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UNIT 8 (Chapter 9 (Bowman's strategic clock: Developed in 1996 by…

- - - - Objectives and attitude to risk: Some organisations may be risk averse and therefore pursue strategies that are more conservative, focusing on what they know and steady growth rather than adopting a more risky strategy that offers more growth.
      - Cost: The budget available is likely to have an impact on strategic direction, which will be analysed in relation to the expected returns in a cost-benefit analysis.
      - Barriers to entry: Some markets may have high barriers to entry, making entry very difficult. This might be in the form of tariffs, quotas and regulations. Access to these markets might be enabled by strategies involving setting up production facilities in the market, collaboration with existing businesses or takeover of existing businesses within in the market.
      - Competitors' actions: Organisations will seek proactive strategies to enable them to stay ahead of competitors, although sometimes they will need to be reactive, responding to competitors.
      - Ethics involved: With greater attention attached to corporate social responsibility, the ethics involved may be an important consideration.
    - - Market development: involves finding new markets for existing products using market research and segmentation to identify new groups of customers.
      - New product development: involves producing new products for existing markets.
      - Market penetration: increased market share in existing markets achieved by selling more products to existing customers or new customers.
      - Diversification: the most risky strategy, involving new products in new areas.
  - - - Differentiation strategy: This involves making products different from and more attractive than your competitors. Methods of achieving this may be through quality, durability, functionality, customer service or a brand image that is valued by customers. A successful differentiation strategy requires research and by customers. A successful differentiation strategy requires research and development, innovation and effective sales and marketing.
      - Focus strategy: With a focus strategy, an organisation focuses on a particular niche in the market. However within that niche it is still important to decide how to achieve a competitive advantage and whether a low cost or differentiation strategy will be chosen. For example, Baxters soups focuses on a small segment of the soup market, providing highly differentiated products. It is this focus that makes Baxters soups stand out; without it, the business would be stuck in the middle, heading for failure.
      - Low-cost strategy: This is not just having low costs but being the leader in terms of cost in your industry. In pursuing this strategy, an organisation needs to be confident it can maintain it can maintain its leadership. It must have a sustainable low-cost base and access to capital to invest in technology that can further reduce costs.
- - - - differentiation strategy
        
        A differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition.
      - Cost leadership - is a concept developed by Michael Porter, utilised in business strategy. It describes a way to establish the competitive advantage. Cost leadership, in basic words, means the lowest cost of operation in the industry
        
        lower input costs - this can be achieved by owning suppliers or being located nearer to the suppliers to reduce costs
        
        economies of scale - companies can benefit from economies of scale depending on their size the bigger the company and the bigger the order the more they benefit from this.
        
        experience - having experienced workers and being experienced in the market allows you to source out better deals than competitors
        
        product/process design - many companies provide a cheaper service than others by using this method. An example could be Ryanair they only fly from smaller airports and offer basic services on board to save money.
    - - Where the competitors are positioned - This is an important decision to be made. when deciding where to be positioned in the market you need to thoroughly look at competitors and how they are positioned. If a competitor is dominating one sector of the market you may want to place yourself elsewhere if you cannot compete.
      - The external enviroment - the external environment drastically affects the position of a business. the world is becoming more and more eco friendly and business' need to match this or expect bad press to come their way. Business' also have to react to the economy and customers buying habits places like lidl and aldi are benefiting from such changes.
      - The the strengths and competences of the business- The business needs to decide what their strengths and weaknesses are and where they can be most effective. If a company is small and new in a market then they cant expect to be able to take on big contracts and compete with large business'.