic positioning (ie how a product should be positioned to give it the most competitive position in the market

Question 5

Influences on the choice of strategic positioning

Answer 5

Competition - How strong are the competitors a business faces in its chosen strategic position? What advantages, if any, do those competitors face?

Core competencies - Does the business have the right skill set and resources?

External environment - Do any PESTLE factors affect the business?

Question 6

Competitive advantage

Answer 6

An advantage over competitors gained by offering consumers greater value, either by providing lower prices or by providing greater benefits and service that justifies higher prices

Question 7

Importance of having a competitive advantage:

Answer 7

It distinguishes a company from its competitors

It contributes to higher prices, more customers, and brand loyalty

It remains one of the main goals of any firm

Question 8

Challenges in maintaining a competitive advantage:

Answer 8

It can be hard to maintain your target audience when tastes and fashions are constantly changing and customers are always wanting something different

Many competitors will always try to outdo you and bring out new product ranges and decrease prices even further

To build a sustainable differentiation strategy, firms need to build their reputation around those distinctive characteristics and make their expertise exceptionally visible to your target audience