Business 8
Choosing strategic direction
Strategic direction - the long term path a business chooses to follow to achieve its objectives and
fulfil its vision
-> guides decision making
-> aligns the team
-> focuses resources
-> measures progress
Factors that determine strategic direction
. Leadership and management style
. Financial resources
. Organisational culture and values
. Technological capabilities
Ansoff’s Matrix
– Tool for businesses who want to grow quickly and have a growth objective
– Used to identify an appropriate strategic decision and identify the level of risk associated with
the chosen strategy
– Four elements, broken down into two categories: market and product
4
3
2
1
, Market penetration
– least risky to achieve growth
– Involves selling more products to existing customers by encouraging: more regular use,
increased usage, brand loyalty
Market development
– finding and exploiting new market opportunities for existing products by: entering new
markets abroad, repositioning the product by selling to different customer profiles, seeking
complementary locations
Product development
– selling new or improved products to existing customers by: developing new versions or
upgrades, redesigning packaging, relaunching
Diversification
– most risky
– Involves targeting new customers with entirely new or redeveloped products
– Eg Greggs Cafe launching themed clothing products
Strategic positioning - how a business sets itself apart from competitors in the market
Influences on choice of strategic position
– Customer needs and preferences
Choosing strategic direction
Strategic direction - the long term path a business chooses to follow to achieve its objectives and
fulfil its vision
-> guides decision making
-> aligns the team
-> focuses resources
-> measures progress
Factors that determine strategic direction
. Leadership and management style
. Financial resources
. Organisational culture and values
. Technological capabilities
Ansoff’s Matrix
– Tool for businesses who want to grow quickly and have a growth objective
– Used to identify an appropriate strategic decision and identify the level of risk associated with
the chosen strategy
– Four elements, broken down into two categories: market and product
4
3
2
1
, Market penetration
– least risky to achieve growth
– Involves selling more products to existing customers by encouraging: more regular use,
increased usage, brand loyalty
Market development
– finding and exploiting new market opportunities for existing products by: entering new
markets abroad, repositioning the product by selling to different customer profiles, seeking
complementary locations
Product development
– selling new or improved products to existing customers by: developing new versions or
upgrades, redesigning packaging, relaunching
Diversification
– most risky
– Involves targeting new customers with entirely new or redeveloped products
– Eg Greggs Cafe launching themed clothing products
Strategic positioning - how a business sets itself apart from competitors in the market
Influences on choice of strategic position
– Customer needs and preferences
