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3.7 Analyse The Strategic Position Of A Business > 3.7.1 Mission, Corporate Objectives & Strategy > Flashcards

3.7.1 Mission, Corporate Objectives & Strategy Flashcards

- Influences on the mission of a business - Internal and external influences on corporate objectives and decisions - The distinction between strategy and tactics - The links between mission, corporate objectives and strategy - The impact of strategic decision making on functional decision making - The value of SWOT analysis

1
Q

What is “Strategic Positioning” ?

A

A company’s relative position within its industry

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2
Q

What are the key ideas behind “strategic positioning” ? (4)

A
  • Specific industry
  • Area
  • Market
  • Place against competition
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3
Q

What is “Strategic Decision” ?

A

The process of charting a course based on long term goals/ vision

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4
Q

What is the main goal of “Strategic Decision” ?

A

To align short term plans with the broader mission

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5
Q

What are the benefits of aligning short term objectives ? (2)

A

Provides:

  • Clarity
  • Consistency
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6
Q

Factors to consider when strategic decision making ? (5)

A
  • impact of technology on strategic decision making
  • influence of corporate social responsibility, ethics and environment on strategic decision making
  • difficulties in forecasting the future
  • importance of assessing feasibility & risk
  • impact on stakeholders and their reaction to strategic decision making
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7
Q

What are the four stages of strategic decision making ?

A
  1. what does the business hope to achieve ?
  2. business strategy
  3. impact of strategy on functional areas
  4. SWOT analysis
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8
Q

What do businesses try to achieve ? (broad)

A
  • mission statement

- corporate objectives

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9
Q

How do stages one and two link ?

A

How business strategy relates to the mission and objectives

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10
Q

What do mission statements include ? (4)

A
  • what does the business want to be?
  • values of the business
  • range of a firm’s activities
  • importance of different groups
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11
Q

What are “corporate objectives” ? (2)

A
  • medium to long-term goals set to co-ordinate a business and all its functional areas
  • turns a mission statement into quantifiable data (measured/ timescale)
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12
Q

What are the features of judgments made by senior managers ? (3)

A
  • long-term
  • involve a commitment of resources
  • difficult to reverse
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13
Q

What are the “Drucker - Eight areas of business activity” ? (8)

A
  • market position
  • innovation
  • financial resources
  • physical resources
  • human resources
  • productivity
  • social responsibility
  • profits
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14
Q

What is the focus of strategic decision making in a privately owned company ?

A

Maximise returns for investors

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15
Q

How do privately owned company’s achieve their mission statements focus ?

A

Maximise short term profits to benefit a small number of investors

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16
Q

How do publicly owned businesses achieve their mission statement focus ?

A

Provide services to all over the long term

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17
Q

What is “short-termism” ?

A

When a business prioritises short-term rather than long-term performance

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18
Q

What performance measures does short-termism promote ? (5)

A
  • share price
  • revenue growth
  • gross & operating profit
  • unit costs & productivity
  • return on capital employed
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19
Q

What long-term performance measures are lost to short-termism ? (6)

A
  • market share
  • quality
  • innovation
  • brand reputation
  • employee skills & experience
  • social responsibility & sustainability
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20
Q

Why is short-termism used ? (3)

A
  • stock market focus on latest financial performance
  • reliance on bonuses based on short-term performance
  • frequent change in leadership strategy (e.g takeovers)
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21
Q

Indicators of short-termism (4)

A
  • bonuses based on short-term objectives
  • low investment in research and development
  • high dividend payments over re-investment
  • overuse of takeovers rather than internal growth
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22
Q

Internal factors which affect SDM (3)

A
  • poor performance
  • new leaders
  • business culture
23
Q

External factors which affect SDM (4)

A
  • prices on global markets
  • technological changes
  • patterns on migration
  • state of the economy
24
Q

Examples of “prices on global markets” (3)

A
  • price of commodities (wheat & oil)
  • global price change = impact on individual business strategies
  • case study - BP
25
Q

Example of “technological changes” (3)

A
  • move to capital intensive production -> use of robots/ tech
  • 24/7 online business (e.g Banking)
  • BMW - robotic production lines and collaborative robots = less human training and recruitment
26
Q

Examples of “patterns of migration” (2)

A
  • Uk subject to high levels of migration (> 20 years)

- rising net immigration

27
Q

What are the implications of high net-immigration ? (3)

A
  • changes nature of available workforce
  • provides additional/ different customers
  • high implications in universities and agriculture
28
Q

Examples of the “state of the economy” (6)

A
  • impact of the 2008 financial crisis
  • global pandemic 2020
  • 2008-18 consumer spending held but increased borrowing
  • 2008-18 changes in spending papers
  • business adapt to low cost and high competition
  • decline in no of high street stores
29
Q

What is “entrepreneurial” culture ?

A

Where a businesses encourages employee ideas and initiatives

30
Q

What corporate objectives/ SDM are used in “entrepreneurial” culture ? (3)

A
  • decentralise the organisation
  • flatter structure
  • delegate authority at junior levels
31
Q

What is “customer-focused” culture ?

A

Where customers are the most valued part of a business

32
Q

What are the corporate objectives/ SDM of “customer-focused” culture ? (2)

A
  • product development

- employee training that places the customer first

33
Q

What is “strategy” ?

A

A long-term plan to achieve the business’s vision through attaining corporate objectives

34
Q

How does having a strategy benefit the business ?

A

Helps employees to develop their own plan to implement strategies

35
Q

What is a “tactic” or “ tactical decision” ?

A

The decision made about how to implement a business’s strategy

36
Q

What are the key features of tactical decisions ? (4)

A
  • short term
  • fewer resources involved
  • easy to reverse
  • taken by junior management

(Opposite to strategies)

37
Q

How do mission statements, objectives and tactics link ?

A

Tactics are minor decisions which support corporate objectives
Corporate objectives are developed to fulfil the mission and vision
A mission/ vision acts as a broad guide to managers towards success

38
Q

What are “business functions” ?

A

The departments or areas that comprise a business such as:

  • operations
  • finance
  • marketing
  • human resources
39
Q

What are “functional decisions” ?

A

A judgement taken by managers responsible for one aspect of a business’ activities

40
Q

How are functional decisions made in marketing ? (3)

A

Need to take decisions about :

  • researching into consumers’ needs in different markets
  • launching new products
  • adapting existing products
41
Q

How are functional decisions made in finance ? (2)

A

Relates to:

  • raising capital to fund expansion
  • managing cash flow
42
Q

How are functional decisions made in human resources ?

A
  • preparing new workforce plans

- staffing to manage scale of production

43
Q

How are functional decisions made in operations ? (2)

A
  • finding the most efficient locations

- increase usage of technology in production to gain competitiveness

44
Q

What must functional objectives be to support strategic decision making ?

A

Must be coordinated so they can work effectively together

45
Q

What does “SWOT” analysis stand for ? (4)

A

S - strengths
W - weaknesses
O - opportunities
T - threats

47
Q

What are internal factors in “SWOT analysis” ?

A

The strengths and weaknesses internal to the organization

48
Q

Examples of strengths: (4)

A
  • a high level of cash
  • a strong brand name
  • a good distribution network
  • highly skilled and loyal staff
49
Q

Examples of weaknesses: (4)

A
  • large amounts of long term borrowing
  • under utilised capacity
  • low net profit margin
  • a lack of new products in development
50
Q

Examples of opportunities: (3)

A
  • growth in a major market
  • an alliance with a competitor to develop new technology
  • rising income levels among target consumer groups
51
Q

Examples of threats: (3)

A
  • being taken over by a large competitor
  • a change in consumer tastes leasing to a significant fall in demand
  • new laws increasing the costs of production
52
Q

What are external factors in “SWOT analysis” ?

A

The opportunities and threats presented by the external environment to the organisation

53
Q

What do managers focus on when developing strategies ? (3)

A
  • build on strengths to exploit opportunities
  • reduce/ eliminate weaknesses
  • protect the business against threats
54
Q

Benefits of SWOT analysis (6)

A
  • low-cost and straight forward that can be used by all businesses
  • assist managers to focus on internal operations and external environment
  • encourages logical and relevant plans
  • uses ‘threats’ to help recognise and asses risk
  • can be combined effectively with other research
  • can be used within a business’s functions
55
Q

Limitations to SWOT analysis (5)

A
  • only covers issues which can be covered SWOT not two sided factors
  • doesn’t offer solutions and requires further analysis
  • analysis offers no support to relative importance of factors
  • SWOT analysis is subjective so isn’t reliable, relevant or comparable
  • if data used is poor or outdated analysis isn’t useful

3.7 Analyse The Strategic Position Of A Business (8 decks)

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