7. Strategic options Flashcards
How to achieve cost leadership?
Economies of scale
Seeker cheaper sources of supply
Reduced labour costs
What are the benefits of a cost leadership strategy?
Higher chances of survival during downturns
Higher profit margins
Risks of adopting a cost leadership strategy?
Only room for one cost leader
Cost advantage may be lost due to inflation
Customers may prefer to pay extra for a better product
How to become a differentiator?
Strong branding
Product innovation
Quality
What are the benefits of a differentiator strategy?
Higher margins
Uniqueness
Risks of adopting a differentiator approach?
Cheap copies
Being out-differentiated
Customers unwilling to pay the extra
What is a focus strategy?
Focus on a segment of the market rather than the whole market
What is the Ansoff matrix?
Looks at growth by considering opportunities to sell more existing products/develop new products and building market share in existing/new markets
What are four boxes in Ansoff?
Market penetration
Market development
Diversification
Product development
What is market penetration?
More sales of existing products to existing markets
What is diversification?
Developing new products for new markets
What is product development?
Developing new products for existing markets
What is market development?
Finding new markets for existing products
How can diversification occur?
Related - integrating activities in the supply chain (vertical) or leveraging existing competences (horizontal)
Unrelated
How to achieve market penetration?
Price cuts
Effective marketing
Small product improvements
