KT2: 3.1.1 Corporate Objectives, 3.1.2. Theories of Corporate Strategy

Question 1

Aims

Answer 1

a generalised statement of where a business is heading.

Question 2

Mission

Answer 2

an aim expressed in a particularly inspiring way.

Question 3

Mission statement

Answer 3

a short passage of text that sums up an organisation’s mission. This may get displayed on walls throughout the business and placed prominently on its website.

Question 4

Corporate strategy

Answer 4

provides a medium to long-term plan for meeting company wide objectives.

Question 5

Distinctive capabilities

Answer 5

ways a firm operates that cannot easily be copied by rivals, e.g. Ryanair’s obsession with cost minimisation.

Question 6

Economies of scale

Answer 6

factors that cause average costs to fall as the scale of output increases.

Question 7

Generic strategy

Answer 7

a strategic position that will prove effective in every market, i.e. generically. Porter said lowest cost and highest differentiation were the perfect positions of strength.

Question 8

Product differentiation

Answer 8

the extent to which consumers perceive one product as being distinct from its rivals.

Question 9

Stock units

Answer 9

the number of different brands and pace sizes stocked by a business; each has its own barcode; a Tesco hypermarket might have 75,000 separate products; an Aldi has 1,200.

Question 10

Ansoff’s Matrix

Answer 10

Igor Ansoff believe that businesses need greater awareness of the risk involved in developing new products or new markets, and especially in the combination of the two: diversification.

Question 11

Diversification

Answer 11

when a business expands its activities outside its normal range. This may be done to reduce risk or to expand possible markets.

Question 12

Repositioning

Answer 12

changing a product or its promotion to appeal to a different market segment.