Unit 8

Question 1

What is strategic direction?

Answer 1

Involves deciding the direction in which a business should move and the methods by which it should pursue its plan

Question 2

What is the the method used for strategic direction

Answer 2

Ansoff’s Matrix

Question 3

What does the Ansoff Matrix represent?

Answer 3

the different options open to a marketing manager when considering new opportunities for sales growth

Question 4

Draw the ansoff’s matrix

Answer 4

-

Question 5

Why is the ansoff’s matrix used?

Answer 5

A useful framework for analysing a range of strategic options in relation to risk and rewards

Question 6

What are the 4 growth strategies from ansoff’s matrix?

Answer 6

• market penetration
• market development
• product development
• diversification

Question 7

What is the objective of market penetration?

Answer 7

Higher market share in existing markets - get more of the same customers

Question 8

How do you achieve market penetration?

Answer 8

• Reduce prices
• Promote product range
• Sales force push
• Altering products - ie different sizes
• Increase buying options - online

Question 9

What are the advantages of market penetration?

Answer 9

• already has good knowledge on markets and products due to experience
• less likely to need R&D

Question 10

What is product development?

Answer 10

involves taking a new or modified product and developing it in existing markets

Question 11

How can products be developed?

Answer 11

New products to replace current products
New innovative products
Product improvements
Product line extensions
New products to complement existing products
Products at a different quality level to existing products

Question 12

When is product development used?

Answer 12

• the firm has strong R&D capabilities
• the market is growing
• the firm can build on existing brands
• competitors have better products

Question 13

What are the advantages of product development?

Answer 13

• is the first firm in the market

Question 14

What is market development?

Answer 14

strategy of selling an existing product to new markets. This could involve selling to an overseas market or a new market segment.

Question 15

How can markets be developed?

Answer 15

• Selling the same product to different people
• Entering new markets or segments with existing products
• Gaining new customers, new segments, new markets
• Entering overseas markets

Question 16

When is market development used?

Answer 16

• Untapped markets are beckoning
• The firm has excess capacity
• There are attractive channels to access new market

Question 17

What are the disadvantages of market development?

Answer 17

• riskier than product development

- existing product might not suit new markets

Question 18

What is diversification?

Answer 18

the process of selling a different or a new unrelated product in an unrelated market

Question 19

What are the 2 types of diversification?

Answer 19

• related

- unrelated

Question 20

What is related diversification?

Answer 20

where a business expands its activities into product lines that are similar to those it currently offers

Question 21

What are the advantages of related diversification?

Answer 21

• builds on assets or activities the firm already has

- reduces risk

Question 22

What are the 3 types of related diversification?

Answer 22

• vertical
• horizontal
• concentric

Question 23

What is vertical diversification?

Answer 23

when an organisation decides to move into its suppliers or customers’ business

Question 24

What is horizontal diversification?

Answer 24

when new products are introduced into current markets

Question 25

What is concentric diversification?

Answer 25

when new products closely related to existing products are introduced to new markets

Question 26

What is unrelated diversification?

Answer 26

growth in products and markets that are completely new

Question 27

What are the disadvantages of diversification method?

Answer 27

risky - little knowledge | costly - R&D

Question 28

What is strategic positioning?

Answer 28

is how a business perceives itself in relation to its competitors

Question 29

What are the 2 methods used to analyse strategic positioning?

Answer 29

Porter's strategies | Bowman's strategic clock

Question 30

What are the 2 strategies that Porter suggested?

Answer 30

cost-leadership strategy | differentiation strategy

Question 31

What is the cost leadership strategy?

Answer 31

involves becoming the lowest cost producer in the industry

Question 32

What are benefits of a cost leadership strategy?

Answer 32

lower costs = higher profits

Question 33

How can a cost leadership strategy be achieved?

Answer 33

- lower input costs - economies of scale - bargaining power - high levels of productivity - lean production

Question 34

What is differentiation leadership strategy?

Answer 34

when the business targets larger markets and aim to achieve a competitive advantage through differentiation

Question 35

How can a differentiation leadership strategy be achieved?

Answer 35

- superior product quality - branding - consistent promotion - effective distribution channels

Question 36

What is the differentiation focus strategy?

Answer 36

where a business aims to differentiate within just one or a small number of target market segments

Question 37

What is the cost focus strategy?

Answer 37

where a business seeks a lower-cost advantage in just one or a small number of market segments

Question 38

What does the Bowman's strategic clock do?

Answer 38

plot the options of strategic postioning for a business

Question 39

What are the 2 axis on the Bowman's strategic clocl?

Answer 39

perceived value to a customer | price

Question 40

What are the 8 different positions on the Bowman's clock?

Answer 40

``` 1 - low price and low added value 2 - low price 3 - hybrid 4 - differentiation 5 - focused differentiation 6 - risky high margins 7 - monopoly pricing 8 - loss of market share ```

Question 41

What influences a positioning strategy?

Answer 41

- competitors position - external environment - the strengths and competencies of a business

Question 42

How can a business protect its competitive advantage?

Answer 42

- legal protection