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business (paper 2) > 207 stratergy and implementation > Flashcards

207 stratergy and implementation Flashcards

1
Q

relationship between objectives and strategy

A

objectives leads to stratergy- busines decides what its objectives are and the strategy can be made to meet these objectives

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2
Q

what are the 4 stratergies

A
  • corperate stratergy
  • stategic stratergy
  • divisional stratergy
  • functional stratergy
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3
Q

what is the corporate starergy

A

-Refers to strategic decisions that impact the entire organization.
-Made by senior managers.
-Decisions on how to achieve a business’s vision/mission/aims/objectives

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4
Q

describe startegic direction

A
  • sets out in broad how objectives will be achieved
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5
Q

describe divisional stratergy

A
  • the overall corperate stratergy will be communicared to divisonal managers
  • this infomation shapes the plans the divisional managers create
  • comany orginises different departmenst to focus on diffrernt products
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6
Q

describe functional stratergy

A
  • relates to a single functional operation such as; production , marketing the actitives involved within these functions
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7
Q

explain the relationship between strategy and tactics

A
  • tactics- meduim term decsions made by middle maagers- aim to implement strategic decisions
  • tactics are adaptable- adjust to changing market decisions eg. advertising campaign
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8
Q

explain the purpose of corporate plans

A

-Based on management assessment of market opportunities, resources, and technology.
-Establish clear and measurable objectives.
-Include methods for monitoring progress and tactical decisions to achieve goals.

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9
Q

what is SWOT analysis

A

used to idenity and anysise the internal streoghs and weakneses of an orginisation and external oppotunities and threats created by the external environment

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10
Q

SWOT anysis examples

A

-strenths- brand reputation, USP, efficient production methods, high market share
-weakness- demotivated workforce, customer disatiscation, low working capital, lack of innovation
-oppotunites- favourable econmic condictions eg.low interest rates, social changes, high retained profit/working capital, new markets that are increasing in size
-threats-unfavourable ecomic conditions eg.high interest rate, new competitors/growth of existing competitors

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11
Q

what is poters 5 forces

A
  • barriers to entry
  • supplier power
  • buyer power
  • competitive rivalrly
  • threat of substitution
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12
Q

what is the ansoff matrix

A

-A strategic tool used by a business to achieve growth
-Suggests the level of risk associated with each strategy
-Considers weather to target existing customers or new customers and if existing products should be used or new products should be developed .

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13
Q

desribe market penetraton

A
  • focuses on exisiting products in existing markets
  • aim to incease sales within its exising market eg. Mc Donalds selling a Big Mac
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14
Q

describe product development

A
  • indroducing new products targeted at the exising market ( customers)
  • prodcuts similar to those that the business already has eg. apple selling an apple watch
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15
Q

describe market development

A
  • introducing existing products into new markets.
  • Involves targeting new geographic areas or customer segments.
  • Requires identifying market needs and adapting marketing strategies, e.g., Apple opening stores in India or Macciess veggie burger
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16
Q

decstibe diversification

A
  • business ventures away from their core product and introduces a new product in a new industry for a new target audence eg.black and white maccies burger in China
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17
Q

usefulness of ansoff matrix to a business

A
  • easy to undertand
  • help businss make informed decisions
  • minimises investment risk
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18
Q

drawbacks of using ansoff matrix to a business

A
  • does not take into account competitors actions-> could be the first in market development- competitve advanatge/ first mover advantage
  • difficult to predict futire
  • lack of cost benifit analysis
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19
Q

what is organic growth

A

-uses existing resources to grow and will not involve any other business
- achived by; selling more products, expanding product range, targeting new markets, benifiting from econoies of scale

20
Q

(+) of organic growth

A
  • less risky -funded by retained profit
  • less threat of loosing brand identiry
  • less loss of controll
  • employees know of the brand already
  • cheaper than inorganic growth especially in the short term
  • no culture clashes
21
Q

(-) of organic growth

A
  • lack of shared expertise
  • disatisfaction from shareholders if they belive they are loosing out on the return on their investment
  • business may be to small to compete with competitors
22
Q

what is inorganic (external) growth

A
  • achieved by takeovers (acquisitions) or mergers as a form of growth
  • It is a quicker method of growth than organic growth
23
Q

what are takeovers (external)

A
  • when one business aquires another
  • takes place when 50% shares are sold

-> Public companies: More vulnerable to takeovers (shares are traded on stock markets).
Private companies: Less vulnerable (shareholders must agree to sell)

24
Q

what are mergers

A
  • the process by which two companies become one
  • agreed upon mutual concent
25
Q

what is intergergration

A

refers to when a business seeks to grow inorganically (externally)
this involves the business either merging or taking over a business

26
Q

what are the types of intergration

A

-backwards->previous stage of production eg. aldi-dairy farm
- horizontal-> same stage in the same industry eg. aldi- asda
-forwards-> the next stage of prodcution eg.aldi- deliveroo

27
Q

benifts of horizonal intergration

A
  • less liklihood of failure when entering new markets- if businss has an established business in the market they want to enter- benifit from established brand awarness and dcustomer loyality- reduces competition
    -business can share knowlege and expertise- two busisnes have strenth in different areas- greater quaility products/ customer satisfaction- increased revnue/ market share
28
Q

limitations of horizontal intergration

A
  • culture clashes- employees at pervious comany may struggle to adapt as they have different ethods/ efficiency- slowing down production
    -cost of puchase- mergers less likely to have much cost- taking over a competitor is time cinsuing/expenisve-ecpecially if one PLC is buying another PLC- leads to less capital available tooperate new business in short term
29
Q

what is backwards vertical intergation

A

objective is to reduce costs / secure supplies/ more control over the quality of the product and the supply chain

eg. Starbucks buying a coffee farm in China

30
Q

benefits of backwards vertical intergration

A
  • business can dicatate when products/raw materials are delivered - many deliveries a day- JIT system
  • controll quality of raw materials- important for predium brands- differ on quality
  • profit margin of suppler is removed- cheaper variable costs
31
Q

what is forward vertical intergration

A

when a business stars selling its prodcuts directly to customers, instead of relying on other businses to do it
eg. phone manufactoer opening stores to sell them directly

32
Q

benifits of forward vetical intergration

A
  • manufactor has guanteed oulets to sell their products- firms do not have to negotiate with retailors to stock their products- retailors requst large discounts/ could choose ot stop selling the product
  • manufactorer has conrol of the price and advertisement of the product- eg. if its sold at prenium price or promotional offors attached- affecting brand image of a product
33
Q

limitations of vertical intergration

A
  • increased cost of operation such as staff, services and additional marketing
  • lack of experince- taking over a comany comes with the risk of having a lack of understanding in how to recruit, market amd operate the business in the diferent stages in the supply chain
34
Q

what is francising

A

is the legal right to use the brand name, products and business style of exising businses
franchisor - business who sells their brand
name to others
franchisee- business who has bought the
franchise

35
Q

advantages from the franchisor’s (the person selling the franchise) point of view

A

-fast growth with lower risk- franchisee finances the growth

  • economies of scale can happen quickly- franchisor now is involved in bulk buying for the franchises
  • extra commitment from the franchises – committed to the success of the business -likely to be hardworking, helping to give a greater chance of successful growth- they had to pay for the franchise.
36
Q

limitations from the franchisor’s (the person selling the franchise) point

A
  • dieconomies of scale- growing too quickly may become harder for the franchisor to oversee management of quality across large amount tof franchises
  • depends on the qulity of the frranchisee- weak undepreformincan affect the brand reputation for the whole business
37
Q

benefits for the franchisee of buying into a franchise rather than starting their own business from scratch

A
  • lower risk of failure than setting up a new business due to exising brand reuptation and supply chain network or exising business
  • acsess to experice/ support from head office/ senior management of the franchisor
38
Q

diadvanatges for the franchisee of buying into a franchise rather than starting their own business from scratch

A
  • depends on the level of autonomy to make decisions such as branding, pricing and product portfolio made by the franchisor
  • ongoing payments to franchisor- royalty fee
39
Q

what is rationlisation

A

is the reorginisation of a business in order to increase its efficiency

40
Q

methods of rationlising + limitations

A

-redundacies-> long term- reduces capacity utilisation , short-term: cost of trainig exisiting staff, challenge of re-orginising the remaing staff, expensive
-reduce product portfolio(remove dogs)-> loose some customer base
-introtuction of tech-> could lead to further job losses (band reputation), cost to impliment/train
-close branches-> loss of accesibilityto rtaget makret- reduces market share
-sale of assets and leaseback)-> reduces business size-increase monthly outgoings
-offsore to cheaper production country*-> less control of production/quality, distribution cost increased

41
Q

importance of rationlisation

A
  • can be neccesary to reduce/ avoid liquidity problems as the business may be experiencing a cash flow problem
  • can maintain shareholders confifence as their dividnets are being protected
  • reduced costs - reduced prices for customers
  • greater efficiency if pursued with lean production techniques
42
Q

limitations of rationlisation

A
  • demotivates staff as job security is reduced-> therefore it depends on the motivation/ productivity of remaining staff
  • negive PR can negitivelly impact brand reputation-> *depends on how well it is communicatd
  • legal issues if redudnacies are not made by negotiation with trade unions-> depends negotiations made wiith trade unions*
43
Q

factors effecting location

A

-increased market growth/acsess to new markets-> business with sufficient acsess to capital will seek to expand into fast growing market as they want stars rather than dogs in their portfolio, through using market development

-*acsess to factors of prodcution(land/labour)-> busisnes close to production- cheaper -reduce transportation costs, minimize delays, and have easier access to raw materials and skilled labour

-brand related/historic reasons-> reinforce brand identity, attract loyal customers. historic locations builds trust and brand recognition, while prestigious areas strengthen premium brands

44
Q

what is outsourcing

A

is the busines practice of hiring a third party outside a comany to preform services or create goods that used to be preformed by the comany’s own employees and staff

45
Q

(+) of outsorcing

A
  • businses are able to react to changes in demand more quickly if they have access to a number of other firms’ production plants.
  • lets the business focus on its core business
  • Non standard orders can be completed with no disruption
    •- allows the business to increase capacity utilisation.
46
Q

(-) of outsourcing

A

-breakdown in communication in the production chain- cultural differences-> poor customer service
• employee demotivation: Job insecurity from outsourcing can lower morale, increase turnover, and reduce productivity.
• quality cannot be guranteed- production in the hands of producers miles away
•more difficult to impliment JIT systems

47
Q

factors influencing weather a business outsources

A
  • available capacity
  • expertisie
  • nature of demand
  • cost
  • level of risk
  • impact on profit

business (paper 2) (10 decks)

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