3.1 - Business Objectives & Strategy Flashcards
Corporate
A body of people working together.
Critical appraisal
Process of assessing the outcomes of research to judge its trustworthiness and value.
Mission Statement
Sets out the purpose of a business.
- Values of the business
- The scope of the business (Areas it operates)
- Long-term aims
Corporate Objectives
Determines the mission of a business
- Includes setting measurable targets for the whole organisation.
Functional Objective
Departmental objective which helps the business achieve its mission.
Hierarchy of Business Objectives
- Mission Statement
- Corporate Objectives
- Departmental/Functional Objectives
Corporate Strategy
Unique plan or framework that is long-term in nature, designed to gain a competitive advantage over other market participants while delivering both on client and stakeholder promises.
Benefits & Drawbacks of a mission statement
Pros:
- Focus
- Profit (Motivating employees, efficiency)
- Identity (of the business)
Cons:
- Can be unrealistic
- Can be a waste of time & resources
- Ambiguous
SWOT Analysis
Strengths, weaknesses, opportunities and threats.
Method of identifying internal strengths and weaknesses of a business.
What is Ansof’s matrix?
Marketing tool that looks at different markets and products to determine which has the greatest risk & value.
- Cost leadership (Company that projects its self as the cheapest in the market) - Existing product & Service
- Differentiation (Unique product or USP) - New Product & Service
- Product Development (Developiing your current product/service) - New Product & Existing market
- Market Development (Entering new markets) - Existing Product & New market
Benefits of Porters Strategic matrix
- Establishes a clear direction for the business
Describe the Boston Matrix
Star
- High Market share & High Growth market
Cash Cow
- High Market share & Low growth market
Question Marks
- Low Market share & High growth market
Dogs
- Low market share & Low growth market
(Kay’s distinctive Capabilities)
3 factors that can lead to a sustainable competitive advantage.
- Architecture (Relationships within a business that create understanding between suppliers, customers & employees)
- Reputation (Brand values are hard to replicate & may take years to develop)
- Innovation (Process of developing unique products & processes which can sometimes be patented.
What does PESTLE stand for? And what is it?
Political, Economic, Social, Technological, Legal & Environmental.
They are external factors
What are Porters 5 forces & what is the purpose?
To help businesses make strategic decisions by understanding the competitive dynamics of an industry. (Are new products/services going to be proftable?)
- New Entrants
- Customers
- Substitutes
- Suppliers
- Rivalry
Merger
A legal deal to bring 2 businesses together under 1 board of directors
Takeover (acquisition)
A larger business purchasing a smaller one
Hostile takeover
Takeover that is unwanted by board of directors
Explain:
- Primary Sector
- Secondary sector
- Tertiary Sector
Primary = Businesses involved in removing products from the planet (digging, fishing etc)
Secondary = Businesses involved in manufacturing raw materials (clothes, cars etc)
Tertiary = Businesses involved in selling goods to consumers
What is horizontal integration?
Businesses operating in the same sector merge or takeover another business in the same sector.
What is vertical integration?
When one business takes over / merges with a business in another sector.
What are the risks of a merger/takeover
What are the benefits of a merger/takeover
Risks
- Different corporate objectives
- duplicate staff
Benefits
- Increased revenue
- Economies of scale
Reactive vs Proactive
Reactive = act in response to something
Proactive = acting in anticipation of future problems / situations
