3.1 Flashcards
What is a mission statement?
Reason for existence
- overriding goal, the reason for a businesses existence and it’s vision for the future
Who is the mission statement for?
- Investor: reassure them about investing in a good company
- Customer
Features of a good mission statement
- clear sense of business purpose
- excites, inspires, motivates and guides
- easy to understand and remember
- differentiates business from competitors
Issues with mission statements
- not always supported by actions of the business
- often too vague and general
- often merely statements of the obvious
- are they just PR?
- to be effective, everyone in the business has to “buy it”
What are objectives?
Statements of specific outcomes that are to be achieved
What are corporate objectives?
Those that relate to a business as a whole
- more precise and detailed statements of aims/ goals
Main purposes of corporate objectives
- provide strategic focus
- measure performance as a whole
- inform decision- making
Features of a good corporate aim
Specific Measurable Achievable Realistic Time stamped
Functional objectives?
How each department supports the corporate aim
Examples of functional objectives
Marketing: advertise
R&D: develop new products
Customer service: improve
What is an aim?
A generalised statement of where a business is heading, from which objectives can be set
What is short-termism?
Business priorities short term rather than long term performance
Short-termism features
- low investment in R&D
- high dividend payments rather than reinvesting profits
- overuse of takeovers rather than internal growth
What is the Ansoff Matrix?
Marketing planning model that helps businesses determine its product and market strategy
4 sections of Ansoff’s matrix
- market penetration
- market development
- product development
- diversification
Ansoffs matrix: Market penetration
Growth strategy where a business aims to sell existing products into existing markets
- aim: increase market share
- get existing customers to buy more
- Woden range of existing products
Evaluation of market penetration
+ business focuses on markets and products it knows well
+ can exploit insights on what customers want
+ unlikely to need significant new market research
Ansoffs matrix: Product development
Growth strategy where a business aims to introduce new products into existing markets
- driven by investment in new product development
- requires consistent, long term investment in R&D
- technological innovation provides significant opportunities for product development strategies
Evaluating product development
+ strong emphasis on effective market research and successful innovation
+ great way of exploring the existing customer base who may respond positively to new products
Ansoffs matrix: market development
Involves a business seeking to sell its existing products into new markets
- new geographical markets
- new distribution channels
- different pricing polices
Evaluation of market development
+ logical strategy where existing markets are saturated or in decline
- often railed than product development- particularly expansion into international markets
- existing products may not suite new markets
Ansoffs matrix: diversification
Growth strategy where a business markets new products in new markets
- innovation and R&D
- acquire an existing business in market
- extend an existing brand into the new market
Evaluation of product development
- inherently risked strategy
- no direct experience of the product or market
- few EOS
- overall risk is spread if successful
What is a competitive advantage?
An advantage over competitors gained by offering consumers greater value, either by lower prices or greater benefits and service that justifies higher prices
