207-Strategy and implementation Flashcards
What is the relationship between objectives and strategy?
Objectives lead into strategy. The business decides what the objectives are and the strategy can be devised in order to meet the objectives.
The setting and achievement of objectives within a large business is a hierarchical structure:
corporate strategy at the top -> strategic direction -> divisional strategy ->functional level strategy
What is meant by corporate strategy?
Concerned with strategic decisions made that effect the entire business. They are made by senior managers and concern the long-term direction of the business.
What is meant by Strategic direction?
The course of action that leads to the achievement of the stated goals of the corporate strategy, aimed at meeting mission and vision strategies.
What is meant by divisional strategies ?
The overall corporate strategy will be communicated to the divisional managers. Their info shapes the plans the divisional managers make.
What is meant by functional strategies?
Functional strategies relate to a single functional operation such as: production, marketing or HRM and the activities involved within each of these functions. Decisions made at this level are guided by the higher level corporate and divisional strategies and will support those strategies.
What are strategic decisions (strategy) ?
Strategy is the way a business operates in order to achieve its medium/long-term aims and objectives
What are meant by tactical decisions ?
medium term decisions made by middle managers. They follow on from strategic decisions and aims and objectives stated in the strategic plan. they are also adaptable
What is a corporate plan ?
a statement of organisational goals to be achieved in the medium to long term. Its based on management assessments of market opportunities, the economic situation and the resources and technologies available to the business. It will make clear measurable objectives and formulate strategies for achieving these objectives. The corporate plan will include methods for monitoring the achievement of objectives and the tactical decisions made to achieve these objectives.
What is SWOT analysis used for?
to identify and analyse the internal strengths and weaknesses of an organisation, as well as the external opportunities and threats created by the external environments.
SWOT - strengths may include :
- Effective distribution networks
- Strong brand identity
- High staff motivation
- Thought of as a price leader
- Good industrial relations
- High levels of productivity
- USP
- Market share
- Efficient production methods
SWOT - weaknesses may include:
- Limited product range
- Poor investment record in technology
- High levels of staff turnover
- Failing to achieve industry benchmarks
- Bad debt or cash-flow problems
- Customer dissatisfaction
*Low working capital
SWOT - opportunities may include:
- Changes in technology and competitive structure of markets
- Changes in government policy related to the business’s field
- Changes in social patterns, population profiles, lifestyle changes, fashion etc.
SWOT - Threats may include:
- Economic recession
- Changing consumer incomes or tastes
- New product launches by competitors
- Environmental legislation
- New or increased taxes
- New technologies being used by competitors
What is meant my porters five forces?
Fives forces that exist in every industry that either have a positive or negative impact on profitability. When collective strength of five forces is
favourable, a business will be able to earn above average
rates of return on capital. Where the collective strength of
the five forces is unfavourable, a business will be locked
into low or wildly fluctuating returns. i.e. pff determine the profitability of an industry
What are the Five forces in Porters five forces?
1)Buyer Power - ability of customers in an industry to determine the price they pay
2)Supplier power - how influential suppliers are in the price they charge for their supply
3)Threat of substitutes - a product that performs the same function as the one in the industry
4)Barriers to entry - factors that can make an industry easy/hard for a new business to enter
5)Competitive rivalry - degree of competition in the market
What is the purpose of Ansoffs matrix?
It outlines the options open to businesses if they wish to grow, with a view to increase profitability and revenue.
What are the options for Ansoffs matrix?
1)Existing market and product (lowest risk)
2)Existing market and new product (medium risk)
3)New market, existing product (medium risk)
4)New market, new product (highest risk)
Drawbacks of Ansoffs matrix
(-)doesnt take into account competitors actions
(-)Lack of CBA
(-)Difficult to predict future
What is eat by organic growth?
when a business il use its existing resources without involving any other business. Its the expansion of the business by selling more of its products
What s the most common method of organic growth?
Opening up more factories to increase capacity or retail outlets to sell more products
Benefits and drawbacks of using organic growth (rather than inorganic)?
(+)No culture clash compared with mergers or takeovers
(+)Cheaper especially in the short term
(+)Generally less risky
(-)Can be a slow process
(-)Requires strong expertise from the managers to drive this growth
(-)Can sometimes mean the business remains too small to compete with its competitors
What is meant by vertical and horizontal integration?
When a business seek to grow in-organically. This involves the business either merging or taking over a business
Explain the three types of integration
1)Backwards vertical: previous stages production
2)Horizontal: same line/same stag of production
3)Forward vertical: next stage of production
