2 - objectives and strategy Flashcards
whats the hierarchy of objectives?
Aim Corporate Objectives Business Objectives Department Objectives Employee Objectives
Factors effecting the setting of objectives?
size of business trends economy finances competition government personnell stakeholders nature of product
strategy is used to achieve objectives
outline how strategy works?
Objective Internal/External analysis e.g. SWOT and PESTELE (Contingency plans incase things change) Strategies Implement Evaluate and review
a successful strategy will have/be …
- clear purpose
- step by step methods
- contingency plans
- flexibility and dynamic
- user friendly
- communicated
- customer orientated
4 types of strategy:
functional
business
corporate
global
parts to porters ‘five forces analysis’
threat of new entrants
bargaining power of suppliers
bargaining power of buyers
threat of substitutes
middle - intensity of rivalry in the industry
(all leads to rivalry among existing competitors)
how would you evaluate a strategy?
seeing if objectives have been achieved
what is a contingency plan?
worst case scenario plan - procedures in place for these situations
contingency plan by function
HR - labour (zero hour contracts)
Marketing - alternative services
Financial - contingency budgets
Production - backup technology
crisis management
where the situation is so adverse it has huge negative impacts on the business
stakeholder
a person with an interest in the success of a business
internal stakeholders?
employees and owners etc
external stakeholders?
suppliers and community etc
what will the owner want?
- a satisfactory return on their investment
- profits
- good reputation
what will the employees want?
- good and fair wage
- job security
- job satisfaction
what will the suppliers want?
- regular orders
- prompt payment
what will the local community want?
- jobs
- involvement
- respect
what do the customers want?
- good quality
- low prices
- innovation
- customer service
what do the shareholders want?
- good return on their investments
the government are not direct stakeholders.. but why do they have an interest in the business?
they want it to be a success as if more people are employed as a result the business will pay out less social security benefits etc
what is a mission statement?
a mission statement gives a general idea of what the business plans to do and its purpose to write this down is for the benefit of the stakeholders
aims of most businesses include?
survival
breaking even
gain a share of the market
profit
what does setting objectives provide?
a sense of direction
motivational force
greater control over business functions
strategic objectives
long term objectives
tactical objectives
short term objectives (day to day)
what are smart objectives?
specific measurable achievable realistic timed
what do some internal business constraints include?
- lack of finance
- poor communication
- conflict between departments
what do some external business constraints include?
- changes in the law
- state of the economy
- behaviour of competitors
what is SWAT analysis?
strengths, weaknesses - internal audit
opportunities, threats - external audit
whats the point of porters 5 forces model?
a system for analysing the level of competition in an industry. looks at the forces that determine the level of competitive intensity and the attractiveness of the industry
bargaining power of suppliers
suppliers who can force up the price of their products through a strong power to bargain, will cut profits at the firm
bargaining power of consumers
forces prices down and reduce profitability
threat of new entrants
firm enters the market and takes a share of that market and increases the competitive intensity
threat of substitutes
substitute products entering the market increases competition: a business who fails to notice and respond to this will loose market share
degree of competitive intensity
where this is high it is likely that the results will be innovation, prices wars and more promotion - reducing the level of profitability which can be achieved
using the model…
when a business is moving into a new market sector the model can be used to dress the potential issues
however, porters is not always able to obtain all required information about the threats that exist
business plan?
a formal written document which outlines how a business is going to achieve its objectives
what does strategic review enable?
- analysis of SWOT and PEST to be undertaken
- analysis of key performance areas/ indicators to be identified
- identification of good/bad practice in the firm
advantages of business plans?
- gives the business a sense of direction
- forces evaluation of current objectives and strategies
- sets out of role/goal for each department
- encourages communication and cooperation
what questions must a business plan answer? (W)
what are we aiming to achieve? why? what needs to be done? who? when? what resources?
disadvantages of a business plan?
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opportunity cost:
the cost of the next best alternative foregone. the time etc spent on one activity which could have been spent on another
what is the plan,do,review process?
Plan: establish objectives and the course of action as well as resources necessary
Do: implement the plan ensuring that all areas of the business understand their part
Review: there will need to be a formal ongoing evaluation process and then a final review at the end
advantages of plan do review
- approach is methodical forcing a strategic approach
- encourages continuous improvements of the business
- employees more focused so likely to be motivated and efficient
disadvantages of plan do review
- lengthy process so considerable opportunity cost
- cycle can be inflexible
- some employees may not like ongoing review
contingency planning?
Planning for what will happen if things go wrong. Agreed course of action is in place and is ready to be used if necessary
‘firefighting’?
When a manager spends time trying to fix unforeseen problems/emergencies
crisis management?
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uncertainty:
The inability to calculate the costs and benefits of a decision accurately
risk:
The chance/possibility of an adverse occurrence
reward:
The possible return that an activity may make
Unquantifiable risk:
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Quantifiable risk:
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Personal risk:
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Economic risk could be managed by?
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Political risk could be managed by:
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Competitive risk could be managed by:
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Organisational risk could be managed by:
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Stakeholder risk could be managed by:
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Methods of forecasting?
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Qualitative forecasting?
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Methods of qualitative forecasting:
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Quantitive methods of forecasting:
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Limitations of forecasting?
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Decision making tools?
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Ansoffs matrix?
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Market penetration:
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Market development:
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Product development:
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Diversification:
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Conflicts in decision making?
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Decision trees:
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Benefits of decision trees?
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Limitations of decision trees?
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