3.1 Business objectives & Strategy

Question 1

Define Mission statement

Answer 1

An expression of a business’s overall aim as well as its core values and context

Question 2

SMART objectives

Answer 2

Specific
Measurable
Agreed
Realistic
Time-bound

Question 3

What is the Ansoff Matrix

Answer 3

Ansoff’s Matrix is a tool for businesses with a growth objective

It is used to identify an appropriate corporate strategy and identify the level of risk associated with the chosen strategy

The model considers four elements, which are broken down into two categories

The market - existing and new markets

The product - existing and new products

Question 4

What is the least riskiest strategy in the Ansoff Matrix?

Answer 4

Market penetration

Question 5

Define Market penetration

Answer 5

This involves selling more products to existing customers by encouraging

1. More regular use of the product
2. Increased usage of the product
3. Brand loyalty of customers

Question 6

Define Market development (Ansoff Matrix)

Answer 6

Market development involves finding and exploiting new market opportunities for existing products by

1. Entering new markets abroad
2. Repositioning the product by selling to different customer profiles (selling to other businesses as well as directly to consumers)
3. Seeking complementary locations

Question 7

Define Product development (Ansoff Matrix)

Answer 7

Product Development involves selling new or improved products to existing customers by

1. Developing new versions or upgrades of existing successful products
2. Redesigning packaging and aesthetic features
3. Relaunching heritage products at commercially convenient intervals

Question 8

Define Diversification (Ansoff Matrix)

Answer 8

Diversification is the most risky growth strategy as it involves targeting new customers with entirely new or redeveloped products

Examples of diversification include

• Tesco launching a range of financial products, including current accounts and credit cards
• Greggs launching a range of themed clothing products

Question 9

What is Porter’s Generic Strategic Matrix?

Answer 9

Porter’s Generic Strategic Matrix identifies a range of strategies a business might adopt considering

Its source of competitive advantage (cost or differentiation)

The scope of the market in which it operates (mass or niche)

Question 10

Define Portfolio analysis

Answer 10

Portfolio analysis involves a business carrying out a detailed evaluation of its full range of products in order that appropriate strategies may be identified and pursued

Question 11

What is the Boston Matrix?

Answer 11

The Boston Matrix is a portfolio analysis tool that considers the relative market share of a firm’s products and the rate of growth within the market in which each product is sold

Question 12

Define Stars (Boston Matrix)

Answer 12

Stars are products sold in high-growth markets and have a high level of market share

Question 13

Define Cash Cows (Boston Matrix)

Answer 13

Cash Cows are sold in lower-growth markets and have a high market share

Question 14

Define Question Marks (Boston Matrix)

Answer 14

Question Marks are sold in high-growth markets and have a relatively low market share

Question 15

Define Dogs

Answer 15

Dogs are sold in low-growth markets and have a relatively low market share

Question 16

Examples of Distinctive Capabilities

Answer 16

1. Operational skills and expertise within the business
2. Relationships and networks established within and around the business
3. Reputation and image of the business
4. Innovation and the ability to change

Question 17

Define Strategic decision-making

Answer 17

Strategic decision-making involves medium- to long-term planning to achieve corporate and functional objectives

Question 18

Define Tactical decisions

Answer 18

Tactical decisions are made to support the overall strategy and are usually short-term

Question 19

What is a SWOT analysis?

Answer 19

SWOT analysis is an analytical tool used by businesses to identify

Internal strengths and weaknesses

External opportunities and threats

Question 20

What does SWOT stand for?

Answer 20

1. Strengths
2. Weaknesses
3. Opportunities
4. Threats

Question 21

Define PESTLE analysis

Answer 21

PESTLE analysis examines the external factors that are likely to impact the activities and outcomes of a business

Question 22

PESTLE is an acronym for:

Answer 22

Political

Economic

Social

Technological

Legal

Environmental

Question 23

Describe Political (PESTLE)

Answer 23

The extent to which local and national government is expected to influence the business including
Government stability and relationships with key trading partners

Tax regulations

Trade restrictions

Question 24

Define Economic (PESTLE)

Answer 24

The extent to which economic indicators are expected to directly impact business performance including

Inflation

Exchange rates

Cost of living

The stage of the Business Cycle and GDP growth

Unemployment levels

Question 25

Define Social (PESTLE)

Answer 25

The extent to which personal attitudes and values, culture and demographic change are expected to affect the business including Social mobility Education Ethics & Religion Migration Health profile

Question 26

Define Technological

Answer 26

The extent to which technological change and innovation are expected to impact the business including Research & development Production and distribution processes and efficiency

Question 27

Define Legal (PESTLE)

Answer 27

The extent to which changes in law and regulations are expected to impact the business including Taxation Employment Advertising

Question 28

Define Environmental (PESTLE)

Answer 28

The extent to which changes in attitudes and government policy towards environmental protection as well as the impact of global warming expected to impact the business including Changing infrastructure - for example in favour of green transportation networks Energy availability & cost Disposal of materials

Question 29

Changes in Market Structure

Answer 29

1. Businesses leave & enter the market integration 2. Changes in the regulatory framework 3. Globalisation 4. Changes in consumer tastes & preferences 5. Growth of the internet

Question 30

Define Porter's 5 Forces

Answer 30

Porter’s Five Forces identify the key pressures on an industry that impact the ability of a business to compete with rivals

Question 31

What are Porter's 5 Forces?

Answer 31

1. Industry Rivalry 2. Threat of new entrants 3. Buying power 4. Supplier power 5. Threat if substitution

Question 32

Define Internal economies of scale

Answer 32

Internal economies of scale occur as a result of the growth in the scale of production within the business

Question 33

Define External economies of scale

Answer 33

External economies of scale occur when there is an increase in the size of the industry in which the firm operates

Question 34

Types of EoS

Answer 34

1. Financial 2. Managerial 3. Purchasing 4. Marketing 5. Risk-bearing

Question 35

Problems arising from growth

Answer 35

1. Diseconomies of scale 2. Internal communication 3. Overtrading

Question 36

Define Overtrading

Answer 36

Occurs when a company takes on more business than it can handle, leading to a strain on its resources or an inability to meet its financial obligations (lack of liquidity)