3.1 - Business objectives and strategy Flashcards
Define a mission statement
A formal summary of a businesses aims, values and their main reason for existence
Define Ansoff’s Matrix and describe its 4 parts
The Ansoff matrix is a strategic planning tool that provides a framework to help businesses devise stratergies for future growth
Market penetration
* Existing product, existing market, (low risk)
* E.g. promotional campaign, price reduction, expanded distribution channels, rebranding
Market Development
- Existing product, new market (medium risk)
- E.g. franchising, geographic or demographic expansion, starting eccomerce
Product Development
* New product, existing market (medium risk)
* E.g. New features, line extension, new flavour drinks
Diversification
* New product, new market (high risk)
* E.g. Tesco offering credit card, Amazon offering video streaming
Explain the critical appraisal of mission statements and corporate aims
Critically appraising mission statement and corporate objectives means to reassess their suitability by considering factors like are they aligned to social trends and do they align with the corporate vision.
Describe Kays Distinctive Capibilities
Kay’s Distinctive Capabilities Framework, developed by economist John Kay, identifies three critical organizational capabilities that can give a company a competitive advantage if leveraged effectively:
* Architecture: Refers to the way the company is organized, with clear corporate objectives, leaderships structure and focused employees.
* Reputation: How customers and potential customers perceive the company, brand identity, differentiation stratergy, added value.
* Innovation: Ability to change, product development stratergy (Ansoff)
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What are Porters 5 Fources?
Porter set out five forces that influence the profotability and nature of competition in a given industry:
* competitive rivalry
* threat of new entrants
* negotiating power of suppliers
* negotiating power of customers
* the ability of customers to find substitutes.
Describe Kay’s distinctive capibilities
Kay’s distinctive capabilities – This is the three distinctive capabilities that help a business to get added value and a competitive advantage.
- Architecture – Relational contacts within or around the organisation with customers, suppliers and employees. This increases co-ordination within and around the business thus allowing the business to respond quickly to changes in the market.
- Reputation – This includes the customers own experience and word of mouth created by businesses providing a good customer service as well as quality products. This creates loyal customers thus giving the business a competitive advantage over existing business and new entrants.
- Innovation – This is when a business creates new goods and inventions. This is makes the business differentiated to its competition. However, it is only likely to last in the short term as similar products are released once other businesses see the invention.
Describe the effect of strategic and tactical decisions on human, physical, and financial resources.
Strategy – This is a long term plan that is proactive and used to try and achieve the businesses overall goal.
Tactics – This is a short term plan that is reactive and is used to help the business keep on track/achieve its strategy.
Human resources – The strategy may be to make a profit. However, if there is a recession then the tactic may be to make redundancies as staff are no longer needed due to the lower demand.
Physical resources – The strategy have a good reputation. However, in order to do this the business may invest in machinery in order to match an increase in demand.
Financial resources – A businesses strategy may be to grow by 20%. However, if interest rates are high then the business may decide to borrow money from selling shares rather than loans.
Diffireniate between business aims and objectives
- Aims are the long-term intentions or purposes of the business.
- Objectives are the specific, measurable, and time-bound targets set to achieve the aims
Define strategic
Relating to the identification of long-term or overall aims and interests and the means of achieving them:
* “strategic planning for the organization is the responsibility of top management”
Designed or planned to serve a particular purpose:
Define Corporate Stratergy
Medium to long term plan a business has to achieve its objectives
