Business Maturity and Expansion Strategies
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Questions and Answers

Which of the following is NOT a growth strategy defined by the Ansoff Matrix?

  • Diversification
  • Market saturation (correct)
  • Market penetration
  • Product development

    • Horizontal growth focuses on increasing sales opportunities among existing customers.

    False

    What is the primary focus of domestic expansion?

    Operating within the geographical limits of the country.

    An emerging market typically has a growing population with disposable income and an interest in purchasing __________.

    <p>goods or services</p> Signup and view all the answers

    What does GDP stand for?

    <p>Gross Domestic Product</p> Signup and view all the answers

    Match the following types of business expansion with their characteristics:

    <p>Domestic = Growth within the country's geographical limits International = Expansion into a foreign market but not multi-country Multinational = Operations in multiple countries with significant investments Global = Business activities that exceed national borders</p> Signup and view all the answers

    What advantage does the first business to expand into an emerging market typically obtain?

    <p>A large market share and access to untapped resources.</p> Signup and view all the answers

    Vertical growth involves selling existing products and services to new customers in different locations.

    <p>False</p> Signup and view all the answers

    What type of license allows a business to use another business's intellectual property exclusively?

    <p>Sole license</p> Signup and view all the answers

    A strategic alliance typically involves forming a new business.

    <p>False</p> Signup and view all the answers

    What are the three key components of the PPRR model in risk management?

    <p>Prevention, Preparedness, Response, Recovery</p> Signup and view all the answers

    An _____ license allows multiple businesses to utilize the same intellectual property.

    <p>open-source</p> Signup and view all the answers

    Match the licensing terms with their definitions:

    <p>Exclusive license = License involving only one licensee Sole license = License with restrictions on field or geography Non-exclusive license = License allowing multiple licensees Open-source license = License permitting free use of source code</p> Signup and view all the answers

    What is a key benefit of partnering with local international agents and distributors?

    <p>Navigate expansion into new markets</p> Signup and view all the answers

    Overseas manufacturing is aimed at increasing operational costs.

    <p>False</p> Signup and view all the answers

    What is the purpose of contingency planning in risk management?

    <p>To mitigate future events or circumstances impacting the business.</p> Signup and view all the answers

    What does the 'T' in STEEPLE analysis stand for?

    <p>Technological</p> Signup and view all the answers

    Emerging technologies can positively impact business growth and diversification.

    <p>True</p> Signup and view all the answers

    What are the two main activities involved in importing and exporting?

    <p>Manufacturing products/services and obtaining goods/services.</p> Signup and view all the answers

    The ________ market refers to a small segment of the market with unique characteristics that can be strategically developed.

    <p>niche</p> Signup and view all the answers

    Match the modes of market entry with their descriptions:

    <p>Exporting = Shipping goods to other countries for sale Importing = Bringing in goods from other countries for business Contractual agreements = Legal contracts to facilitate international business Market development = Strategies for entering new geographical markets</p> Signup and view all the answers

    Which of the following factors is NOT included in the STEEPLE analysis?

    <p>Geographical</p> Signup and view all the answers

    Innovation in business refers strictly to new product development.

    <p>False</p> Signup and view all the answers

    Name one challenge associated with market entry strategies.

    <p>High costs or need for partnerships/investors.</p> Signup and view all the answers

    Study Notes

    Business Maturity Stage

    • Businesses reach maturity when they achieve saturation in their existing market.
    • Growth strategies in the maturity stage are crucial for long-term viability.
    • The Ansoff Matrix outlines four growth strategies:
      • Market Penetration: Selling more of existing products in existing markets.
      • Product Development: Creating new products for existing markets.
      • Market Development: Selling existing products to new markets.
      • Diversification: Creating new products for new markets.
    • Vertical growth focuses on increasing market share within existing markets by increasing sales opportunities or acquiring related businesses.
    • Horizontal growth involves expanding geographical reach by selling existing products to new customers in new locations.

    Levels of Business Expansion

    • Domestic expansion refers to growth within the geographical limits of the country.
    • International expansion involves business activities that occur beyond the borders of the home country.
    • Multinational businesses operate in multiple countries with a centralized headquarters.
    • Global businesses operate in many countries with decentralized operations and significant international integration.
    • Transnational businesses are like global businesses but with a stronger emphasis on local adaptation and responsiveness to local situations.

    Emerging Markets

    • Emerging markets have growing populations with disposable income and interest in new goods and services.
    • The early mover advantage in emerging markets allows companies to secure significant market share, access new customers, and build their brand.

    Environmental Factors and STEEPLE Analysis

    • Socio-cultural factors include cultural norms, values, beliefs, and lifestyles.
    • Technological factors relate to advancements, innovations, and technological infrastructure.
    • Economic factors involve economic growth, inflation, interest rates, and government policy.
    • Environmental factors concern environmental regulations, resource availability, and sustainability.
    • Political factors encompass government stability, political climate, and regulatory frameworks.
    • Legal factors relate to legal systems, regulations, and compliance requirements.
    • Ethical factors include ethical considerations, social responsibility, and business practices.

    Niche Market

    • A niche market is a small, specialized segment of a larger market with unique characteristics.
    • Companies can strategically develop niche markets or organically grow into them.

    Innovation for Expansion

    • Innovation in products, processes, marketing, or organization can lead to a competitive advantage and market share growth.

    Research and Development (R&D)

    • R&D activities focus on developing new products/services, improving existing ones, or optimizing processes.

    Emerging Technologies

    • Emerging technologies can disrupt industries, drive growth, facilitate expansion, and create niche markets.

    Modes of Entry into New Markets

    • Modes of entry are strategic plans for delivering goods and services to new markets.
    • They can be costly and require partnerships, investments, or loans.

    Formats of Market Entry

    • Importing and Exporting: Exchange of goods and services between countries.
      • Exporting: Selling domestically manufactured goods to international markets.
      • Importing: Obtaining goods from international sources.
    • Licensing: Contractual agreements to use another business's intellectual property.
      • Exclusive License: Commercialization of intellectual property with exclusive rights for specified markets.
      • Sole License: Exclusive license limited to a specific product, field, or geographical area.
      • Non-exclusive License: Grants usage rights to others alongside the licensee.
      • Open-source License: Freely available software source code for developers to use.
    • International Agents and Distributors: Local partners to assist with expansion and navigate local markets.
    • Strategic Alliances and Joint Ventures: Partnerships that combine complementary strengths.
      • Strategic Alliance: Collaboration to access new expertise or technology with limited scope.
      • Joint Venture: Agreement to form a new business entity with shared ownership.
    • Overseas Manufacturing (Outsourcing/Offshoring): Shifting manufacturing operations to another country for cost-effectiveness or access to specific resources.
    • Sales Subsidiaries: A business owned and controlled by a parent company that sells the parent company's products.

    Risk Management

    • Identifying, evaluating, and understanding risks associated with business activities to minimize their impact.
    • The business must consider the probability and consequences of potential risks.

    Contingency Planning

    • Preparing plans of action to address future events or circumstances that can have a significant impact.
    • The PPRR model (Prevention, Preparedness, Response, Recovery) is a framework for contingency planning.

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    Related Documents

    Chapter 2 Domestic and Global Expansion PDF

    Description

    This quiz explores the stages of business maturity, focusing on growth strategies essential for long-term viability. Learn about the Ansoff Matrix and various expansion methods such as domestic and international growth. Test your understanding of market penetration, product development, and other crucial concepts.

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