8 strategic direction

Question 1

Ansoff matrix

Answer 1

to see the RISK and decide on a suitable DIRECTION of growth for the product

market development
diversification
market penetration
product development

Question 2

strategic positioning

Answer 2

porter’s generic strategy
- low cost, differentiation and focus strategy (?)

Question 3

Porter’s 5 forces

Answer 3

rivalry
-threat of new entrants
-fear of substitution
-bargaining power of suppliers
-bargaining power of buyers

Question 4

competitive advantage

Answer 4

an advantage over competitors by offering greater value, either by lowering prices (COST) OR better products and service justified by high price(DIFFERENTIAL)

Question 5

cost leadership

Answer 5

To become the lowest-cost producer in the industry.

Tends to exploit economies of scale.
Sustain of the strategy->higher profits but similar sp than rivals.

Question 6

differential strategy

Answer 6

provides uniqueness to the product, meeting buyers value and charges premium price for it

Question 7

focus strategy

Answer 7

concentrates on one segment within the market (niche)

Question 8

market development

Answer 8

new market N existing product

Question 9

diversification

Answer 9

new market N new product

Question 10

market penetration

Answer 10

existing market N existing product

Question 11

product development

Answer 11

existing market N new product

Question 12

competitive rivalry

Answer 12

→ DEGREE of competition between firms for customer/sales

• diversity of competitors (product/strategy) → if they have the same customers
• industry/market concentration (market domination)
• quality differences (durability and reliability differences→ customer satisfaction)
• brand loyalty
• barriers to exit (specialised assets/difficult to relocate/high exit cost)

Question 13

threat of new entrants

Answer 13

• barriers of entry
  
  • economies of scale
  • capital requirements
  • cumulative experience
• government policies (e.g. open trades vs protectionist)
• accessibility to distribution channels (and capacity of those channels)
• switching cost (for customers)

Question 14

fear of substitution

Answer 14

• likeliness to switch to an alternative product; depends on…
  
  • brand loyalty
  • cost of switching (for consumers)
  • PED
• relative price performance of substitute
  
  • this means price tends to reflect the quality of product, so how high you charge the product tells the customers the extent of quality of the product

Question 15

bargaining power of suppliers

Answer 15

• number and size of supplier
• uniqueness of supplier
• substitutes and cost of switching (e.g. cooperate for JIT to work)

Question 16

bargaining power of buyers

Answer 16

• number and size of customer
• size of order
• differences of buyers from other competitors
• price sensitivity
• substitute
• buyer’s information availability (catching up to the business)
• switching cost (for consumers)