3.7.1 Mission, corporate objectives, and strategy Flashcards
What is PESTLE Analysis? (not asking for meaning of acronym)
a framework for assessing the key features of the external environment in which a business operate
What are the letters in PESTLE?
- Political
- Economic
- Social
- Technological
- Legal
- Environmental and ethical
What are the political factors affecting a business?
Competition policy
Industrial regulation
Government spending and tax policies
Business policy and incentives
What are the economic factors affecting a business?
Interest rates
Exchange rates
Consumer spending and income
Economic growth (GDP)
What are the social factors affecting a business?
Demographic change
Impact of pressure groups
Consumer tastes and fashion
Changing lifestyles
What are the technological factors affecting a business?
Disruptive technologies
Adoption of mobile technology
New production processes
Big data
What are the legal factors affecting a business?
Employment law
Minimum/living wage
Health and safety laws
Environmental legislation
What are the environmental and ethical factors affecting a business?
Sustainability
Tax practices
Ethical saving (supply chain)
Pollution and carbon emissions
State what are the internal influences on corporate objectives and questions surrounding it:
- 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?
State what are the external influences on corporate objectives and questions surrounding them:
- 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?
What are 3 things business strategies are focused on?
- 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
List factors that affect business strategy
- Mission statements
- Vision and core values
- Organisational culture
- Business planning
- Growth strategy
- Segmentation, targeting & positioning
What are business tactics focused on?
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
In terms of business theory, give factors that are more relevant to tactics employed by a business?
- Marketing mix
- Financial and non-financial rewards
- Inventory management
- Location decisions
- Day-to-day customer service decisions
- Recruitment, selection, and training processes
What is the business’s mission?
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
What are corporate objectives?
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
How do mission statements relate to corporate objectives, strategy and tactics?
Mission statements inform corporate objectives which then inform the strategy for the firm and then the tactics
How are strategic decisions are made?
- Most business decisions involve middle-ranking executives making decisions based on a combination of a recommendation from decision trees and investment appraisal.
Who are the middle ranking executives making strategic decisions?
Even though strategic decisions can be worth millions or even billions they often are made by managers that have very little to go on
What is the impact of strategic decision making on functional decision making?
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.
What does the approach known as “scientific decision making” show what strategy should be? State these in bullets.
- 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
What is SWOT Analysis?
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.
What does SWOT actually stand for?
- Internal strengths
- Internal weaknesses
- Opportunities in the external environment
- Threats in the external environment
What are the aims of a SWOT analysis?
- 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
Explain strengths and weaknesses
Are internal to the business
Relate to the present situation
Explain opportunities and threats
- Are external to the business
- Relate to changes in the environment which will impact the business
