7. Analysing the strategic position of a business Flashcards
what is a strategy
a medium term plan to achieve an objective
what is a tactic
a short-term action to support a strategy
what is the objective of competition law
to promote economic efficiency through the sound development of the market economy and to protect the consumer from excessive market power
what is the CMA
the competition and markets authority
a non-ministerial government department responsible for strengthening business competition and preventing and reducing anti-competitive activities
what is the labour market legislation
designed to prevent the exploitation of employees by business by regulating the relations between workers, employees and trade unions
eg of labour market legislation
the equality act 2010 the minimum wage act 1998 the employments rights act the health and saftey at work act the working time regulations 1998
eg of competition legislation
the competition act 1998
the enterprise act 2002
what is enviroment legislation
designed to minimise the negative impact of business on the environment
two main categories: pollution and climate change
eg of environment legislation
the environmental protection act 1991
the environment act 1995
what is a mission statement
a qualitative statement of a business’ purpose
what are corporate objectives
quantitative goals set for the entire business
must be SMART specific measurable acheiveable relevant time
internal factors influencing the choice of objectives
- business size and age
- ethics/social responsibility
- business performance
external factors influencing choice of objectives
- shareholders pressure
- changes in the economy
- changes in government polivy
- competitors’ actions
- social changes
pros of financial ratios when assessing perfomance
- can help identify a trend when comparing with pervious years
- can help compare performance with similar businesses
cons of financial ratios when assessing performance
- can the figures be trusted? window dressing could distort figures
- looking at past data
- ignores other key data: changes in the economy, strategic decisions etc
what does profitability refer to
the capacity of a business to make profit and profitability ratios assess its ability to generate profit
what is does liquidity refer to
the extent to which a business is able to pay its short-term debts
what does gearing refer to
investigates whether or not a business is at risk from increases in interest rates and falling profit
what is a core competence
something unique that a business has or can do better than competitors
a core competency should: 3
- be difficult for competitors to replicate
- provide opportunities for a business to expand into new markets
- provide significant benefits to customers
what is outsourcing
subcontracting of non-core activities of an organisation in order to free up cash, time, personnel and facilities (concentrating on areas it has a competitive advantage)
long-term achieved through: 3
- investment in research and development of new products and processes
- focusing on customer satisfaction and loyalty
- focusing on employees engagement and loyalty
what is Kaplan and Norton’s balanced scorecard model
a planning tool that helps a business achieve its corporate goals
4 perspectives of the balanced scorecard
finance
customer
internal process
learning/growth
pros of the balanced scorecard 2
- provides a broader view that may detect weaknesses early
- it allows employees to see their importance within an organisation, thereby acting as a motivator
- helps achieve long-term objectives and strategy as opposed to short-termism
weaknesses of balanced scorecard
- it’s complex and some areas can be difficult to quantify
- achieving the right balance between the dimensions can be difficult
- its use is dependent on the complier’s perspective
what is Elkington’s triple bottom line
concept emphasises the three Ps:
profit (economic)
people (social)
planet (environmental)
benefits of the TBL
- helps businesses consider its stakeholders and ethics
- corporate social responsbility can bring benefits to the business
- ensures the sustainability of the business
drawbacks of the TBL
- CSR can lead to higher costs, premium price and reduce competitiveness
- may incompatible with an objective of cost minimisation
- setting objectives for ‘people’ and ‘planet’ may be difficult
