3.1 - business objectives and strategy Flashcards
What is a mission statement?
A mission statement tells you about a businesses intentions.
The mission of a business is its overall purpose or main corporate aims. The mission statement is a written description of these aims
What is the purpose of a mission statement?
Mission statements tell you the purpose of the business, and can include information such as its values, its standards, how it will achieve its mission, who the customers are and what makes the business unique.
Mission statements can give clues about the business’s beliefs and ethics.
Why do businesses set objectives?
Businesses set objectives to enable them to achieve their mission.
Objectives turn the corporate aims of a business into specific goals that must be met in the short to medium term.
What is the hierarchy of objectives?
- Mission statement
- Corporate objectives
- Departmental objectives
What are corporate objectives?
Croporate objectives are the goals of the business as a whole .
What are departmental objectives?
Departmental objectives are the objetives of each department.
What should an objective to be effective?
To be effective an objetive should be ‘SMART’:
- Specific
- Measurable
- Agreed
- Realistic
- Timely
What is a strategy?
A strategy is a more long term plan of actions, developed to achieve a businesses objectives.
What are tactics?
Tactics are short-term plans. They’re the techniques that a business will use to achieve its overall strategy.
Tactics can sometimes be used to react to an opportunity or threat, for example after a competitor cuts its prices a businesses tactic might be to cut its own prices.
What are ansoffs 4 corporate strategies?
Ansoff suggeested 4 corporate strategies that a business can use to set its direction for growth and development.
- Market penetration - trying to increase market share in an existing market
- New product development - selling new products in your existing markets
- Market development - selling existing products to new markets
- Diversification - selling new products to new markets
What is the purpose of ansoffs matrix?
Ansoffs matrix is a tool for comparing the level of risk involved with the different growth strategies.
It helps managers to decide on a direction for strategic growth.
On disadvantage of the matrix is that it fials to show that market development and diversification strategies also tend to require significant change to the tactics of the business.
What are Porters 3 generic strategies?
Porter suggested 3 generic strategies to gain an advantage:
- Cost leadership - this is when a business goes for the lowest cost of production for a given level of quality
- Diversification - this strategy requires a product with unique attributes which consumers value so they believe its better than competitiors products.
- Focus - this strategy concentrates on niche markets and either minimising costs or showing differention
What is porters strategic matrix?
Porters strategic matrix shows the strategy a business is best placed to use based on its market scope.
What is kay’s model?
Kay’s model states that a succesful business strategy for a business is one that is built on thje business’s distinctive capability.
A distinctive capability is something that a business is goods at, and something that other business don’t do.
The three distinctive capabilities outlined by kay are:
- Architecture – describes the relationships a business has with its main stakeholders
- Reputation - a busienss can build a reputation by keeping customers satisfied
- Innovation - a business that invests resources into research and development will bring new and innovative products to the market.
What must capabilities be?
Capabilities need to be:
- sustainable
- appropriate
