3.8

Question 1

Strategic direction

Answer 1

The general path a business takes based on its mission and objectives

Question 2

Factors influencing the markets a business chooses to compete in

Answer 2

• Product type
• Level of competition
• External factors
• Internal factors
• Attitude to risk

Question 3

Factors influencing the products a business chooses to offer

Answer 3

• Research and development
• Competitors
• Technology
• Finances
• External factors

Question 4

Ansoff’s matrix layout

Answer 4

• Existing products and markets: Market penetration
• Existing markets, new products: Product development
• New markets, existing products: Market development
• New products, new markets: Diversification

Question 5

Market penetration

Answer 5

A strategy focused on increasing the sales of existing products or services in current markets:
- Promotions
- Pricing strategies
- Advertisements
- Expanding distribution channels

Question 6

New product development

Answer 6

The process of creating and introducing innovative products or services to meet evolving customer needs in existing markets:
- R&D
- Market research
- Innovation

Question 7

Market development

Answer 7

A strategy aimed at expanding into new market segments or geographical areas with existing products or services:
- Exporting to new countries
- New product dimensions or packaging
- New distribution channels
- Different pricing policies

Question 8

Diversification

Answer 8

A strategy involving the expansion of a business’s activities activities into new products, services and markets unrelated to its current offerings

Question 9

Advantages and disadvantages of Ansoff’s matrix

Answer 9

• Outlines potential risk
• Structured framework for decision-making
• Ignores internal and external factors
• Basic view of options

Question 10

Strategic positioning

Answer 10

Choosing how to compete against other businesses in the market

Question 11

Cost leadership

Answer 11

Having the lowest cost of production for a given level of quality

Question 12

Difficulties of holding onto a competitive advantage

Answer 12

• Competitors copying product or lowering price
• Changing consumer tastes
• Changing economy

Question 13

Differentiation

Answer 13

Having a product with unique attributes which consumers value, so that they perceive it to be better than rivals’

Question 14

Focus

Answer 14

Concentrating on niche market segments to achieve either a cost advantage or differentiation

Question 15

Porter’s strategic matrix layout

Answer 15

• Narrow market scope, cost advantage: Cost focus
• Narrow market scope, differentiation advantage: Differentiation focus
• Broad market scope, cost advantage: Cost leadership
• Broad market scope, differentiation advantage: Differentiation