8.1 Business strategy: meaning and purpose Flashcards
What is a strategy in simple terms?
A strategy is how we get from where we are now to where we want to be in the future.
What does a successful business have to achieve its goals?
A successful business will have SMART objectives and a clear business strategy with a set of policies to focus on achieving those aims.
What does business strategy involve asking?
Business strategy asks big questions like “Which markets and products do we want to be in?” and makes major decisions like “Can we expand from manufacturing operations into retailing?”
Why do businesses need strategies?
Businesses need strategies to provide integration, direction, and focus.
What are the four main factors that influence business strategies?
The four main factors influencing business strategies are resources available, strengths of the business, competitive environment, and objectives.
How do available resources influence business strategy?
Limited resources force businesses to choose which strategies to proceed with and which to drop or scale back. For example, launching a new product nationwide might be scaled back due to lack of resources.
How do a business’s strengths affect its strategy?
A business should apply its proven strengths when developing strategies. It may also focus on selling off underperforming areas to concentrate on its successes for growth, like Pepsi did with Quaker Oats by keeping the Gatorade drink division.
How does the competitive environment influence business strategy?
Competitors’ actions, such as innovations or price changes, can force a business to adapt its strategy.
How do business objectives affect strategy?
Business objectives influence strategy by determining priorities, such as maximizing shareholder returns or focusing on social responsibility, which will result in different strategies.
Can you give an example of a business strategy influenced by competitive pressure?
Yes, Esso’s “Pricewatch” strategy was introduced in response to supermarket petrol price cuts, showing how competitive pressure can drive strategy changes.
