Corporate strategy questions and
answers
Define corporate strategy
A medium/long term plan for meeting corporate objectives
- it will include the implications of this for human, financial and production resources
True or false: a strategic decision can be easily reversed
False: it cannot be easily reversed, it is longer term so takes a lot of planning and investment
of time and money
How are the firms strengths used when creating corporate strategy?
The strengths are related to the opportunities that exist in the market to try to exploit them
Where does creating strategies take place?
At each level of business (not corporate strategies, but other strategies)
From the series of strategies formed (as each level of the business has got a strategy) what
can be created?
A hierarchy of strategies
What would the hierarchy of strategies look like?
1. Corporate strategy
- deals with major issues
- e.g. what industry the business should compete in to achieve objectives
2. Business units/division (e.g. costa coffee, china) strategy
- how will they compete in the industry
3. Functional strategy
- how to achieve targets set by senior managers
Porter suggested four generic strategies that can be followed in order to ......
Gain a competitive advantage
What is a competitive advantage?
an advantage over competitors gained by offering greater value, either by having lower
prices or providing better benefits that justify higher prices
, Porter's generic strategies matrix (draw it)
Which strategies seek competitive advantage in a mass market?
Differentiation leadership and cost leadership
Which strategies seek competitive advantage in a niche market?
Differentiation focus and cost focus
What is the objective for a cost leadership strategy?
To be the lowest-cost producer in the industry
How may a business become the lowest-cost producer in the industry?
Producing on a large scale to achieve economies of scale
When is cost leadership appropriate?
- when selling prices are broadly similar across the market
- products are generic/little differentiation between businesses
- branding is relatively unimportant
What is a mass market?
When product produced on a large scale for a significant number of end consumers
Likely attributes of a cost leader
- high levels of productivity
- high capacity utilisation
- use bargaining power to negotiate lowest prices for raw materials
- lean production methods (e.g. JIT)
- effective use of technology in production process
- access to the most effective distribution channels
What is cost focus?
A low cost product targeting a narrow market (e.g. local discount retailer)
For a cost focus business, how may their product compare to the market leader?
Similar product, but lower-priced
- it is acceptable to enough (sufficient) customers
True or false: for cost focus, they can enjoy the economies of scale to get their low costs?
answers
Define corporate strategy
A medium/long term plan for meeting corporate objectives
- it will include the implications of this for human, financial and production resources
True or false: a strategic decision can be easily reversed
False: it cannot be easily reversed, it is longer term so takes a lot of planning and investment
of time and money
How are the firms strengths used when creating corporate strategy?
The strengths are related to the opportunities that exist in the market to try to exploit them
Where does creating strategies take place?
At each level of business (not corporate strategies, but other strategies)
From the series of strategies formed (as each level of the business has got a strategy) what
can be created?
A hierarchy of strategies
What would the hierarchy of strategies look like?
1. Corporate strategy
- deals with major issues
- e.g. what industry the business should compete in to achieve objectives
2. Business units/division (e.g. costa coffee, china) strategy
- how will they compete in the industry
3. Functional strategy
- how to achieve targets set by senior managers
Porter suggested four generic strategies that can be followed in order to ......
Gain a competitive advantage
What is a competitive advantage?
an advantage over competitors gained by offering greater value, either by having lower
prices or providing better benefits that justify higher prices
, Porter's generic strategies matrix (draw it)
Which strategies seek competitive advantage in a mass market?
Differentiation leadership and cost leadership
Which strategies seek competitive advantage in a niche market?
Differentiation focus and cost focus
What is the objective for a cost leadership strategy?
To be the lowest-cost producer in the industry
How may a business become the lowest-cost producer in the industry?
Producing on a large scale to achieve economies of scale
When is cost leadership appropriate?
- when selling prices are broadly similar across the market
- products are generic/little differentiation between businesses
- branding is relatively unimportant
What is a mass market?
When product produced on a large scale for a significant number of end consumers
Likely attributes of a cost leader
- high levels of productivity
- high capacity utilisation
- use bargaining power to negotiate lowest prices for raw materials
- lean production methods (e.g. JIT)
- effective use of technology in production process
- access to the most effective distribution channels
What is cost focus?
A low cost product targeting a narrow market (e.g. local discount retailer)
For a cost focus business, how may their product compare to the market leader?
Similar product, but lower-priced
- it is acceptable to enough (sufficient) customers
True or false: for cost focus, they can enjoy the economies of scale to get their low costs?
