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3.1.3 - corporate strategy - Coggle Diagram
3.1.3 - corporate strategy
Ansoffs matrix: Businesses can use this to decide theit strategic direction.
Market diversification: entering a new market with a new product.
Advantage: Business sales and profit can increase rapidly as they benefit from accessing a new marking with a new product. can also spread risk as it gives a business an alternative if one other product in another market declines.
Disadvantage: Limited expertise, knowledge and research available which poses a higher level of risk.
Market development: entering a new market with an existing prodct.
Raleigh selling bikes in a new country
Market penetration: entering an existing market with an existing product.
Mcdonalds advertising their happy meal
Product development: entering an existing market with a new product.
KFC making pizzas
Influences on strategic direction
Level of risk
Opportunity cost: whether or not the business is willing to accept the risk of not taking an alternative route
Business culture and leadership must accept the route taken
Choosing how to compete: price or customer satisfaction?
Price competition may involve under cutting or price matching other businesses to create demand
Cost leadership: used by supermarkets like aldi and lidl, where a business seeks to be the cheapest on the market. This can be done by producing their own label products or securing cheaper deals from suppliers, for example.
Businesses may also compete on the benefits they offer customers
Differentiation: where businesses which compete in the terms of benefits being given to customers for the purchase of its products and services. They can do this by investing in research, development and further innovating their products.
'Stuck in the middle?' Businesses that fail to do either.