3.1

Question 1

What’s a mission statement

Answer 1

A mission statement is a qualitative statement of an organisations aims

Question 2

What is the hierarchy of business objectives

Answer 2

Mission statement and general aims

Corporate objectives

Department objectives

Question 3

What is the uses of a mission statement

Answer 3

Focus; helps to focus and involve all employees in the business

B. Profitability; helps to motivate employees to become more efficient which could have an impact on profitability

C. Identity; helps to create an identity in a competitive marketplace

Question 4

What are the limitations of a mission statement

Answer 4

Can be unrealistic and over optimistic

B. Can be a waste of management time and resources

C. Can lead to conflicts and inconsistencies when not properly written

D. Can be ambiguous

E. Can become obsolete as the business develops but the mission statement remains the same (perhaps due to a merger or change of product, iPod to iPhone for example)

Question 5

What is an owners perspective on a mission statement

Answer 5

Owners will want to maximise shareholder value of the business

Question 6

What is a managers perspective of a mission statement

Answer 6

Manager will look for core aims and objectives of the business to lead their staff / teams with

Question 7

What are employees perspective of a mission statement

Answer 7

Employees will look for motivational statements that make them feel proud to work for that company

Question 8

What are pressure groups leg unions perspective of mission statements

Answer 8

Pressure groups will look for a clear environmental or ethical message in the mission statement

Question 9

What are customers perspectives of a mission statement

Answer 9

Customers will look to see core business principals that are ethical

Question 10

What’s corporate timescales

Answer 10

This refers to strategy and the expectations of when a return will be achieved

Question 11

What’s short-termism

Answer 11

a business that focuses on short-term returns on investment e.g. a start-up business’s first year’s profits

Question 12

What’s long-termism

Answer 12

ability of a business to invest in projects over a long term e.g. a cure for cancer

Question 13

What’s evidence based decision making

Answer 13

based on valid and reliable data e.g. we should give Shivani the job because she has smashed her last 4 targets

Question 14

What subjective decision making

Answer 14

based on personal feelings and opinions e.g. we should give Tom the job I like him

Question 15

What is short- termism

Answer 15

Short-termism is choosing a course of action which is best in the short term, but may be critical in the long-term

short-term attitude by a business is a focus on short-term returns on investments

Question 16

What is the limitations of short - termism

Answer 16

they should be looking to invest in research projects that will give the business the competitive advantage

• Short-termism makes businesses fail to innovate and stagnate (Kodak and Blockbuster)

Question 17

What is long - termism

Answer 17

This is a whole business approach

Considers ethical behaviour of the business in decision making

• Research and development have long term goals

• Staff development is seen a long term objective of the business, to retain and develop staff

• Long-term technology investments secure data for the future

Question 18

What does SWOT stand for

Answer 18

Strengths - internal

Weaknesses - internal

Opportunities - external

Threats - external

Question 19

How can SWOT analysis be used

Answer 19

strategy of growth and attack to use the business’s strength to maximise opportunities in the market

can be used as a tool to compete and defend, using the strengths to minimise the market threats

improve and attack new markets or produce new products

identify when to change and retreat

Question 20

What does corporate strategy mean

Answer 20

The overall scope and direction of a business and the way in which it’s various business operations work together to achieve particular goals

Question 21

What is Ansoff matrix

Answer 21

A tool used by businesses for analysis includes 4 factors
Market penetration (low risk)

Product or service development (moderate risk)

Market development (moderate risk)

Diversification (high risk)

Existing product, new product
Existing market, new market

Question 22

Uses of Ansoff matrix

Answer 22

identify all their current products or services and their markets,

then consider their future options for expansion using the matrix shown, considering opportunities, associated costs, benefits and risks

Ansoff’s matrix helps to identify potential new markets or marketing strategies for a business

Question 23

Limitations of Ansoff Matrix

Answer 23

It only shows part of the picture
• It oversimplifies the market
• Large MNCs may need thousands of sub options and strategies

• Any organisation using Ansoff’s matrix as an analysis tool to help decide on a company strategy should also conduct a SWOT and a PESTLE analysis to get a better idea of the whole picture, to see the issues from more than one angle

Question 24

What’s Porters Strategic matrix

Answer 24

Porter suggested that there were 3 generic business strategies that would get competitive advantage. These were:

• Cost leadership; making products at the lowest cost, may include outsourcing, lean management, standard no frills low cost products

• Differentiation; the product or service is unique and the USP adds value to the product

• Focus; the product or service will serve a very small specific niche, high costs are passed on to customers, no close substitutes (Divided into cost focus and differentiation focus)

Lower cost, differentiation
Broad target, narrow target

Question 25

Uses of porters strategic matrix

Answer 25

Those in support of Porter’s Strategic matrix (generic strategies) say that it establishes a clear direction for the business to go in

• Identifies when a business may be in trouble e.g. Woolworths and BHS both got “stuck in the middle”

Question 26

Limitations of porters strategic matrix

Answer 26

Not as relevant in very dynamic markets

• May not be useful in a crisis situation

• Over simplifies the market structure

• Can be possible for a store or business to offer a range of products to a range of customers and not get stuck in the middle e.g. Debenhams

Question 27

What does PESTLE stand for

Answer 27

Political, economic, social, technological, legal, environment

Question 28

Economic factors that effect a business

Answer 28

An increase in interest rates
• An increase in inflation
• Unemployment rates
• Recession
• The business cycle

Question 29

Impacts of politics on a business

Answer 29

A change in government, BBC article here
• Government laws; minimum wage
• Brexit and new trading blocs post-Brexit
• Tax rates (e.g. increase in VAT here)
• Tariffs (when importing into the UK)