Corporate Strategies

Pioneering Strategy

• Being first to market with a new innovation.
• Generally more risky, but greater potential for market share and brand loyalty.
• Often requires a lot of investment in research and development.

• For example Apple's iPhone.

• Risk of failure is high.
• Costly, therefore the company needs to be financial secure.
• Potential for large gains.
• Requires a strong research and development (R&D) capability.
• Product champions who push new ideas are important.
• Market research is vital.

• The risk of failure is considerably high because this product or service has never entered the market, thus making it is impossible to determine that the product will be a success or failure since the product/service’s lack of experience in the market.
• Although pioneering is risky and costly, the profits that can be earned from this strategy balances out the risk factor.

Imitative Strategy

• Developing products that are similar to an existing new product.
• Less risky than the pioneering strategy but also generally less popular.
• Less research and development costs.

• An example of an imitative strategy would be the many other mobile phones that came out soon after the iPhone, which used similar components and layouts.

• It takes advantage of R&D invested by others.
• Less risky.
• Based on a strong development capability.

• The designer must consider the ethical implications of imitating the products of others and their implications on a cultural, economic, and intellectual property level.

Ansoff Matrix

• The Ansoff Matrix is a diagram that is used to categorize the strategies of different products.
• There are four different categories that a product can be in, which are market development, market penetration, product development and product diversification.

Market Development

• Finding new applications for existing products, thereby opening up new markets.
• E.g. try to sell an existing product to a new group of consumers.

• This growth strategy is more risky than market penetration because of the fact the business is focusing on a new market which it may or may not be successful in.

Market Penetration

• Increasing sales to existing customers or finding new customers for an existing product.
• E.g successful selling of a product or service in a specific market. It is measured by the amount of sales volume of an existing good or service compared to the total target market for that product or service.

• The market penetration strategy emphasizes that organizations should focus on the markets and products they are familiar with.
• This is usually of lesser risk because the organization has an idea of the information in the market, its competitors etc.

Product Diversification

• Increasing sales from new products targeting new markets or market segments.
• E.g. new products to increase sales by reaching out to other market (segments), such as the development of the iPad, iPhone and the iPod.

• This strategy is the most risky from the four because the business is moving into a market in which it has minimum experience.
• This strategy is usually adopted by large organizations looking to expand their product portfolio and profitability through dispersing their risk in different markets.

Product Development

• The creation of new, modified or updated products aimed mainly at a company’s existing customers.
• E.g. product development to keep up to date with the demand of existing customers. Such as releasing new, improved, generations, such as the 2018 generation over the 2017 generation iPhone’s.

• This strategy requires the organisation to develop new competencies and modify products to entice people in the market.
• This type of strategy is particularly important in markets with a lot of competition because it provides the organization with a competitive advantage with the constant introduction of new products to existing customers.

Hybrid Approach

• Some companies use a mix of corporate strategies for their products.

• There are many benefits for a company using a hybrid strategy. Companies use a mixture of the corporate strategies in order to:

maximize profit and sales

reduces R&D spending

reduces the risk of employing only a pioneering strategy.

Corporate Social Responsibility

• A form of self-regulation for a company that centres on the development of goals related to three areas:

1. economic (profit)
2. social (people)
3. environmental (planet)

• Related to “Triple Bottom Line” and ‘Sustainability report’.
• Corporate social responsibility can be a particular goal of a company.
• The aim is to manage the economic, social and environmental impacts of their operation to maximize the benefits and minimize the disadvantages.