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Choosing an area of Competition
Market penetration - increasing sales of existing products to existing markets
e.g. McDonalds happy meal → targeting an existing market with existing products
Market development - targeting existing products at new markets to increase sales
e.g. Nike selling existing products to international markets
Product development - targeting new products in an existing market to increase sales
e.g. KFC introducing a new range of pizzas - new product, existing market (fast food)
Diversification - targeting new products at new markets to increase sales
- Can provide large rewards (e.g. first mover advantage)
- Can spread risk as it gives alternatives if one product declines
- May be limited expertise of the new market / new product → increased risk
Influences on strategic direction:
- The level of risk that is accepted can influence overall choice of direction
- Opportunity costs (the cost of not doing something)
- Business culture - culture & leadership must support chosen strategic decision
Geographic diversification can bring about more political / economic risk
Choosing how to Compete
Price competition → match pricing / undercutting prices of another business
Choosing an area of Competition
Market penetration - increasing sales of existing products to existing markets
e.g. McDonalds happy meal → targeting an existing market with existing products
Market development - targeting existing products at new markets to increase sales
e.g. Nike selling existing products to international markets
Product development - targeting new products in an existing market to increase sales
e.g. KFC introducing a new range of pizzas - new product, existing market (fast food)
Diversification - targeting new products at new markets to increase sales
- Can provide large rewards (e.g. first mover advantage)
- Can spread risk as it gives alternatives if one product declines
- May be limited expertise of the new market / new product → increased risk
Influences on strategic direction:
- The level of risk that is accepted can influence overall choice of direction
- Opportunity costs (the cost of not doing something)
- Business culture - culture & leadership must support chosen strategic decision
Geographic diversification can bring about more political / economic risk
Choosing how to Compete
Price competition → match pricing / undercutting prices of another business
