Section C Strategy

Question 1

What is a business strategy?

Answer 1

A plan which is developed and implemented by the management of a company to achieve their strategic goals/objectives.

Question 2

International marketing/globalisation vs strategy developments

Answer 2

Markets are dynamic and change all the time, even more on the international level.
So the strategies need to recognize and adapt to changes

note the authors - Hamel &Prahalad

Question 3

Changes in strategies vs globalization vs culture?

Answer 3

Globalisation means more stakeholders involved with differing cultures. Agreement on decisions about strategy changes becomes therefore harder.

Question 4

Is the type of organisation relevant?

Answer 4

Yes, it should be considered what strategies will the company follow and find the most appropriate type and structure of organisation, considering all pros and cons, such as:
Flat vs tall
Sole trader vs company
atc.

Question 5

3 types of objectives

Answer 5

Strategic (medium to long-term)
Tactical (medium to short-term)
Operational (day-to-day)

Question 6

SMART objective to which a good strategy should lead?

Answer 6

Specific
Measurable
Achievable
Relevant
Time-specific

Question 7

4 Stages of strategy development

Answer 7

1. Assessment of where the business is
2. Development of a plan (the strategy itself) where the business wants to arrive.
3. Consideration of implementation of planned steps and their viability
4. Periodic evaluation

Question 8

Growth strategy based on SWOT

Answer 8

Combining strengths with opportunities - most positive short-term strategy, if there are no other big issues

Question 9

Defensive strategy based on SWOT

Answer 9

When weaknesses and threats relate, quick defensive action needed to survive. The most negative short-term strategy

Question 10

Re-orientation strategy based on SWOT

Answer 10

Long-term strategy, which aims to address weaknesses (implement changes) to benefit from existing/foreseeable opportunities

Question 11

Defusing strategy based on SWOT

Answer 11

Neutral, medium, short term strategy, not meeting opportunities but minimizing existing/foreseeable threats is viewed as a most beneficial step.

Question 12

What are the 4 growth strategies according to Ansoff?

Answer 12

1. Market penetration
2. Product development
3. Market development
4. Diversification

Question 13

What are the limitations of Diversification strategy?

Answer 13

All related to product or market development strategies:
1. Low quality research
2. Low quality of R&D system
3. Loosing first mover advantage to competitors due to prolonged R&D time,
4. Loosing first mover advantage to competitors, because not patented (kept as a company secret) items/processes become common knowledge or known to the competitor
5. Lack of understanding local specifics of new markets
6. Lack of effective distribution channel

Question 14

What are the 4 strategies to manage stakeholders under stakeholder mapping tool?

Answer 14

1. Minimal effort (towards stakeholders with low interest and low power)
2. Keep informed (the cheapest way to satisfy stakeholders with high interest but low power)
3. Keep satisfied (stakeholders with power but no interest, so that they don’t become interested to participate in your decision making)
4. Key Players

Question 15

What are the limitation of stakeholder analysis/mapping?

Answer 15

1. The analysis and prioritization may be very subjective, depending on the ethics of the decision maker
2. Members of particular group may have shifted to more powerful group unnoticed (e.g. a pressure group like environmentalists became better present in the local government gaining more power) or neglected shareholder bought larger share.

Question 16

What type of businesses may choose not to expand and why?

Answer 16

Businesses offering high-end products or service providers, because of:
*High dependence on owner’s/specific person’s highly specific skills and need of their direct and intensive involvement in production or service offering, such as a private clinic with a well-known doctor; a restaurant with a well-known chef, a popular stylist’s shop etc
*Need to stay close to customers, to understand their ever-changing wants and needs:

Question 17

Growth strategy: internal vs external?

Answer 17

Internal growth is
1. slow
2. often Lacking finance (possible)
but
1. Less risky
2. and retaining control and focus

Question 18

Growth strategy through integration directions?

Answer 18

Consider pros and cons of vertical or horizontal integrations, as well as of conglomerate

Question 19

Growth strategy through going global

Answer 19

Consider the methods such as:
Joint venture
Strategic alliance
Direct or indirect export
Direct investment
Franchise
E-commerce

Question 20

Growth strategy vs Economies of scale

Answer 20

1. Technical - fixed costs better spread or less share of fixed costs vs variable costs
2. Managerial - business can afford more managers with specialized skills, instead of a few doing everything
3. Financial - risks are better managed
4. Marketing - more resources available
5. Purchasing - discounts available

Question 21

Growth strategy vs diseconomies of scale

Answer 21

Diseconomies:
1. Technical - added capacity adds to new fixed costs which may not be good spread in the beginning. (using just small space in a new warehouse)
2. Managerial - over-specialized or overqualified
3. Financial - larger (end historically successful businesses may overestimate their powers or competences and make poor investments
4. Marketing - costlier mistakes
5. Purchasing - costlier funds than cost savings from larger stock (which may deteriorate btw)

Question 22

Risk strategies?

Answer 22

May be considered based on these tools:

SWAT (e.g. strategies related to minimizing threats being part of risk strategies, such as diffusing and defensive strategies)

Ansoff (diversification being the most risky and penetration the least risky etc)

Question 23

What we learned around Product strategies?

Answer 23

May be considered based on these tools:

*BCG matrix

*Extention strategies (related to : product redesign or extended use)

*Branding/brand development strategies:
1. Raising Brand awareness
2. Strengthening of brand loyalty
3. Maintenance of brand value

Question 24

List of pricing strategies?

Answer 24

1. Price cuts (permanent)
2. Promotional Pricing/price promotion
3. Skimming
4. Penetration
5. Cost-plus/mark-up
6. Psychological/perceived value/99.9
7. Loss leader
8. Price discrimination (based on customers’ characteristics)
9. Dynamic pricing (based on changing market conditions, like Bolt)
10. Economy pricing
11. Premium Pricing (based on quality)
12. Bundle pricing (less cost in a bundle then separately)
13. Complementary pricing (Paying small amount for main product and large amounts for details, like food in petting zoo

Question 25

Choice of Pricing strategies?

Answer 25

*Popular at the introduction level: 1. Penetration if there is big competition 2. Price skimming if the product is unique/has no/less competition *Popular at the introduction level: 1. Prices set to penetrate the market may now raise but 2. Skimming prices lowered *Popular at maturity level (as many competitors attracted by your profits enter the market): 1. Competitive or 2. Promotional pricing, *Popular at saturation level? 1.promotional pricing 2. complementary pricing *Popular at declining stage? Price cuts *BMG strategies may be again used depending on product and its life-cycle: 1. Holding 2. Building 3. Harvesting 4. Divesting *Extention strategy may be considered, finding new segments with new pricing strategy or through pricier or cheaper version of product (product redisign)

Question 26

Distribution strategies?

Answer 26

*Number of intermediaries *direct vs indirect export other *Limited/selected sales points is common for which stage of life-cycle?

Question 27

Promotion strategies?

Answer 27

*Extended marketing (e.g. new segments) *BElow vs above-the-line: Below-the-line: Direct marketing (direct mails) Trade shows Search engines SMM Personal selling In person or on the phone Public relations Sales promotions (coupons; BOGOF; competitions etc) *Importance of packaging: 1. Protection 2. Convenience to carry, use 3. Provision of information 4. Reduced risks 5. Promotional tool

Question 28

Guerrilla or viral marketing?

Answer 28

Attention to: Ethical issues Brand image may be damaged May be illegal (more an issue of guerrilla)

Question 29

Branding/brand development strategies?

Answer 29

1. Raising Brand awareness 2. Strengthening of brand loyalty 3. Maintenance of brand value

Question 30

Types of extension strategies

Answer 30

1. New markets (new regions; export) 2. New markets (new segments) 3. New uses 4. New design or packaging 5. New promotional strategies

Question 31

Specific Promotion/Advertising strategies?

Answer 31

Guerrilla, virus

Question 32

BCG product strategies, related to the level of further investment

Answer 32

1. Holding 2. Building 3. Harvesting 4. Divesting