Theories of Corporate Strategy

Ansoff’s Matrix - framework used to assist a company in developing a marketing strategy for growth

• Market penetration - existing product to existing market

  • Least risky - not looking to move into anything new

  • Trying to drive up market share (selling more)

    • Sales promotion

    • Extension strategies

  • If the market is saturated (not much chance for growth) it may not be rewarding

• Product development - new products in existing market

  • Medium risk - research and development needed

  • Makes sense to do if you are a market leader, have strong market share, high cash flow (can finance R&D), high brand loyalty

  • May require some form of market research

• Market development - entering new market with existing product

  • Medium risk - no need for R&D but need market research

  • No guarantee of sales

  • Think about culture - especially if moving internationally

  • Multi channel distribution e.g. e-commerce

  • Do you need to overcome domestic recession?

• Diversification - entering new markets with new products

  • High risk - needs market research and R&D (high costs)

  • Makes sense if the business’ current market is saturate or if they have a small product range with products in the decline stage

  • Good for growth, good for developing brand loyalty if goes well (opportunity for consumers to buy other products from you)

Porter’s Strategic Matrix/Generic Strategies

• Businesses are either low cost or highly differentiated

• Any business that gets stuck in the middle will not have a USP meaning potential failure

Low cost ——————-Stuck in the middle——————Highly differentiated

Either broad or narrow focus.

• Broad

  • Cost leadership - can provide low cost goo across the entire market

    • Unit costs can be brought down

    • Charge competitive prices but produce for cheaper (increase profitability)

  • Differentiation

    • Offer premium prices

• Narrow

  • Cost focus

  • Differentiation focus

Kay’s Model of Distinctive Capabilities - exploiting the things you are good at to give competitive advantage

• Architecture - relationship with key stakeholders

  • Efficient service with good relationships

• Innovation - introducing new product and gaining competitive advantage

  • Nailing competitors with developing new ideas

  Reputation - based on customer experience

  • Brand loyalty

How to choose which strategy?

• Consider the cost and returns

• Consider the stakeholders e.g. shareholders

• Consider the risk

• Consider your competencies - strengths