9.1 Corporate Strategies

The success of a company relies heavily on the strategies it adopts. The evaluation of products, services and systems can inform the selection of the most appropriate strategies to follow that will enable a company to achieve its objectives.

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


 The success of a company relies heavily on the corporate strategy it adopts. There are many different corporate strategies a company can consider. 

Pioneering Strategy

Pioneering means being ahead of the competitors by introducing a new product or innovation into the market first.

Apple Newton and 1st Generation iPhone
Apple Newton and 1st Generation iPhone
  • Pioneering, a corporate strategy, is the process of introducing new areas of thought or development in the design process.
  • Motorola introduced the 1st mobile phone in 1973 and commercially in 1983.
  • It is the most risky (costly) strategy but one with the potential for the largest gains.
  • A pioneering company requires a strong research and development (R&D) capability, which is expensive.
  • A pioneering company needs to be financially secure and requires product champions to push new ideas.
  • Consider the Sony or Apple companies and their various pioneering developments.
  • Good market research can offset some risk, but is problematic for novel products.
  • To be successful while using this type of corporate strategy, the firm must learn more about the consumer market by extensive market research.
  • This is recommended because the pioneering strategy is very risky due to the fact the firm is introducing a totally new, unknown, and unexpected product or service to the market.
  • Although pioneering is risky and costly, the profits that can be earned from this strategy balances with the risks
    • 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. 

Apple: In an interview, the CEO was asked if he was concerned that so many companies produced very similar products after Apple’s releases. His reply was, no, as it shows that we are pioneering and ahead of the rest.

Imitative Strategy

The imitative strategy aims to develop a product similar to the “pioneered” product (an existing new product) as quickly as possible. It takes advantage of R&D invested by others, and is less risky, but is based on a strong development capability.

When the apple iPhone came out within months many of the other smartphone companies adopted similar touch screen technology, apps, and aesthetic principles.

1st Generation iPhone released in 2007
1st Generation iPhone released in 2007
Samsung 1st Generation Smartphone released in 2008
Samsung 1st Generation Smartphone released in 2008

The Success of Pioneering and Innovative Strategies

  • Consider the success of each between the two
    • The Success of Pioneering and Innovative Strategies
    • Examples of companies and products that have used the above strategies – Apple vs Samsung
    • The Apple iPod is an example of a product developed using a pioneering strategy. At the time, there were no similar products on the market. As Apple has continued to develop products such as the iPhone and iPad, many electronics companies have mimicked the aesthetic style and functionality of their products. 
 Hybrid Strategy

There are many benefits for a company using a hybrid strategy. Companies that use a mixture of pioneering,  imitative strategies or any of the below ones listed,  in order to:

  • maximize profit and sales
  • provides for a quick turn around
  • reduces R&D spending
  • reduces the risk of employing only a pioneering strategy.

Activity 9.1a: Describe a product that has been produced that was/is similar to an existing product (other than an Apple product) that was pioneering. Also, consider the relative success of the pioneering strategy.

Activity 9.1b: Describe a product that has been produced that was/is similar to an existing product (other than a Samsung product) that was imitative. Also, consider the relative success of a imitative strategy.

Activity9.1c: Describe a product that has been produced  that are a result of a hybrid approach. Also, consider the relative success of a hybrid approach.


Market and Product Growth Strategies

Knowledgegrab on Ansoff Matrix for product and market growth strategies.

Market Penetration

Increasing sales to existing customers or finding new customers for an existing product.

  • For example, if there are 300 million people in a country and 65 million of those people have cell phones then the market penetration of cell phones would be approximately 22%. This would mean in theory there are still 235 million more potential customers for cell phones, which may be a good sign of growth for cell phone makers. In general, the older the offering or industry, the greater the market penetration.  Web reference

Describe a strategy that a company would use to enhance market penetration.

  •  A strategy a company may consider to enhance market penetration is product promotion.
  • Product promotion engages in propagating information about a product, product line, brand, or company.
  • More examples on market penetration.
Market Development

The video is good in illustrating market penetration although it does focus on the negative affects.

Finding new applications for existing products, thereby opening up new markets

  • Market development targets customers in a market segment who are not buying the companies products, for example Apple iPhone targeting Blackberry customers in the smartphone market segment.
  • Market development targets customers in other market segments such as Apple iPod customers being targeted by the iPhone.

Describe how a company would undertake market development.

  • The identification of new markets for products,
  • For example, nylon was originally developed for parachutes and now have varied uses including clothing, sports etc.

Activity9.1d: Locate a product that was or still is used in one market and that was later used in a different market or product.

Product Development

The creation of new, modified or updated products aimed mainly at a company’s existing customers.

Describe one example of how a company undertakes product development.

  • Consider adding variations to a product to develop a range of products building on an established brand,
  • For example, ice cream, snack food products, chocolate products (Kit Kat, Mars bars).
Variety of flavours from Coca-cola products

Product development, can be approached through many ways:

  • By enhancing the released product, adding new features i.e a camera on a phone, or video playback on an I-pod.
  • By increasing the products range, giving different designs and/or adding more options to certain ones.
  • The company may release many different types, of a certain general product, even if they are very different i.e different soda flavours under the same company name.

Activity9.1e:  Describe a product that has been modified or updated products aimed mainly at a company’s existing customers.

Product Diversification

Increasing sales from new products [and]/or [new] markets 

  • Involves a company both in the development of new products and in selling those products to new companies.
  • High risk strategy.

Describe one example of diversification.

  • a company manufacturing three-pin electrical plugs may consider producing them in a range of colours or from materials of different textures and/or material properties. (need to find a different example)

Activity9.1f: Locate an example of a product that was a result of diversification.


Ansoff Matrix
Ansoff Matrix
Coca-Cola strategies example from marketing agenda
Ansoff Matrix of 4 growth strategies Coca-Cola strategies example from marketingagenda
 
Corporate Social Responsibility

Corporate social responsibility is a form of self-regulation for a company and centres around the development of goals related to three areas: 

      • economic 
      • social
      • environmental

Companies that consider corporate social responsibility as a goal need to assess the impact of their operations in relation to these three areas in order to maximize the benefits and minimize the disadvantages.

Students need to consider the ways in which a company might achieve this and the evidence of effective corporate social responsibility for a major multinational corporation.

  • How corporate social responsibility may be a particular goal of a company whereby the aim is to manage the economic, social and environmental impacts of their operation to maximize the benefits and minimize the disadvantages
  • Examples of evidence of effective corporate social responsibility for a major multinational company

International Mindedness

Adoption of corporate social responsibility by multinational companies can be used as a distraction from their core business practices.

Theory of Knowledge

Is strategic planning more influenced by reason, intuition or imagination? Or by a combination of all of the ways of knowing?


Something Extra …

https://www.youtube.com/user/storyofstuffproject

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