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business > 3.1 > Flashcards

3.1 Flashcards

1
Q

what is the point of corporate objectives?

A

Aims and objectives serve as a guide for the businesses’ overall strategy and direction, helping to focus efforts and resources toward a common purpose

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2
Q

what is an aim?

A

What the business is looking to achieve in the long term?

Often expressed as an overall vision and describes the businesses reason for being

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3
Q

What is a Mission Statement?

A

An expression of a business’s overall aim as well as its core values and context

Often expressed in inspirational terms to provide direction and a common purpose for employees

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4
Q

what is a corporate objective

A

The specific performance goals set by senior management for the business to achieve over time

Corporate objectives may focus on achieving specified levels of market share , profit, sales growth or new product/market development

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5
Q

what is a functional objective

A

The **day to day goals **of functions or departments within the business

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6
Q

what does the SMART stand for in smart objectives

A

Specific
Measurable
Agreed
Realistic
Time-bound

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7
Q

what is Ansoff’s matrix?

A

Ansoff’s Matrix is a tool for businesses with a** growth objective**

It is used to identify an appropriate corporate strategy and identify the level of risk associated with the chosen strategy

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8
Q

ansoffs matrix

market penetration

A
  • existing products existing market
  • done by encouraging : More regular use of the product
    Increased usage of the product
  • least risky
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9
Q

ansoffs matrix

Market development

A
  • new market same product
  • can be done by : repositioning and seeking complementary locations

pro: know the product -> expertise allows for more effective marketing and sales strategies in the new market.
con: risky ->lose money

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10
Q

ansoffs matrix

Product Development

A
  • new product existing customers

pro: meets changing customer needs -> enhance customer loyalty -> repeat purchase

con: lots of r and d -> expensive -> may not make that money back

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11
Q

ansoffs matrix

diversification

A
  • new product new market

pro: spread risk -> protects business from product and market related downturns -> less dependancy on single revenue stream

con: High Complexity and Cost: -> requires most investment and research (building new distribution channels) -> cash flow problems / covering day to day expenses

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12
Q

what is porters strategic mix

A

Porter’s Generic Strategic Matrix identifies a range of strategies a business might adopt considering price product anf scope

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13
Q

porters strategic mix

cost leadership

A

-** cost** compentitive advantage

pro: By minimizing costs -> company can offer lower prices than competitors -> attracting price-sensitive customers -> potentially increasing market share.
pro: create significant barriers to entry for new competitors-> as they may struggle to match the low costs and prices.

con: emphasis on cost-cutting may limit the company’s ability to invest in innovation and new product development -> potentially leading to stagnation.

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14
Q

differentiation

A
  • differentiation competitive advantage

pro: can foster brand loyalty among customers -> can lead to repeat purchases and positive word-of-mouth -> repeat purchases and less money on marketing

con: can be costly, as it may require investment in research, development, design, marketing, and branding -> This can erode profit margins and increase the risk of financial strain. ->** bad dividends / cant sustain differentiation **

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15
Q

what is portfolio advantage

A

carrying out a detailed evaluation of its full range of products in order that appropriate strategies may be identified and pursued

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16
Q

what is the boston matrix

A

** portfolio analysis tool** that considers the relative market share of a firm’s products and the rate of growth within the market in which each product is sold

pro:helps evaluate their product portfolio by identifying which products generate the most value and which ones may require further investment or divestment.

con:can be subjective and may vary depending on the criteria used for measurement. Different interpretations or biases may lead to inconsistent results and decision-making.

17
Q

what is a distinctive capability?

A

When a business has a particular strength that is very difficult for competitors to copy, it has a distinctive capability

18
Q

The Effects of Strategic Decisions on Resources

Withdraw an obsolete product from the sale

A
  • Fewer workers required as output is likely to be lower -> so redundancies may be needed -> Redundancy payments or retraining of staff may incur significant short-term cost
19
Q

The Effects of Strategic Decisions on Resources

Merge with a competitor

A
  • Where staff roles are duplicated redundancies or redeployment may be required
  • Duplicated capital equipment and property may be sold to create income
  • Techniques and knowledge can be shared between former rivals
20
Q

what is SWOT analysis

A

SWOT Analysis is an analytical tool used by businesses to identify:
- Internal strengths and weaknesses
- External opportunities and threats

21
Q

pros of swot analysis

A
  • Strategic Planning: highlights their strengths and weaknesses -> more informed decision making -> less risk
22
Q

cons of swot analysis

A
  • lack of prioritasion ->spread too thin to make an impact -> no competitive advantage
23
Q

what is PESTLE?

A

PESTLE analysis examines the external factors that are likely to impact the activities and outcomes of a business

24
Q

what does pestle stand for?

A

Political
Economic
Social
Technological
Legal
Environmental

25
Q

pro of PESTLE analysis

A

PESTLE analysis provides a comprehensive overview of external factors affecting a business ->helps businesses gain a holistic understanding of their operating environment -> enabling informed decision-making and strategic planning -> proactive approach allows businesses to adapt to changes in the external environment and capitalize on emerging trends, -> long-term sustainability and competitiveness.

26
Q

con of PESTLE

A

can be overwhelming and time-consuming

Analyzing each factor comprehensively requires significant resources and expertise

may lead to analysis paralysis or superficial assessments, limiting its effectiveness

suboptimal strategies and missed opportunities

27
Q

what are porters 5 forces?

A

Porter’s Five Forces identify the key pressures on an industry that impact the ability of a business to compete with rivals

28
Q

porters 5 forces

Industry Rivalry

A

When there are many competitors selling similar products, the business will have little power
Many rivals are trying to get a more significant share of the market
Customers have a lot of choices and can shop around

When a business offers products in an industry with little or no competition it has more power, can use premium pricing and dominate the market

29
Q

porters 5 forces

Threat of New Entry

A

If new competitors can enter an industry quickly and without investing a lot of money, then the barriers to entry is low and the threat of new entrants is high
The market is likely to contain a large number of rival businesses
Individual businesses are likely to have little power

Where the barriers to entry are too high for new businesses to gain a foothold and compete in the market the threat of new entrants is low

30
Q

porters 5 forces

Buyer Power

A
31
Q

porters 5 forces

Buyer Power

A

When a business sells to a small number of customers those **customers have significant power to negotiate lower prices **

The business has few options when it comes to customers

It will have to price and sell products according to customer demands

32
Q

porters 5 forces

Supplier Power

A

Wher business has lot of choices
It is likely to be able to shop around for lower price

Where supplier has significant power over business as a result of offering a specialised component or where there is a small number of suppliers in the market business has little choice over the source of its suppliers
It is likely to have to pay high prices for its components and accept suppliers’ terms and conditions

33
Q

Threat of Substitution

A

Where** customers can swap** a businesses products for those of a rival the business has little power
The business is likely to have to compete on price or invest heavily in developing a USP

Where substitution is unlikely a business has significant market power
It is likely to be able to charge a high price for its products and may be less inclined to innovate

business (18 decks)

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