207-Strategy and implementation

Question 1

What is the relationship between objectives and strategy?

Answer 1

Objectives lead into strategy. The business decides what the objectives are and the strategy can be devised in order to meet the objectives.

Question 2

The setting and achievement of objectives within a large business is a hierarchical structure:

Answer 2

corporate strategy at the top -> strategic direction -> divisional strategy ->functional level strategy

Question 3

What is meant by corporate strategy?

Answer 3

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.

Question 4

What is meant by Strategic direction?

Answer 4

The course of action that leads to the achievement of the stated goals of the corporate strategy, aimed at meeting mission and vision strategies.

Question 5

What is meant by divisional strategies ?

Answer 5

The overall corporate strategy will be communicated to the divisional managers. Their info shapes the plans the divisional managers make.

Question 6

What is meant by functional strategies?

Answer 6

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.

Question 7

What are strategic decisions (strategy) ?

Answer 7

Strategy is the way a business operates in order to achieve its medium/long-term aims and objectives

Question 8

What are meant by tactical decisions ?

Answer 8

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

Question 9

What is a corporate plan ?

Answer 9

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.

Question 10

What is SWOT analysis used for?

Answer 10

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.

Question 11

SWOT - strengths may include :

Answer 11

• 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

Question 12

SWOT - weaknesses may include:

Answer 12

• 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

Question 13

SWOT - opportunities may include:

Answer 13

• 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.

Question 14

SWOT - Threats may include:

Answer 14

• Economic recession
• Changing consumer incomes or tastes
• New product launches by competitors
• Environmental legislation
• New or increased taxes
• New technologies being used by competitors

Question 15

What is meant my porters five forces?

Answer 15

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

Question 16

What are the Five forces in Porters five forces?

Answer 16

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

Question 17

What is the purpose of Ansoffs matrix?

Answer 17

It outlines the options open to businesses if they wish to grow, with a view to increase profitability and revenue.

Question 18

What are the options for Ansoffs matrix?

Answer 18

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)

Question 19

Drawbacks of Ansoffs matrix

Answer 19

(-)doesnt take into account competitors actions
(-)Lack of CBA
(-)Difficult to predict future

Question 20

What is eat by organic growth?

Answer 20

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

Question 21

What s the most common method of organic growth?

Answer 21

Opening up more factories to increase capacity or retail outlets to sell more products

Question 22

Benefits and drawbacks of using organic growth (rather than inorganic)?

Answer 22

(+)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

Question 23

What is meant by vertical and horizontal integration?

Answer 23

When a business seek to grow in-organically. This involves the business either merging or taking over a business

Question 24

Explain the three types of integration

Answer 24

1)Backwards vertical: previous stages production
2)Horizontal: same line/same stag of production
3)Forward vertical: next stage of production

Question 25

4 benefits and 2 drawbacks of horizontal integration

Answer 25

(+)Share knowledge and expertise
(+)Reduces competitive rivalry
(+)Fast and easy access to resources such as land, premises and equipment
(+)Less likelihood of failure when entering new market
(-)Cost of purchase and time consuming
(-)Culture clash/change resistance

Question 26

2 benefits of backward vertical integration

Answer 26

(+)Control over quality and delivery of raw materials and/or stock
(+)The profit margin of supplier is removed

Question 27

2 Benefits of forwards vertical integration

Answer 27

(+)The manufacturer has guaranteed outlets to sell their products
(+)manufacturer has more control over price and advertisement of the product (which can affect the brand reputation)

Question 28

2 Limitations of vertical integration

Answer 28

(-)Increased costs of operation such ass staff, spice provision and additional marketing
(-)Lack of experience

Question 29

Define franchising

Answer 29

The legal right to use the brand name, products and business style of an existing business.

Question 30

Franchisor vs franchisee

Answer 30

Franchisor is the one selling the brand name and franchisee is the buyer

Question 31

Franchising advantages for franchisee

Answer 31

(+)Don’t need a new idea and it’s already established
(+)Some offer training
(+)Larger ones will often have national advertising campaigns and a solid trading name

Question 32

Franchising advantages for Franchisor

Answer 32

(+)Fast-growth and the franchisee fiancés the growth
(+)Economies of scale bulk buying
(+)Increased income from franchisee

Question 33

Problems with franchising

Answer 33

(-)Loss of control (Franchisor)
(-)Not all profit returns to Franchisor or franchisee
(-)Potential loss of reputation
(-)Growth may occur too quickly - possible diseconomies of scale

Question 34

What is meant by rationalisation?

Answer 34

the reorganisation of a business in order to increase its efficiency. Often leads to a reduction in business size, a change of policy or an alteration of strategy relating to particular products

Question 35

Factors that affect decisions about location/relocation and rationalisation

Answer 35

Regional:
-access to markets
-cost and nature of factors of production
-social reasons

National:
-maximising economies of scale
-access to international markets
-tax advantages

Question 36

What is meant by outsourcing?

Answer 36

The transfer of activities, which were previously conducted in house, to a third party or outside business

Question 37

Advantages of outsourcing

Answer 37

(+)able to react to changes of demand quicker if they have access to other firms production plants
(+)Let’s a business focus on its core business
(+)May be experts/specialised ->efficiency
(+)Non-standard orders can be completed with no distruption

Question 38

Disadvantages of outsourcing

Answer 38

-Potential poor customer service
-demotivating for existing employees
-Difficult to implement JIT systems