3.1.2 theories of corporate strategies

business strategy

a long term plan which will give the firm an advantage in the competitive market place & fulfil stakeholder expectations

Ansoff's matrix (1957)

a tool to help businesses achieve growth

market penetration

achieve growth in existing markets with existing products

how can market penetration be achieved

brand loyalty, encouragement to use the products more,

product development

marketing new or modified product in existing markets

market development

marketing existing products in new markets

how to develop markets

diff countries have diff tastes and preferences

diversification

new products developed for new markets

porters strategies matrix (1980)

to identify the sources of competitive advantage that a business might achieve in a market

cost leadership

striving to be the lowest cost provider in a market

differentiation

businesses operating in a mass market but adopting a unique position instead of lower cost position

differentiation is achieved by

quality, design, brand identity, customer service

differentiation advantages

able to charge a premium price (USP)

differentiation disadvantages

hard to guarantee that the rewards will justify additional costs

Differentiation focus

Pursuing different strategies within a focussed market e.g. Ferrari

Focus advantages

Locussing onnarrowsegment → understands customers well

Focus disadvantage

Market = v. Small → low bargaining power with suppliers

Competitive advantage

set of unique features → company perceived by customers robe superior

Distinctive capabilities

Form of competitive advantage → hard for competitors understand / imitate

Kay's distinctive capabilities framework (1995)

Architecture → connections & relationships

reputation → brand image

innovation → new products / production process

portfolio analysis

categorising all the products and services of a firm → deciding where it fits in a strategic plan