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Business Objectives and Strategy

Theories of corporate strategy

  • 8 things to know
  • Paper 2 and Paper 3

Overview

Ansoff’s Matrix and the risk attached to each quadrant, Porter’s generic strategies and being stuck in the middle, portfolio analysis, distinctive capabilities, and strategic against tactical decisions and their impact on resources.

What you need to know

Answer each one before you reveal it.

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Key term

What is Ansoff's Matrix, and what strategies does it set out?

Evaluation

Which Ansoff strategies carry the most and least risk?

Key term

What are Porter's three generic strategies?

Key term

What are Kay's distinctive capabilities?

Key term

Distinguish strategic from tactical decisions.

Process

How does scope distinguish strategic from tactical decisions?

Key term

How might a strategic decision affect supply chain arrangements?

Key term

How might a strategic decision affect capital structure?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What is Ansoff's Matrix?

    Model answer

    A strategic planning tool that identifies four growth strategies based on whether products and markets are existing or new.

  2. 2

    In Ansoff's Matrix, what strategy involves selling more of existing products to existing markets?

    Model answer

    Market penetration

  3. 3

    Explain how a business might pursue market penetration as a growth strategy.

    Model answer

    By increasing market share through tactics such as competitive pricing, increased promotion, loyalty schemes, or acquiring competitors within the same market

  4. 4

    What is product development in the context of Ansoff's Matrix?

    Model answer

    A growth strategy involving the creation and sale of new products to existing markets

  5. 5

    Why might product development be considered riskier than market penetration?

    Model answer

    Because it involves the uncertainty and costs of developing new products, which may fail to meet customer needs or face unexpected competition

  6. 6

    Define market development as a strategic option in Ansoff's Matrix.

    Model answer

    A growth strategy that involves selling existing products to new markets, such as new geographical regions or customer segments

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