7. Analysing Strategic position Flashcards
what is a mission statement?
overall purpose and future vision of the business
what is an effective mission statement?
- differentiates
- clear
- motivates
- for all stakeholders
criticisms of mission statement?
- vague
- viewed cynically
- not aligned with actions
- pr , marketing value only
what is the difference between strategy and tactics?
strategy- long term to achieve corp. obj. with resources
tactic= short term, influenced by functions with less resources used
examples of strategy v Tactics: Netflix
s=launched in over 100 countries to become streaming leader
t= increased quota of europe programmes in response to demand of eu
examples of strategy v tactics: Starbucks
s= launched 200 stores in 100 china cities to increase market leadership
t= social media campaign following price criticisms
what does SWOT stand for?
Strengths- internal
Weaknesses- internal
Opportunities- external
Threats- external
advantages of SWOT
- analyses external environ
- logical structure
- focus on strategic issues
disadvantage of SWOT
- lacks focus
- quickly out of date
- independent?
what is the purpose of ROCE?
- measure performance
- provides target
- benchmark against competitors
ROCE calc.
operating profit/ total equity + non current liabilities x100
Current ratio
Current assets/ current liabilities
evaluating current ratio
effective= 1.5-2.5
- industry matters
- compare with comp.
- look at trends
gearing ratio meaning
proportion of finance provided by debt
What does GDP measure?
measures all economic activity i a country
Inflation
substantial increase in the average price levels of economy
how does inflation benefit business
prices rise
higher profit margins
debt as source of finance cheaper
how does inflation damage a business
rising costs
lower investment
higher interest rates
fiscal monetary policy
use of government taxation and spending
monetary policy
use of interest rates and changes to money supply
what is protectionism
restrict free trade
methods of protectionism
- tarriffs
-quotas
-barriers (regulate quality) - subsidies (aid domestic)
exchange rates
price of one currency in the terms of another
impact of exchange rates
- price of exports
- cost of goods bought oversea
- revenue/profit earned oversea
types of fiscal (taxes)
- income tax
- corporation tax
- VAT
business cycle stages
- boom
-recession - slump
- recovery
what are core competencies?
-something unique that a business can/has done strategically well
features of competencies
- provide consumer benefits
- hard for comp. to imitate
- leverage to wider market
4 core competencies
- collective learning
- integration of skills
- deliver superior products
- differentiation to comp.
short termism + example (related)
focus and prioritise short term over long term goals
eg. unileaver adopting long term perspective
indicators of short termism
- low R+D investment
- high dividends (not reinvest)
- external growth
- bonuses on short obj
elkingtons triple bottom line
performance of
- people
-planet
-profit
benefits of ETBL
- think beyond profit measure
- encoruages CSR reporting
- supports environ
drawbacks of ETBL
- not useful for overall performance
- hard to measure planet/people
- no legal requirement to report
Reasons for greater globalisation
- trade liberation (less barriers)
- political change
- less communication cost
- increased sig of MNC’s
- migration
Methods of entering international markets
- Exporting: low risk
- Liscensing: local presence, risky but valuable insight
- Alliance: shared profit/risk, exploit customer bases
- Direct Investment: high cost/risk
developed v emerging economies
- saturated/growing market
- BRICs emerging
- MINT predicted growth
example of internationalisation
- Ikea to India
- adapted services to having installers rather than do it yourself
- low prices (price sensitive)
- adapted menu
problems of globalisation
- longer lead times
- implications of CSR
- additional management costs
- impact of exchange rates
- communication (language/time zones)
reasons for offshoring
- manu costs lower
- potential for better skilled workers
- more capacity
- take adv. of free trade
example of offshoring
UK financial call service centre in India eg. HSBC
reasons for reshoring
- certainty of delivery times
- less risk/ complex of supply chain
- more certain of quality
- easier collab w. home suppliers
- cost adv. is not as significant anymore
