Theories of corporate stategy

Question 1

Corporate Strategy

Answer 1

Medium to long term plans of a business, detailing how objectives will be met through decisions and activities relating to all aspects of the business.

Question 2

Medium to long term plans of a business, detailing how objectives will be met through decisions and activities relating to all aspects of the business.

Answer 2

• Corporate objectives
• Distinctive capabilities
• Competitive environment
• Leaders’ attitudes to risk
• Local, national and global economic environment

Question 3

Ansoff’s Matrix

Answer 3

Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets.

Question 4

Market Penetration

Answer 4

Considered the lower risk option as selling more of an existing product to the existing market

• Gain market share from competitors
• Encourage customers to buy more
• Changes to teh marketing mix
• Extension strategies
• Competitors reactions could be negative
• Relatively short term only
• Market may already be saturated
• Cannibalisation

Question 5

Market Development

Answer 5

Selling an existing product in a new market. Risk is associated with the unknown nature of the market

• Enter a new international market
• Change promotional tactics
• New distribution channel
• Product may not be accepted desired or understood in new market
• Alienation of current customer
• business may not understand the new market

Question 6

Product Development

Answer 6

Selling a new product in an existing market. Risk is associated with the potential failure of the new product

• Launch substantially imporved version of existing products
• Introduce complementary products
• New product innovation

Question 7

Diversification

Answer 7

Considered the highest strategy as selling a new product in a new market. Seen as a risk.

Question 8

SWOT analysis

Answer 8

Diagnostic tool used to identify the internal strengths and weakness and the external opportunities and weakness

Question 9

Business can look to

Answer 9

Maximise strength
Minimise weaknesses
Take advantage of opportunities
Avoid threats or turn them into opportunities

Question 10

Strengths / Weakness

Answer 10

Internal to the business

• Financial performance
• Resource Management
• Human resources management
• Marketing
• Culture of the business
• Corporate social responsibility and ethics

Question 11

Opportunities / Threat

Answer 11

• External to the business
• Economic environment
• Political and legal environment
• Degree of competition
• Technological change
• Consumer trends
• Demographics