chapter 6 strategy and implementation Flashcards

Question

The four options of the Ansoff Matrix

Answer 1

- Existing products+ Existing Markets: Market penetration - Existing products+ New Markets: Market Development - New products+ Existing Markets: Product development - New Products+ New Markets: Diversifictaion

Answer 2

This is the method of conecntrating sales of existing products to existing markets. The methods to do this includes: * Attracting customers who have not yet become regular users * Attacking competitor sales * Increasing consumption amongst existing users

Answer 3

This involves finding and developing new markets for existing products. They can do this by: * Identifiying users in different markets with similar needs to existing customers * Identifying new customers who would use a product in a different way

Answer 4

This involves developing new products and new markets. This can be attempted if a business sees a new oppurtunity and has the investment funds avaliable . This has the greatest level of risk. But it can also spread risk as it allows for lower reliance in the markets that they are already in

Answer 5

This is referred to as internal growth and is the expansion of the business by selling more of its products. The most used method is the opening of more factories to increase capacity. Other methods include: * Expanding product range * Targeting new markets * Expanding the distribution network * Benefiting from economies of scale

Answer 6

Benefits: * Less risky form of growth as it most likely funded with retained profit * Less threat of brand dilution * Allows for greater consistency * Growth can be steady * There is is less loss of control Drawbacks: * Oppurtuinites may be missed from acquisitions * Potential for growth may be more limited * There could be a lack of shared expertise * A lack of competitiveness could result due to a lack of economies of scale

Answer 7

This is also reffered to as inorganic growth and is acheived by takeovers or mergers this is also quicker than organic growth

Answer 8

This is the acquisition of one business by another, either on an agreed or hostile basis. This will take place when a business sells more than 50% of its shares

Answer 9

This is the process in which two businesses become one. They are normally equal in size and will agree on the share ownership of the new business

Answer 10

This is when the business merges with or takes over another in the same industry at the same stage of the production process. The benefits of this include: * The removal of some of the competition * May increase economies of scale * Increases market power to compete with market leaders * Synergy may occur * Increased capital of merged businesses * Opportunity to cut costs Drawbacks of this include: * Large initial cost. * Possible culture clashes in management. * Diseconomies of scale. * Investigation from the CMA. * Problems with the high street such as reduction in customer numbers or high fixed costs.

Answer 11

This is when business merges or takes over another business at the previous stage in the production process within the same industry. ( Taking over supplier)

Answer 12

This is when a business mergers or takes over another business at the next stage in the production process.( Takes over the customer)

Answer 13

- Security of supplies and control of supplier prices - Improves supply chain co-ordination Can guarantee the quality of its raw materials - Can determine standard of outlets/shops - Use of outlets to determine brand image - Keeps all profits and removes middlemen - Control over quality - Possible economies of scale