(3.1) Business Objectives & Strategy

Question 1

Mission Statement

Answer 1

A brief statement describing a businesses main purpose and objective

Question 2

What is Corporate Objectives?

Answer 2

Objectives of a medium/ large business and should be created from the mission statement

Question 3

What are Functional objectives?

Answer 3

Each department will set their own objectives which should be created from the corporate objective

Question 4

What should ‘SMART’ objectives be? I.e. what do they stand for

Answer 4

Smart objectives should be Specific, Measurable, Achievable, Realistic and Time-Related

Question 5

What is Ansoff’s Matrix?

Answer 5

A tool used to help assess the level of risk associated with a new strategy or product for a business

Question 6

What is Ansoff’s 4 strategies?

Answer 6

Market penetration, product development, market development, diversification

Question 7

What is Market penetration and the advantages and disadvantages?

Answer 7

Achieving growth in existing markets with existing products

+Safest strategy
+

Question 8

What is product development and the advantages and disadvantages?

Answer 8

Marketing new or modified products in existing markets

+keeps customers interested
+

Question 9

What is market development and the advantages and disadvantages?

Answer 9

Marketing existing products in new markets

+No need for improving the punctuality of the product
+

Question 10

What is diversification and the advantages and disadvantages?

Answer 10

Introducing new products into new markets

+Opportunity for huge growth
+

Question 11

What is Porter’s Strategic Mix and what do they mean?

Answer 11

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

Question 12

What is Kay’s Distinctive Capabilities?

Answer 12

Believed that a business should exploit what their good at

Question 13

What are the three elements of Kay’s Distinctive Capabilities?

Answer 13

Innovation, Reputation, Architecture

Question 14

What does Architecture, Reputation, innovation mean for Kays Distinctive capabilities?

Answer 14

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

Question 15

What is distinctive capabilities?

Answer 15

Features that are unique to a business

Question 16

What is SWOT analysis and what does it stand for?

Answer 16

A tool used to identify a businesses current position and the external factors that may affect it

Strengths, weaknesses, opportunities and threats

Question 17

What is SWOT Analysis used for?

Answer 17

Helps develop corporate strategy, decision making with new products, new marketing strategies, whether or not to outsource specific business tasks

Question 18

What are the advantages and disadvantages of SWOT analysis?

Answer 18

+Helps strategic decision
+Low cost simple method
+Could be combined with other decision making models like PESTLE

• Subjective
• Doesn’t offer clear solutions

Question 19

What is PESTLE Analysis and what does it stand for?

Answer 19

A tool used to look at external factors and their potential impact on the business

Political, economy, social, technology, legal, environment

Question 20

What are Porter’s Five Forces and what is it used for?

Answer 20

-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

Question 21

Rivalry within the market (What makes competition fierce? Key problems? Business options?)

Answer 21

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

Question 22

Bargaining power of suppliers (What makes competition fierce? Key problems? Business options?)

Answer 22

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

Question 23

Bargaining power of buyers (What makes competition fierce? Key problems? Business options?)

Answer 23

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

Question 24

Threats of substitutes (What makes competition fierce? Key problems? Business options?)

Answer 24

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

Question 25

Barriers to entry (What makes competition fierce? Key problems? Business options?)

Answer 25

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

Question 26

What might determine rivalry within a market?

Answer 26

Low barrier to enter, easy substitutes for customers, little diversification of products

Question 27

What is the Aim of Portfolio Analysis?

Answer 27

To categorise a company’s products with specific characteristics in order to make strategic decisions

Question 28

What is the 4 key parts of the Boston’s Matrix and what do they mean?

Answer 28

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

Question 29

What’s the difference between a Strategy and Tactics?

Answer 29

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

Question 30

What is the purpose of a mission statement?

Answer 30

• It forms a commitment to the customers

- Helps bring the the company’s workforce together with a shared purpose

Question 31

What is it meant by an oligopoly and monopoly?

Answer 31

Oligopoly -A market dominated by a few large markets

Monopoly (Uncompetitive) -A market dominated by a single business

Question 32

What is an objective?

Answer 32

• Something that the business intends to achieve

Question 33

What three factors do businesses need to consider when operating in a dynamic/ competitive market?

Answer 33

New entrants - stronger competition
New products - businesses may be forced to innovate and make changes
Consolidation (businesses leaving the market) - some businesses get bigger