3.1 Flashcards
Definition of an Aim
What the business is looking to achieve long term, expressed as an overall vision
Definition of a Mission Statement
An expression of a businesses overall aim as well as its core value and context
What is the purpose of a Mission Statement
To provide direction and a common purpose for employees
Definition of a Corporate Objective
The specific performance goals for the business to achieve, set by upper management
Definition of a Functional Objective
The day to day goals of departments derived from corporate objectives
What must objectives be
Specific
Measurable
Achievable
Realistic
Time-bound
What is Ansoff’s Matrix used for
Used to identify an appropriate corporate strategy and identify the level of risk associated
Existing Market, Existing Product
Market Penetration
Existing Market, New Product
Product Development
New Market, Existing Product
Market Development
New Market, New Product
Diversification
3 Ways to use Market Penetration
-More regular use of the product
-Increased usage of the product
-Brand loyalty
3 ways to use Market Development
-Entering new markets abroad
-Repositioning to different customers
-Seeking complementary locations
3 ways to use Product Development
-Develop new versions of product
-Redesign packaging
-Relaunch heritage products
How to use Diversification
Target new customers with entirely new or redesigned products
What is Porters Generic Strategic Matrix
Identifies a range of strategies a business might adopt for a source of competitive advantage or scope of market
What is a concern with Porters
If stuck in the middle, then business is unable to compete successfully with rivals
Mass Market, Cost
Cost Leadership
Mass Market, Differentiation
Differentiation
Niche Market, Cost
Cost Focus
Niche Market, Differentiation
Differentiation Focus
Definition of Portfolio Analysis
Carrying out a detailed evaluation of its full range of products to identify an appropriate strategy
Features of Star
-Positive cash flow
-Needs minimal resources
-Focus on building recognition
Features of a Question Mark
-Often negative cash flow
-Needs investment
-Focus on increasing market share
Features of a Cow
-Positive cash flow
-Needs minimal resources
-Focus on maintaining market share
Features of a Dog
-Negative cash flow
-Would need heavy investment
-Focus would be to divest
What is Reputation
-A business will gain a competitive advantage through excellent reputation for quality
-A differentiation strategy is likely
What is Innovation
-A Business may be particularly effective at responding to external change
-A Market Development strategy is likely
What is Architecture
-A businesses relationships with its main stakeholders
-Low cost or Product Development strategy is likely
Effect of Strategic and Tactical Decisions on Human Resources
-Staff may face redundancies or relocation
-More training may be needed
Effect of Strategic and Tactical Decisions on Physical Resources
-More capital investment is needed
-Changes to production processes
Effect of Strategic and Tactical Decisions on Financial Resources
-More finance may need to be sourced
-Marketing budgets will need to increase
How should SWOT be used
-Strengths = Harnessed
-Weaknesses = Eliminated
-Opportunities = Seized
-Threats = Mitigated
What is a Strength
-What the business is good at
-Internal resources
What is Weaknesses
-What the business does poorly
-Lack of Competitive Advantage
What is an Opportunity
-Option a business may exploit for further success
-Favourable economic factors
What is a Threat
Hazards that have the potential to damage business performance
What is Political
The extent to which local and national government is expected to influence the business
4 Examples of Political
-Trade restrictions
-Political ideology
-Government stability
-Tax regulations
What is Economic
The extent wo which economic indicators directly impact business performance
4 Examples of Economic
-Inflation
-Exchange rates
-Unemployment
-Business cycle
What is Social
The extent to which personal attitudes, values, culture and demographic change are expected to affect business
4 Examples of Social
-Education
-Ethics
-Health
-Social Mobility
What is Technological
The extent to which technological change and innovation are expected to impact business
4 Examples of Technological
-R+D
-Quality
-Online Presence
-Production and Distribution
What is Legal
The extent to which changes in law and regulations are expected to impact the business
4 Examples of Legal
-Taxation
-Employment
-Health and Safety
-Advertising
What is Environmental
The extent to which changes in attitudes and governmental policy towards environmental protection
4 Examples of Environmental
-Air
-Energy
-Disposal of materials
-Changing infrastructure
5 Changes in Market Structure
-Growth of Internet
-Changes in consumer tastes
-Changes in regulatory framework
-Businesses enter/leave market
-Globalisation
What is Porters 5 Forces
Key pressures that impact the ability of a business to compete with rivals
Name Porters 5 Forces
-Threat of New Entry
-Threat of Substitution
-Supplier power
-Buyer power
-Industry Rivalry
