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
What is “Strategic Positioning” ?
A company’s relative position within its industry
What are the key ideas behind “strategic positioning” ? (4)
- Specific industry
- Area
- Market
- Place against competition
What is “Strategic Decision” ?
The process of charting a course based on long term goals/ vision
What is the main goal of “Strategic Decision” ?
To align short term plans with the broader mission
What are the benefits of aligning short term objectives ? (2)
Provides:
- Clarity
- Consistency
Factors to consider when strategic decision making ? (5)
- 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
What are the four stages of strategic decision making ?
- what does the business hope to achieve ?
- business strategy
- impact of strategy on functional areas
- SWOT analysis
What do businesses try to achieve ? (broad)
- mission statement
- corporate objectives
How do stages one and two link ?
How business strategy relates to the mission and objectives
What do mission statements include ? (4)
- what does the business want to be?
- values of the business
- range of a firm’s activities
- importance of different groups
What are “corporate objectives” ? (2)
- 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)
What are the features of judgments made by senior managers ? (3)
- long-term
- involve a commitment of resources
- difficult to reverse
What are the “Drucker - Eight areas of business activity” ? (8)
- market position
- innovation
- financial resources
- physical resources
- human resources
- productivity
- social responsibility
- profits
What is the focus of strategic decision making in a privately owned company ?
Maximise returns for investors
How do privately owned company’s achieve their mission statements focus ?
Maximise short term profits to benefit a small number of investors
How do publicly owned businesses achieve their mission statement focus ?
Provide services to all over the long term
What is “short-termism” ?
When a business prioritises short-term rather than long-term performance
What performance measures does short-termism promote ? (5)
- share price
- revenue growth
- gross & operating profit
- unit costs & productivity
- return on capital employed
What long-term performance measures are lost to short-termism ? (6)
- market share
- quality
- innovation
- brand reputation
- employee skills & experience
- social responsibility & sustainability
Why is short-termism used ? (3)
- stock market focus on latest financial performance
- reliance on bonuses based on short-term performance
- frequent change in leadership strategy (e.g takeovers)
Indicators of short-termism (4)
- 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
Internal factors which affect SDM (3)
- poor performance
- new leaders
- business culture
External factors which affect SDM (4)
- prices on global markets
- technological changes
- patterns on migration
- state of the economy
Examples of “prices on global markets” (3)
- price of commodities (wheat & oil)
- global price change = impact on individual business strategies
- case study - BP
Example of “technological changes” (3)
- 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
Examples of “patterns of migration” (2)
- Uk subject to high levels of migration (> 20 years)
- rising net immigration
What are the implications of high net-immigration ? (3)
- changes nature of available workforce
- provides additional/ different customers
- high implications in universities and agriculture
Examples of the “state of the economy” (6)
- 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
What is “entrepreneurial” culture ?
Where a businesses encourages employee ideas and initiatives
What corporate objectives/ SDM are used in “entrepreneurial” culture ? (3)
- decentralise the organisation
- flatter structure
- delegate authority at junior levels
What is “customer-focused” culture ?
Where customers are the most valued part of a business
What are the corporate objectives/ SDM of “customer-focused” culture ? (2)
- product development
- employee training that places the customer first
What is “strategy” ?
A long-term plan to achieve the business’s vision through attaining corporate objectives
How does having a strategy benefit the business ?
Helps employees to develop their own plan to implement strategies
What is a “tactic” or “ tactical decision” ?
The decision made about how to implement a business’s strategy
What are the key features of tactical decisions ? (4)
- short term
- fewer resources involved
- easy to reverse
- taken by junior management
(Opposite to strategies)
How do mission statements, objectives and tactics link ?
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
What are “business functions” ?
The departments or areas that comprise a business such as:
- operations
- finance
- marketing
- human resources
What are “functional decisions” ?
A judgement taken by managers responsible for one aspect of a business’ activities
How are functional decisions made in marketing ? (3)
Need to take decisions about :
- researching into consumers’ needs in different markets
- launching new products
- adapting existing products
How are functional decisions made in finance ? (2)
Relates to:
- raising capital to fund expansion
- managing cash flow
How are functional decisions made in human resources ?
- preparing new workforce plans
- staffing to manage scale of production
How are functional decisions made in operations ? (2)
- finding the most efficient locations
- increase usage of technology in production to gain competitiveness
What must functional objectives be to support strategic decision making ?
Must be coordinated so they can work effectively together
What does “SWOT” analysis stand for ? (4)
S - strengths
W - weaknesses
O - opportunities
T - threats
What are internal factors in “SWOT analysis” ?
The strengths and weaknesses internal to the organization
Examples of strengths: (4)
- a high level of cash
- a strong brand name
- a good distribution network
- highly skilled and loyal staff
Examples of weaknesses: (4)
- large amounts of long term borrowing
- under utilised capacity
- low net profit margin
- a lack of new products in development
Examples of opportunities: (3)
- growth in a major market
- an alliance with a competitor to develop new technology
- rising income levels among target consumer groups
Examples of threats: (3)
- 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
What are external factors in “SWOT analysis” ?
The opportunities and threats presented by the external environment to the organisation
What do managers focus on when developing strategies ? (3)
- build on strengths to exploit opportunities
- reduce/ eliminate weaknesses
- protect the business against threats
Benefits of SWOT analysis (6)
- 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
Limitations to SWOT analysis (5)
- 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
