3.1 business objectives and strategy Flashcards
corporate aims
generalised statement of where a business is heading
mission statement
- allows a business to differentiate from competitors, defines what it would like its brand image to be represented by e.g. high quality of customer service focused
Influences on mission statements
- purpose and values
- standards and culture
pros and cons of mission statement
+ motivates staff
+ differentiates
- must maintain
- businesses change
corporate strategy
deals with issues such as what market and sectors the business wants to operate in - for the best long term profits
functional strategy
- how to identify and achieve objectives
P5F threat of new entrants
- existing firms strengthen barriers to entry due to their existing brand image
- barriers to entry low - the threat of new entrants high
name the barriers to entry for new firms
- investment costs
- lack of economies of scale
- harder to differentiate
- lack of supplier networks
what makes suppliers powerful?
- few suppliers
- they provide scarce materials
- threaten to integrate vertically
what determines customer power?
- number of customers
- volume of sales per customer
- cost of switching
factors affecting threat of substitutes
- customer loyalty
- prices
- differentiation
intense rivalry leads to…
- price wars (good for consumers)
- innovation (desire for differentiation)
- intense promotion
Boston matrix - portfolio analysis
market share and growth
describe all 4 areas of BM in portfolio analysis
STARS - high growth AND share
CASH COWS - high share, low growth
? MARKS - low share, high growth
DOGS - low share + growth
cons of Boston matrix
- market growth doesn’t mean the market is necessarily attractive
- has no predictive value
porter’s differentiation strategy
added value, added cost, higher price. must be sustained - long term successful survival
what is ansoffs matrix used for?
shows product and market growth strategy
focused low cost
- in mass markets, the lowest-cost producers will enjoy economies of scale
AN MTX market penetration
- existing products, existing markets
- increase market share and loyalty
- drive out competitors
AN MTX market development
- existing products, new markets
- new countries or distributions
AN MTX product development
- new products, existing markets
- research and development needed
AN MTX diversification
- new products, new markets
- higher risk no experience
- marketing needed heavily
what does SWOT stand for?
Strengths internally
Weaknesses internally
Opportunities externally
Threats externally
what does swot analysis aim to discover?
- what the business does better than competitors
- what competitors do better
- whether they’re utilising potential
- how a business should respond to changes in the external environment
what are some external factors that could be included in threats or opportunities?
- demography
- new laws and regulations
- technological factors
- economic factors
what is benchmarking
- comparing your own performance with rivals to identify and learn from best practice
Pestle - political
- competition policy
- gov spending + tax
pestle - economic
- interest and exchange rates
- consumer spending
- GDP
pestle - social
- demography
- consumer tastes and trends
- changing lifestyles
pestle - technology
- mobile technology
- new production processes - economies of scale
pestle - legal
- employment law e.g. minimum wage or H+S
- environmental legislation
pestle - environmental
- sustainability
- ethical sourcing
- emission control
