3.1 business objectives and strategy Flashcards
corporate objective-
- outline what a business wants to achieve
- quantify the mission statement of a business and set measurable targets
mission statement-
- sets out what a business wants to achieve
what are the focuses of corporate objectives?
- innovation
- sustainability
- shareholder value
- social responsibility
- profitability
- market standing
what is short termism?
- the pressure of achieving short term gains over long term success
what is Ansofs Matrix?
- a strategic tool that businesses can use to help choose the market they wish to operate in
what are the 4 sections of Ansofs Matrix?
- market penetration (TL)
- product development (TR)
- market development (BL)
- diversification (BR)
what is the impact of external influences?
- PESTLE analysis
what is PESTLE?
P- political E- environmental S- social T- technological L- legal E- economic
what does Porters five forces do?
- provides a framework for analysing the competitive environment
what are Porters five forces?
- bargaining power of suppliers
- barriers to entry
- threat of substitutes
- bargaining power of buyers
- intensity of rivalry
what is a product porfolio?
- categorise a companies products with specific characteristics in order to make strategic decisions about them
what is on the X and Y axis on the product portfolio?
Y= market growth rate X= relative market share
what are the 4 categories in the product portfolio?
- star
- question mark
- cash cow
- Dog
what is the star in the product portfolio?
- high market share
- high market growth
- possibly a leading brand in the market
what is the question mark in the product portfolio?
- low market share
- high market growth
- fast growing market, not yet established
- requires lots of investment
what is the cash cow in the product portfolio?
- high market share
- low market growth
- successful products in mature markets, generate high revenue, little promotion needed
what is the dog in the product portfolio?
- low market share
- low market growth
- invest to revitalise or discontinue product
what is Porters corporate strategy?
- a business should follow one of 3 positioning strategies in order to compete
what are the 3 position strategies according to Porter?
- segmentation (narrow market scope)
- differentiation (broad, uniqueness)
- cost leadership (broad, low cost)
what is competitive advantage?
- where a business creates unique value for its customers that is greater than that offered by competitors
what is strategy?
- a long term plan or approach that a business will take to achieve its objective
what is tactics?
the day to day decisions taken by middle managers
what is the objective hierarchy?
top to bottom
- aims
- mission statement
- corporate objectives
- functional objectives
what is SWOT analysis?
- a strategic planning tool that a business can use to analyse its current position and the external factors that might affect it
what is shown in SWOT analysis?
internal: -strengths -weaknesses
external: opportunities - threats
benefits of SWOT analysis?
- assists strategic thinking in a structural way
- low cost, simple
- can be combined with other models
limitations of SWOT analysis?
- subjective
- doesn’t offer clear solutions
- depends on perspective
