Choosing Areas of Competition

What does market penetration involve?

Increasing sales of existing products to existing markets.

Give an example of market penetration.

McDonald's promoting its Happy Meal product range to an existing market.

What is market development?

Targeting existing products at new markets to increase sales.

Provide an example of market development.

Raleigh selling its cycling products in a new country.

What is product development?

Targeting new products in existing markets to increase sales.

Give an example of product development.

KFC introducing a range of pizzas to an existing market.

What does diversification involve?

Targeting new products at new markets to increase sales.

List one advantage of diversification.

Diversification can provide large rewards by accessing new markets and selling new products.

List one disadvantage of diversification.

It involves new products and new markets, increasing risk due to limited expertise.

What influences the strategic direction of a business?

The level of risk accepted, opportunity costs, and business culture.

How can opportunity costs influence strategic direction?

A business may need to decide whether to forfeit the benefits of an alternative direction.

Why can business culture influence strategic direction?

Culture and leadership must support the strategic direction chosen.