STRATEGIC DIRECTION

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STRATEGIC DIRECTION by Mind Map: STRATEGIC DIRECTION

1. 1) MARKET PENETRATION

1.1. Strategies to promote higher sales in an existing product and market.

1.2. The main aim is to boost brand loyalty and market share

1.3. It is done by modifying marketing strategy e.g. increased spending on promotion, new product features, price changes.

1.4. May not be as beneficial for long term success. Especially for a slow growing market.

1.5. It is a useful direction for firms in stable, predictable markets and those that are risk averse (fast moving consumer goods e.g Heinz Baked Beans)

2. STRATEGY= A long term plan of how a business sets out to achieve its aims and objectives.

3. STRATEGIC DIRECTION= The strategic direction a business chooses determines the products it sells and the markets it operates in.

3.1. Most firms operate in dynamic markets with changing internal and external factors. The constant change will require the firm to reassess their strategic direction.

4. ANSOFF'S MATRIX= Analyses a businesses strategic direction, it is a decision making model.

4.1. The matrix sets out different strategic directions the firm may pursue helping them to move forwards.

5. 2) MARKET DEVELOPMENT

5.1. Entering a new market with an existing product.

5.2. May involve targeting a new market segment

5.3. The main aims are to increase the companies sales and profit, increase its scale of operations and spreading its risk across more than one market.

5.4. There are chances of failure when entering a new market. These include misinterpreting consumers tastes, buying habits and behaviors. And also existing rivals may make it difficult for new entrants.

6. 3) PRODUCT DEVELOPMENT

6.1. A firm targeting a market in which it already operates in but with a new product

6.2. The main aim is to keep up with developments in the market, anticipating future trends, adapting to changing consumer tastes and keeping up with technological advancements

6.3. Being associated with an existing established brand may increase chances of success.

6.4. It can be risky as it requires expenditure on research and development, and the money spent may not produce a successful product.

7. 4) DIVERSIFICATION

7.1. Launching a new product in a new market- the most risky strategic direction

7.2. It will help the firm to spread its risk the same with other strategies. Due to it operating in more than one market and by selling more than one product

7.3. It may help to increase sales

7.4. It decreases the chances of a company failing, however there are high risks involved due to the lack of knowledge of both product and market- extensive research is needed.

7.5. It is a GOOD strategy for firms trying to escape a declining market.

8. FACTORS IMPACTING THE CHOICE OF STRATEGIC DIRECTION

8.1. The level of risk involved

8.2. The level of shareholder support- Do they support the new direction?

8.3. The impact on the existing brand image and customer reaction

8.4. The impact on employees. Labour turnover? Loss of skills?

8.5. Cost of perusing the strategy and the firms financial position. How will it be funded?

8.6. The opportunity costs.