(3.1) Business Objectives & Strategy Flashcards
Mission Statement
A brief statement describing a businesses main purpose and objective
What is Corporate Objectives?
Objectives of a medium/ large business and should be created from the mission statement
What are Functional objectives?
Each department will set their own objectives which should be created from the corporate objective
What should ‘SMART’ objectives be? I.e. what do they stand for
Smart objectives should be Specific, Measurable, Achievable, Realistic and Time-Related
What is Ansoff’s Matrix?
A tool used to help assess the level of risk associated with a new strategy or product for a business
What is Ansoff’s 4 strategies?
Market penetration, product development, market development, diversification
What is Market penetration and the advantages and disadvantages?
Achieving growth in existing markets with existing products
+Safest strategy
+
What is product development and the advantages and disadvantages?
Marketing new or modified products in existing markets
+keeps customers interested
+
What is market development and the advantages and disadvantages?
Marketing existing products in new markets
+No need for improving the punctuality of the product
+
What is diversification and the advantages and disadvantages?
Introducing new products into new markets
+Opportunity for huge growth
+
What is Porter’s Strategic Mix and what do they mean?
Believed that a business should focus on only three elements to succeed:
Cost leadership - Charging the lowest price
Diversification - Unique, USP
Focus on a niche - small niche
What is Kay’s Distinctive Capabilities?
Believed that a business should exploit what their good at
What are the three elements of Kay’s Distinctive Capabilities?
Innovation, Reputation, Architecture
What does Architecture, Reputation, innovation mean for Kays Distinctive capabilities?
Architecture - Refers to the contacts and relationships within and around the business. Adds value by being more efficient
Innovation - Developing new products and processes, requires heavy research and development can be legally protected
Reputation - Refers to the positive associations a business builds eg quality reliability, service, honesty, prestige
What is distinctive capabilities?
Features that are unique to a business
What is SWOT analysis and what does it stand for?
A tool used to identify a businesses current position and the external factors that may affect it
Strengths, weaknesses, opportunities and threats
What is SWOT Analysis used for?
Helps develop corporate strategy, decision making with new products, new marketing strategies, whether or not to outsource specific business tasks
What are the advantages and disadvantages of SWOT analysis?
+Helps strategic decision
+Low cost simple method
+Could be combined with other decision making models like PESTLE
- Subjective
- Doesn’t offer clear solutions
What is PESTLE Analysis and what does it stand for?
A tool used to look at external factors and their potential impact on the business
Political, economy, social, technology, legal, environment
What are Porter’s Five Forces and what is it used for?
-It’s a tool used to analyse the competitiveness of a business environment.
Rivalry within the market, Bargaining power of suppliers, Bargaining power of buyers, Threats of substitutes, Barriers to entry
Rivalry within the market (What makes competition fierce? Key problems? Business options?)
Competition is Fierce if:
- Easy entry to market
- Easy for customers to switch
- Little differential of products
Key problems:
-Profit margins are squeezed
Options for businesses to consider;
- Reduce costs to help reduce price
- Differentiate
- Takeover/ merge
Bargaining power of suppliers (What makes competition fierce? Key problems? Business options?)
Supplier Power is High if:
- Few suppliers
- Supplier product is essential for production
Key problems
-High production costs and unfavourable terms for the business
Options for Businesses to Consider
- Build strong relationships with suppliers
- Agree long term contracts
- Backwards vertical integration
Bargaining power of buyers (What makes competition fierce? Key problems? Business options?)
Buyer Power is High if:
- There is little difference between products offered by competitors
- Product are price sensitive
- Customers buy in large quantities
- Easy for customers to switch between competitors
Key problems
-Prices are forced to be low…pressure on cash flow
Options for Businesses to Consider:
- Develop a USP
- Lower prices to attracts customers
- Forward integration if buyer is a business
Threats of substitutes (What makes competition fierce? Key problems? Business options?)
Threats of substitues is high if:
- Alternative products exists
- Alternative prices fall
- Customers can easily switch to substitues
Key Problems:
- Buyers have high bargaining power
- Competiton exists outside of the market
Options for Businesses to consider:
- Develop a USP
- Lower prices to attracts customers
- Forward integration if buyer is a business
Barriers to entry (What makes competition fierce? Key problems? Business options?)
Barriers Exist when:
- Capital investment to enter the market is high
- Customers are brand loyalty
Key Problems:
-If few barriers exist it is easy for new competitors to enter the market and increase competitive rivalry
Options for a businesses to Consider:
- Innovation
- Build strong relationship with customers
- Growth to gain EOS
What might determine rivalry within a market?
Low barrier to enter, easy substitutes for customers, little diversification of products
What is the Aim of Portfolio Analysis?
To categorise a company’s products with specific characteristics in order to make strategic decisions
What is the 4 key parts of the Boston’s Matrix and what do they mean?
Stars - High growth products
Question Marks - low growth market shares in high growth markets
Cash Cows - low growth products with high market share
Dogs - products with low market share and market growth
What’s the difference between a Strategy and Tactics?
A strategy is a long term plan that a business will take to achieve its objectives whereas tactics are the day to day decisions taken by middle managers
What is the purpose of a mission statement?
- It forms a commitment to the customers
- Helps bring the the company’s workforce together with a shared purpose
What is it meant by an oligopoly and monopoly?
Oligopoly -A market dominated by a few large markets
Monopoly (Uncompetitive) -A market dominated by a single business
What is an objective?
- Something that the business intends to achieve
What three factors do businesses need to consider when operating in a dynamic/ competitive market?
New entrants - stronger competition
New products - businesses may be forced to innovate and make changes
Consolidation (businesses leaving the market) - some businesses get bigger
