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Business > Analyse Strategi Position Of B > Flashcards

Analyse Strategi Position Of B Flashcards

1
Q

Mission statement

A

Overall meaning
Core

Ie tesla- accelerate the worlds transition to sustainable energy

Make corperate obj to achieve this

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2
Q

Short termism

A

PLC’s- they’re profits are ST, all go to investors and dividends

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3
Q

PESTLE affecting corperate objectives

A

Political
Economic
Social
Technological- advancement
Legal
Ethical
Enicormental- recent changes

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4
Q

Strategy

A

Medium to long term achieving obj

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5
Q

Tactics

A

Shorty term plans to carry out strategy

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6
Q

Strategic vs Functional decision making

A

Strategic- managers, directors

Functional- department heads

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7
Q

Balance sheet

A

Snapshot for financial data
Assets and liabilities

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8
Q

Non current assets-

A

Longer than one year

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9
Q

Current assets

A

Turned into cash within one year

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10
Q

NCL

A

Debts due to be repaid after one year

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11
Q

CL

A

Debts paid in one year

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12
Q

Working capital

A

Current asses-current liabilities

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13
Q

Purpose of balance sheet

A

Helps to judge the size of a business in monetary terms
• To show what a business owns and what it owes
• Gives an insight into how a business is managed
• Identify potential liquidity problems
• Understand the extent to which a business is funded by equity or debt capital
• Judge the risk of investing in or lending money to a business

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14
Q

Purpose of income statement

A

To see if a business is profitable or not
• To judge how efficient a business is in generating profits
• To monitor sales
• To monitor costs
• Judge progress towards targets
• To judge the extent to which an organisation is investing for long term profitability
Allows shareholders to compare investments
• Judge performance over time
• Different purposes for different stakeholders - employees, customers, shareholders

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15
Q

Income statement

A

Costs
Revenue
GP
OP
POY

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16
Q

Enterprise policies

A

Gov helping small business

-Young enterprise scheme
- in areas of high unemployment, ‘enterprise zones’, gov support

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17
Q

Role of regulators

A

Ie OFSTED, ensure businesses are acting in best interest of consumers
Monitor, set targets of improvement

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18
Q

Political environment - infrastructure

A

Physical systems

Opportunities
- jobs
-lower cost of production for businesses
-increases effiency

Threats
More in certtain areas than others

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19
Q

International trade -political

A

Total exports and imports into country’s
And FDI (foreign direct investment) - factory overseas

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20
Q

Advantages of international trade

A

Increase customers
Gain economies of scale e
Increases competitiveness drive
Assess to new tech
Access lower cost production environments

  • however
    Increased costs as a result of diseconomies of scale
    Increase in comp
    Need to differentiate products from different market s
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21
Q

Competitive markets

A

Supermarkets
Sains
Tesco
Etc

More choice
Lower prices

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22
Q

Enviornmental legislation

A
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23
Q

Fiscal policy

A

Gov spending
Direct taxes
-income tax
-corporation
Affect incentives to work

Indirect taxes
- VAT
Ie cigarettes, so less likely to buy

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24
Q

Monterey policy

A

Managing supply of money in order to influence economy

Interest rates

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25
Q

Open trade v protectionism

A

Open trade- no restrictions placed on transactions between 2 countries

Protectionism - protecting domestic countries

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26
Q

Tariffs

A

Additional taxes on imports- making them more expensive

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27
Q

Quotas

A

Limit on how many things allowed to be imported

28
Q

Subsisdes

A

Gov gives me only to domestic to help protect , export oversea

29
Q

Globalisation

A

More international trade

Falling transport costs allow this
Tech advancements
Reduction in protectionism
Rising world incomes and living standards
Emergence or global supply chain- import from all over the world

30
Q

Importance of globalisation

A

Finance - increase revenue from ability to sell overseas
Fall in cost of imported raw materials/increases in competition in the supply chain

Marketing- emergence of global brands
Cost of ad
Promotional campaigns -social media

Operations
- falling transport costs, global supply chains

People-
Reduced communication costs
Increased labour opp

31
Q

Opportunities of globalisation

A

Specialisation- leading to USP
Increase comp and choice
Lower prices, more innovation, improved service and quality
Economies for scale, cost competitive
More efficient suppliers
Opp for internatial expansion

32
Q

Threats of globalisation

A

More comp from cheaper producers
Diseconomies for scale
Unemployment in domestic markets
Increased environmental impact
Unethical— bad rep- CSR

33
Q

Opportunities for emerging economies

A

Large young populations, increasingly wealthy
• Emergence of a ‘middle class’
• Demand for foreign goods
• Removal of protectionist barriers
• Potential ‘first mover advantage’
• Outsourcing opportunities cutting costs of production

34
Q

Threat for emerging economies

A

Protectionist measures on imports
Cancel
•••
Card 34 of 34
Done
Competition from low cost / high quality producers
Threat for emerging economies
+
Legal protection - i.e. breach of copyright laws
[Answer]
Lower production standards than in developed markets
• Volatile economies spreading

35
Q

Carole’s CSR pyramid

A

Philanthropic responsibilities

Ethical responsibilities

Legal responsibilities

Economic responsibilities

36
Q

Carolls CSR - economic

A

Need a profitable base in order to survive and therefore benefit society in the long term
Want to do more than just make a profit, want to make a contribution towards society

Eg cant invest in solutions like climate change, if not profitable

37
Q

Carolls CSR- legal

A

Minimum requirement, have to adhere to laws and regulations
Treat customers, employees and society to at least the lowest acceptable standards

38
Q

Carolls CSR- ethical

A

Optional - but may attract ethical customers
Ie - workers in developing countries are being treated well, not working in bad conditions

39
Q

Carolls CSR- philanthropic

A

Giving time, resources, effort, money to society at large

40
Q

Tensions with CArolls CSR

A

Engaging with Philantrhropic responsibilities- could take cash away from profit of the business

But
Better rep
Attract more ethical customers
Growing trend to be more ethical

41
Q

Technological change impact on strategic decision making - FINANCE

A

Ie - electronic payment systems, reduce of carrying cash
Instant payment

Ie- accounting systems and computer software, reduced human error , easier analysis, better record keeping

42
Q

Technological change impact on strategic decision making - MARKETING

A

Websites- increased data on individuals, more personalised ads
Lower cost advertising
Conduct market research

Ie -social media, real time promotion

43
Q

Technological change impact on strategic decision making - OPERATIONS

A

Stock management systems- reduced cost of holding raw materials
Introduction of JIT methods
Closer relationships with supplier
Mass customisation- do online then send through to business

Improved machinery- capital intensive
Increase output and labour productivity

But impact on creativity

44
Q

Technological change impact on strategic decision making - HR AND PEOPLE

A

Job training in building, online- reduce costs and better skilled
Laptops
Flexible working practices, working from home

45
Q

Opportunities of tech on strategic decision making

A

Lower costs through fewer mistakes
Increase customer satisfaction through consistency and quality of production
Better communication it’s workforce- online
Improve knowledge of customers through collection fo big data

46
Q

Threats of tech in strategic decision making

A

Costs of initial machine instalments
Impact on ability to customise / hand make products
High cost of investment in new tech
Training cost to use the tech
Labour feel disvalued, less motivated

47
Q

Pressures to be socially responsible

A

Shareholders- dont want bad rep, could lower share price
General public- protest, want
Customer- prepared to pay premium price, ie fair trade chocolate, creates USP, improve brand image, create positive PR

But
Increased cost, raw materials, renewable energy
Cost of monitoring and managing

48
Q

Porters 5 forces

A

Entry threat (barriers to entry)
Buyer power
Supplier power
Rivalry
Substitute threat

In competitive markets - analysis of this comp environment - can form a strategy

49
Q

Power of suppliers

A

Impact on overall level of competitiveness - depends on the number of suppliers available for your product you need

If you need specific raw material for your production process , and there are very few suppliers who can provide this, they will have power to raise price,
If they’re late with delivery, cant do anything about it, unsatisfied customers

Suppliers have less power if- many of them, lots of choice - get discounts, better credit terms

50
Q

Power of buyers

A

Not very threat if large market with customers who buy small amounts
But
Industries with only one or two buyers, then power of buyers will be high - ie company that makes army uniforms, and they decide they dont want your products anymore , threat to your business

51
Q

Threat of new entrants

A

Determined by barriers to entry
Costs
- stop new business from coming into market
Ie- high start up costs

  • economies of scale, cost advantages of getting bigger, employee more specialised people- cuts average cost of production - negotiate special deals with suppliers

-legislation, health and safety ie starting up airline , takes time and money

-existing brand loyalty

-specialist knowledge, need

52
Q

Threat of substitutes

A
  • if elastic, more likely to switch
53
Q

Intestity of rivalry

A
54
Q

Strategy to get around THREAT OF NEW ENTRANTS

A

Strategy: create high barriers to entry by -

MARKETING -create price Inelastic product, dont have to cut prices, compete on prices when new entrants into market
Creation of USP and strong brand image

FINANCE - allocate lots fo budget to marketing and R and D, make more difficult for new entrants

OPERATIONS- automate productions, gain economies of scale and specialist knowledge , position as handmade tailored product to create Barrie to entry

PEOPLE/ HR- investment in training and building skills

Impact on profit-
low barriers to entry=low profits , have to cut prices to compete with new entrants
High barriers to entry=higher profit, less choice, more premium pricing

55
Q

Strategy to get around BUYER POWER

A

Reduce power of individual buyers by increasing ales to a greater number of customers

MARKETING - promote products more, advertising

FINANCE_ offering credit/ favourable terms for new customers

OPERATIONS - mass customisation to appeal to more customers

PEOPLE/ HR- increase training from sales team

Impact on profit
Fewer customers = lower profits (can negotiate favourable credit terms, econ of scale)

More customers= higher profits (less reliant on one customers, dont need to cut prices for them)

56
Q

Strategy for SUPPLIER POWER

A

Reduce proportion of inputs to the production process provided by a single supplier - not reliant on one supplier

MARKETING - diversify product range , introduce new products that need different raw materials, can use other suppliers if ours puts up their pricing, help spread risk

FINANCE- increase gearing (borrowing) to reduce need to buy on credit , more cash , not looking for supplier that will offer credit terms, can rather go to any supplier

OPERATIONS- build relationships with new suppliers, increase amount of buffer stock so not reliant on particular suppler to hold stock for us - give more cost though

Impact on profits
Fewer suppliers = lower profits
More suppliers = higher profits

57
Q

Strategy for THREAT OF SUBSTITUTES

A

Socialise in order to fulfil a particular need - gain brand loyalty, USP, so desirable that there are not many substitutes available - or price competitive, but will have to lower cost

MARKETING- increase market research into customer needs , develop product with particular USP

FINANCE-OPERATIONS - invest in specialist equipment

HR- train employees with key skills and unique attributes, customer service

Impact on profits
Fewer substitutes=lower profits
More suppliers=higher profits

58
Q

Strategy for RIVALRY

A

Diversify into new areas and a USP

MARKETING- r and d, product development and creating strong brand image

FINANCE- reinvest profit into new product and market development, instead of short term to shareholders

OPERATIONS- mass customisation to create USP

HR- recruit and train staff to develop strong creativity and product development skills

59
Q

Payback

A

Length for time it takes for the initials cost of investment is retuned to the business

60
Q

Interpretation of Payback

A

Shorter pay back period= preferred, once payback occurs, this is when business scan strat making a profit

Longe payback means = more risk, more difficult to predict condition further into future

Assumes cash flow is consistent throughout year

+easy, more accurate as simply
-not calculate profitability, doesn’t account for seasonality

61
Q

Interpreting ARR

A

Higher rate is better - higher return than interest rate is better

62
Q

Investment appraisal

A

Technique managers use to assess the attractiveness of potential investments that compares to the expected cash outflows to the expected cash inflows

63
Q

Sensitivity analysis

A

If cash inflows and cash outflows are accurate for investment appraisal

Best case scenario
Expected outcome
Worst case
Shows if investment is risky,
How confident they are
Assess of external environment

64
Q

Calculate ARR

A

Net cash flow - initial cost

total net return/ no. of years

Average annual return / initial cost x 100

65
Q

NPV calculation

A

Net cash flow x Discount factor
Add together

66
Q

Return on NPV

A

NPV/ initial cost x100

Business (11 decks)

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