3.1 business objectives and strategy Flashcards
What is the aim?
Often expressed as an overall vision and describes the businesses reason for being
What is the hierarchy of objectives ?
Aim
Mission Statement
Corporate objectives
Functional Objectives
What is a mission statement ?
An expression of a business’s overall aim as well as its core values and context
What is a corporate objective ?
The specific performance goals set by senior management for the business to achieve over time
What is a functional objective ?
The day to day goals of functions or departments within the business, derived from corporate objectives
What are the smart objectives ?
S - specific
M - measurable
A - achievable
R - realistic
T - time
What is a stakeholder ?
individuals or groups that are affected by the actions of a business
What is ansoffs matrix ?
A tool for businesses with growth objectives by identifying a corporate strategy and the level of risk
What is inside ansoffs matrix ?
Market penetration - existing market existing product
Market development - new market existing product
Product development - existing market new market
Diversification - new product new market
What is porters generic strategic matrix
identifies a range of strategies a business might adopt considering
Its source of competitive advantage (cost or differentiation)
The scope of the market in which it operates (mass or niche)
What is the components in porters generic strategy ?
Cost leadership - mass & cost
Differentiation - mass and differentiation
Cost focus - niche
Cost differentiation - niche
What is the Boston matrix ?
The Boston Matrix is 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
What is the star ?
High growth
High market share
What is the question mark ?
Products with high growth and low market share
What are cash cows ?
Products with low growth and high market share
What are dogs ?
Products with low growth and low market share
What is a distinctive capability ?
When a business has a particular strength that is very difficult for competitors to copy
What are some examples of distinctive capabilities ?
Operational skills and expertise
Relationships and networks
Reputation and image
Innovation
What are strategic decisions ?
medium to long term planning to achieve corporate and functional objectives
What are some strategic decisions ?
Enter a new overseas market
Withdraw an obsolete product from the sale
Merge with a competitor
What are tactical decisions ?
made to support the overall strategy and are usually short-term
Tactical decision-making will also have an impact on a business’s human, financial and production resources
What is swot analysis ?
Identify strengths, weaknesses, opportunities, threats
What some strengths of a business?
Skilled staff
Possession of assests
Effective leadership
What are some weaknesses?
Ways in which businesses lag behind competitors
Capital limitations
Lack of competitive advantage
Lack of usp
What are some opportunities ?
Developing markets
Social or technological developments
Economic indicators becoming more favourable
What are some threats?
New or emerging competitors gaining a market share
Changing legal or political environment
Negative press coverage
What is pestle analysis and what does it stand for with examples ?
The external factors that impact the activities and outcomes of a business
Political - tax, trade
Economic - inflation, exchange rates
Social - education, ethics, health
Technological - r&d, quality, production
Legal - taxation, employment
Environmental - energy available, disposal of materials, air quality
How has the market changed ?
- Growth of internet
- Businesses leave and enter the market integration
- Changes in regulatory framework
- Globalisation
- Changes in consumer tastes & preferences
What are porters 5 forces - definition ?
Key pressures on an industry that impact the ability of a business to compete with rivals
What are the components in porters 5 forces and what do they mean ?
Threat of new entry - new competitors enter depending on barriers to entry
Buyer power - dependent on how many customers a business has
Supplier Power - significant power if there is a small no. of suppliers
Threat of substitution - customers can swap business products for those of a rival
Industry rivalry - when there are many competitors selling similar products
