unit 8. strategic direction

what model is used to analyse the best markets to compete in and the products to offer

Ansoffs matrix

what is ansoff's matrix

the risks become greater the further away a business goes from focussing on selling existing products to existing customers, but the reward increases

what is market penetration

increasing market share through selling existing products to existing market, least risky strategy

what is product development

Launching new products into the same market,

How is product development risky

high costs research and development, marketting and promotion so high loss if the product fails

What is market development

selling in a new market with existing products

What is diversification

Introducing new products into new markets

Why is diversification the riskiest strategy

It is operating outside of its range of knowledge and experience

What is strategic risk

uncertainty regarding the firms financial goals and objectives.

What is strategic direction

what strategy a firm takes to meet its long-term objectives

What is strategic positioning

how a business positions themselves so that they can sell the most products

What is Porter's Generic Strategies

low cost leadership, differentiation, focus(niche), differenitation and cost focus

What does porter state about these strategies

That a business needs to pick between as they will get ‘stuck in the middle’ otherwise and lose competitiveness

what is the cost leadership strategy

The aim to be the lowest cost operater, so they can charge lower prices and therefore gain a competitive advantage

How do businesses adopt a low cost strategy

• high levels of efficiency

• low cost labours

What is differentiation strategy

to offer products or services that are of unique and superior , with added value compared with those of competitors. Means consumers are willing to pay a premium price

what are focus strategies

Using cost leadership or differentiation to produce a specialized product or service for a limited, specially targeted group of customers (nichemarket)

What is a critisism of porters generic startegies

They tend to only work in slow moving markets that are fairly unchanging. As otherwise consumer trends are changing quickly

What are the benefits of having a competitive advantage

• increased profits

• increased market share

• higher capacity utilisation (less waste)

• economies of scale

Difficulties in rettaining competetive advantage

• maintaining product differentiation without it being copied

• new entrants in the market

• changes in consumer tastes