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Part 1: Short answer questions

Explain how the Ansoff model can be used to help decide strategic direction. (6 marks)
Ansoff matrix draws out attention to the risks, analyses products and markets and therefore helps a business determine its product and market growth strategy that would suit it best and lead to success.

2 Explain the difference between market penetration and market development.
(4 marks)
In market penetration the business is trying to achieve its objectives, rather than somehow expand and therefore, has the least risks; market development is more risky than market penetration, as the business is now trying to sell their already existing products into new markets.

3 Explain why diversification is considered the riskiest strategic direction.
(3 marks)
Diversification is a strategy, where business introduces new products into new markets. It’s considered the riskiest, because the business is moving into markets where it has very little or no experience at all, which increases all risks.

4 Give two examples of product development for a chocolate manufacturer.
(3 marks)
1. Quality/quantity research into customer needs/changes in tastes, in order to create a product that will appeal to existing market
2. Developing new, modified products, as in that type of market products need to be differentiated in order to remain competitive

5 Give two ways in which Unilever has achieved product differentiation for Persil.
(2 marks)
1. They’ve launched an unusual campaign “dirt is good” advertising their products worldwide. Vivid insights on the brand engage consumers, making them connect/remember what they’ve seen and therefore make that product a bit different from any others.
2. Enhanced brand clarity as well as returning to the brand's “emotional” side makes Persil stand out, as all other brands are too functional and rather boring. They achieved this by refreshing the product’s formula and repackaging.

6 Both British Airways and Ryanair fly to Berlin. How might Porter describe each of these airlines? Where would each be in Bowman's strategic clock?
(6 marks)
Ryanair have built their leadership by being a low cost operator: they are highly efficient, with a low cost advantage. Perhaps, stage 2 or 3 in Bowman’s strategic clock, as besides low pricing they also have slight product differentiation, innovation and added value due to finance gained by economies of scale.
British Airways are more focused on the product differentiation and adding value, rather than low costs- strong customer recognition and desires is caused by the benefits, reliability and availability of the brand. Stage 4, suggesting that they have a good product with an added value in a big market.

Give three reasons why it has been difficult for Apple to continue to maintain its competitive advantage over other smart phone manufacturers.
(3 marks)
1. Currently technology is a very fast growing industry, which is innovating and developing more and more each day, which makes it hard for most of the businesses not to keep up with, but for apple – to be at the top of the market
2. Competition is extremely high in this market, a lot of new designs and innovations are occurring pretty much in all well-known phone manufacturers (Samsung, HTC and etc.)
3. The prices for Apple products have always been fairly high, pointing out the luxuriousness of the product; they can’t lower them, as it might make the brand seem as “cheap”. With each product development the prices increase, which might cause dissatisfied customers

7 Explain the main differences between Porter's strategies and Bowman's strategic clock.
(3 marks)

Porter’s generic strategies helps a company to find competitive advantage over the other competing products and businesses in a market and therefore focuses on costs. Bownam’s strategic clock focuses more on product, rather than the business, thus instead of costs it deal with prices.

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