3.1 Flashcards
What is a mission statement
A mission statement is a short way of a business expressing their main intent
-A mission statement sets out the purpose and primary objectives of a business in the present.
-A mission statement should be memorable/Inspiring
Why are mission statements important
-Makes them recognisable
-Can be used as a target
-Defines a business or products/service
What are corporate objectives
-Corporate objectives should flow from the mission statement and corporate vision
-Usually set by senior management for whole company
What is department objectives
-More aimed and specific objectives for the different departments e.g. finance, marketing
Limitations of mission statement
-Can be unrealistic
-Can become distracting as it is not the main goal
-Too general
-Not detailed
What is Ansoff’s Matrix
-Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets.
Key components of Ansoff matrix
-Market penetration
-product development
-Market development
-Diversification
What is market penetration
-Increase sales to the existing market, or penetrate it more deeply - sell more to the same customers – encourage them to order more often – loyalty schemes e.g. Boots Advantage card
What is product development
-New product or service developed for existing market: means R&D of new products to sell to your existing customers e.g. Hair-care giants Schwarzkopf have applied their professional expertise to formulate Palette a collection of 12 permanent home hair colours
what is market development
-Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets.
-Existing product or service sold to new market e.g. Colouring books sold to adults.
What is diversification
-Diversification is the name given to the growth strategy where a business markets new products in new markets.
-This is an inherently more risk strategy because the business is moving into markets in which it has little or no experience.
What is a competitive advantage
-An advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and services that justify higher prices
what is Porters generic strategies
-Explains how a business can gain a competitive advantage by using of of the four options:
-cost leadership
-differentiation Leadership
-cost focus
-Differentiation focus
What is cost leadership
-The aim here is to become the lowest cost producer in the industry. It typically involves:
-Increasing profits by reducing costs, while charging industry-average prices.
-Increasing market share through charging lower prices, while still making a reasonable profit on each sale because you’ve reduced costs.
What is differentiation leadership
-Differentiation involves making your products/services different from (and more attractive) than those of your competitors.
-How you do this depends on your industry and the products and services themselves, but will typically involve features, functionality, durability, support, and also brand image that your customers value.
What is cost focus
-A business takes a lower-cost advantage in one or a small number of market segments
e.g The market could be defined by demographics (Claire’s accessories appeal to young women)
Differentiation focus
-A classic niche market strategy, a company will seek to differentiate within just one or a small number of target market segments
The Boston matrix
-star-high market share/high growth rate
-question mark-Low market/high growth
-cash cow-low growth/high market
-Dog-low market/low growth
What do you do with the star, question mark, cash cow and dog
-Star-Production of this product should remain consistent while profits are harvested
-Question mark-Products should be invested in while their market share builds
-Cash cow-Products should be produced until sales start to decline
-Dog-These products should be removed from sale
