8.1 Strategic Direction (AQA A Level Business): Flashcards
Exam code: 7132
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Define strategic direction.
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Cards in this collection (16)
Define strategic direction.
Strategic direction is the long-term path a business chooses to achieve its objectives and fulfil its vision.
Why does a clear strategic direction matter?
It guides decision-making, aligns the team, focuses resources and lets managers measure progress.
Name two factors that determine strategic direction.
Leadership/management style and financial resources (also organisational culture and technological capabilities).
Define Ansoff's matrix.
Ansoff's matrix identifies growth strategies (and their risk) based on existing/new products and existing/new markets.
What two categories does Ansoff's matrix consider?
The market (existing or new) and the product (existing or new).
Name the four strategies in Ansoff's matrix.
Market penetration, market development, product development and diversification.
Which Ansoff strategy is least risky, and which is most risky?
Market penetration is least risky; diversification is most risky.
Define market penetration.
Market penetration means selling more existing products to existing customers.
Define market development.
Market development means finding new market opportunities for existing products (e.g. entering markets abroad).
Define product development (Ansoff).
Product development means selling new or improved products to existing customers.
Define diversification.
Diversification means targeting new customers with entirely new or redeveloped products — the riskiest growth strategy.
Give an example of diversification.
Tesco launching financial products, or Greggs launching themed clothing.
How can a business achieve market penetration?
Encourage more regular or increased use of the product and build brand loyalty.
Market penetration involves selling more existing products to existing .
Market penetration involves selling more existing products to existing customers.
True or False?
Market development involves selling existing products in new markets.
True.
Market development finds new market opportunities — such as new countries — for existing products.
True or False?
Product development is the riskiest strategy in Ansoff's matrix.
False.
Diversification is the riskiest; product development sells new products to existing customers.
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