3.7.1 Mission, corporate objectives, and strategy

Question 1

What is PESTLE Analysis? (not asking for meaning of acronym)

Answer 1

a framework for assessing the key features of the external environment in which a business operate

Question 2

What are the letters in PESTLE?

Answer 2

• Political
• Economic
• Social
• Technological
• Legal
• Environmental and ethical

Question 3

What are the political factors affecting a business?

Answer 3

Competition policy
Industrial regulation
Government spending and tax policies
Business policy and incentives

Question 4

What are the economic factors affecting a business?

Answer 4

Interest rates
Exchange rates
Consumer spending and income
Economic growth (GDP)

Question 5

What are the social factors affecting a business?

Answer 5

Demographic change
Impact of pressure groups
Consumer tastes and fashion
Changing lifestyles

Question 6

What are the technological factors affecting a business?

Answer 6

Disruptive technologies
Adoption of mobile technology
New production processes
Big data

Question 7

What are the legal factors affecting a business?

Answer 7

Employment law
Minimum/living wage
Health and safety laws
Environmental legislation

Question 8

What are the environmental and ethical factors affecting a business?

Answer 8

Sustainability
Tax practices
Ethical saving (supply chain)
Pollution and carbon emissions

Question 9

State what are the internal influences on corporate objectives and questions surrounding it:

Answer 9

• Business ownership – who are the business owners and what do they want to achieve?
• Attitude to profit – is the business run to earn profits or it is not-for profit?
• Ethical stance – do ethics play a role in a business’ decision-making?
• Organisational culture – how is the business structured? How are objectives set and decisions taken?
• Leadership – how strong is the influence of leadership in the business in terms of objectives and how decisions are made?
• Strategic position & resources – what options & choices does the business realistically have based on its existing market position & resources?
• Stakeholder influence – how influential are internal stakeholders?

Question 10

State what are the external influences on corporate objectives and questions surrounding them:

Answer 10

• Short-termism – external investor pressure to focus on and achieve short-term objectives at the expense of long-term strategy?
• Economic environment – perspective on key economic indicators such as economic growth, consumer spending & interest rates?
• Political/legal environment – impact of uncertainty about changes in the political & legal environment?
• Competitors – do competitor actions & strategies shape what a business thinks it can achieve?
• Social & technological change – how rapid is the pace of social & technological change in a business’ markets? Does this make objective-setting & decision-making easier or harder?

Question 11

What are 3 things business strategies are focused on?

Answer 11

• The long-term business plan, based on the business mission
• What needs to be done to achieve corporate objectives
• What resources the business needs and to obtain and use them

Question 12

List factors that affect business strategy

Answer 12

• Mission statements
• Vision and core values
• Organisational culture
• Business planning
• Growth strategy
• Segmentation, targeting & positioning

Question 13

What are business tactics focused on?

Answer 13

Tend to be focused on short-term issues, responding to opportunities & threats of the external environment
Are often influenced by functional objectives and decision-making

Question 14

In terms of business theory, give factors that are more relevant to tactics employed by a business?

Answer 14

• Marketing mix
• Financial and non-financial rewards
• Inventory management
• Location decisions
• Day-to-day customer service decisions
• Recruitment, selection, and training processes

Question 15

What is the business’s mission?

Answer 15

the overriding goal of the business and the reason for its existence. A mission provides a strategic perspective for the business and a vision for the future

Question 16

What are corporate objectives?

Answer 16

those that relate to the business as a whole. They are usually set by the top management of the business and they provide the focus for setting more detailed objectives for the main functional activities of the business

Question 17

How do mission statements relate to corporate objectives, strategy and tactics?

Answer 17

Mission statements inform corporate objectives which then inform the strategy for the firm and then the tactics

Question 18

How are strategic decisions are made?

Answer 18

• Most business decisions involve middle-ranking executives making decisions based on a combination of a recommendation from decision trees and investment appraisal.

Question 19

Who are the middle ranking executives making strategic decisions?

Answer 19

Even though strategic decisions can be worth millions or even billions they often are made by managers that have very little to go on

Question 20

What is the impact of strategic decision making on functional decision making?

Answer 20

When a strategic decision is made new objectives need to be set that will affect functional departments. Each of the 4 departments will get its own objectives set, each of the four will aim to knit the objectives together in order to meet the wider objectives of the business.

Question 21

What does the approach known as “scientific decision making” show what strategy should be? State these in bullets.

Answer 21

• Based on clear objectives
• Based on firm evidence of the market and the problem/opportunity, including as much factual. quantitative evidence as possible (e.g. trends in market size, data on costs, sales forecasts)
• Looking for options (alternative theories, e.g.to meet an objective of higher market share firms could launch a new product)
• Be based on a scientific test of these alternatives
• Control the approach decided on – the final stage

Question 22

What is SWOT Analysis?

Answer 22

a method for analysing a business, its resources and its environment – it focuses on the internal strengths and weaknesses of a business (compared with competitors) and the key external opportunities and threats for the business.

Question 23

What does SWOT actually stand for?

Answer 23

• Internal strengths
• Internal weaknesses
• Opportunities in the external environment
• Threats in the external environment

Question 24

What are the aims of a SWOT analysis?

Answer 24

• What the business does better than the competition
• What competitors do better
• Whether it is making the most of the opportunities available
• How a business should respond to changes in its external environment

Question 25

Explain strengths and weaknesses

Answer 25

Are internal to the business
Relate to the present situation

Question 26

Explain opportunities and threats

Answer 26

• Are external to the business
• Relate to changes in the environment which will impact the business