3.1 business objectives and strategy

Question 1

corporate objective-

Answer 1

• outline what a business wants to achieve

- quantify the mission statement of a business and set measurable targets

Question 2

mission statement-

Answer 2

• sets out what a business wants to achieve

Question 3

what are the focuses of corporate objectives?

Answer 3

• innovation
• sustainability
• shareholder value
• social responsibility
• profitability
• market standing

Question 4

what is short termism?

Answer 4

• the pressure of achieving short term gains over long term success

Question 5

what is Ansofs Matrix?

Answer 5

• a strategic tool that businesses can use to help choose the market they wish to operate in

Question 6

what are the 4 sections of Ansofs Matrix?

Answer 6

• market penetration (TL)
• product development (TR)
• market development (BL)
• diversification (BR)

Question 7

what is the impact of external influences?

Answer 7

• PESTLE analysis

Question 8

what is PESTLE?

Answer 8

P- political 
E- environmental 
S- social 
T- technological 
L- legal
E- economic

Question 9

what does Porters five forces do?

Answer 9

• provides a framework for analysing the competitive environment

Question 10

what are Porters five forces?

Answer 10

• bargaining power of suppliers
• barriers to entry
• threat of substitutes
• bargaining power of buyers
• intensity of rivalry

Question 11

what is a product porfolio?

Answer 11

• categorise a companies products with specific characteristics in order to make strategic decisions about them

Question 12

what is on the X and Y axis on the product portfolio?

Answer 12

Y= market growth rate 
X= relative market share

Question 13

what are the 4 categories in the product portfolio?

Answer 13

• star
• question mark
• cash cow
• Dog

Question 14

what is the star in the product portfolio?

Answer 14

• high market share
• high market growth
• possibly a leading brand in the market

Question 15

what is the question mark in the product portfolio?

Answer 15

• low market share
• high market growth
• fast growing market, not yet established
• requires lots of investment

Question 16

what is the cash cow in the product portfolio?

Answer 16

• high market share
• low market growth
• successful products in mature markets, generate high revenue, little promotion needed

Question 17

what is the dog in the product portfolio?

Answer 17

• low market share
• low market growth
• invest to revitalise or discontinue product

Question 18

what is Porters corporate strategy?

Answer 18

• a business should follow one of 3 positioning strategies in order to compete

Question 19

what are the 3 position strategies according to Porter?

Answer 19

• segmentation (narrow market scope)
• differentiation (broad, uniqueness)
• cost leadership (broad, low cost)

Question 20

what is competitive advantage?

Answer 20

• where a business creates unique value for its customers that is greater than that offered by competitors

Question 21

what is strategy?

Answer 21

• a long term plan or approach that a business will take to achieve its objective

Question 22

what is tactics?

Answer 22

the day to day decisions taken by middle managers

Question 23

what is the objective hierarchy?

top to bottom

Answer 23

• aims
• mission statement
• corporate objectives
• functional objectives

Question 24

what is SWOT analysis?

Answer 24

• a strategic planning tool that a business can use to analyse its current position and the external factors that might affect it

Question 25

what is shown in SWOT analysis?

Answer 25

internal: -strengths -weaknesses
external: opportunities - threats

Question 26

benefits of SWOT analysis?

Answer 26

• assists strategic thinking in a structural way
• low cost, simple
• can be combined with other models

Question 27

limitations of SWOT analysis?

Answer 27

• subjective
• doesn’t offer clear solutions
• depends on perspective