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Business Objectives Flashcards

1
Q

What is PESTLE?

A

A concept in marketing principles which are used as a tool to track the environment that they’re operating in and are planning to launch into

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2
Q

What does PESTLE stand for?

A

-Political
-Economic
-Social
-Technological
-Legal
-Environment

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3
Q

Examples of PESTLE:

A

-Political = taxes, trade, tariffs, political stability
-Economic = growth, interest rates, exchange rates, inflation rates
-Social = health consciousness, population growth rate, age distribution, career attitudes
-Technological = research and development, automation, rate of change
-Legal = employment laws, trading laws, marketing restrictions, new laws
-Environmental = regulations, eco consumers, recycling laws, wastage

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4
Q

What is competitive advantage?

A

An advantage over competitors gained by offering consumers greater value, either by lowering prices or offering more benefits to justify higher prices

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5
Q

What is Porters Generic Strategy?

A

-Cost leadership
-Cost focus
-Differentiation leadership
-Differentiation focus

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6
Q

What is the cost leadership strategy?

A

-No frills
-Aiming to be the lowest cost producer in the industry
-Involves increasing profits by reducing costs while charging industry average prices or increasing market share by charging lower prices while making profit due to lower costs

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7
Q

What is the differentiation leadership strategy?

A

-Creating a uniquely desirable product
-Involves making products different from competitors (USP)
-Usually involves support, functionality, durability or brand image

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8
Q

What are the pros and cons of cost leadership?

A

-Higher profits
-Price flexibility
However:
-May face reduced quality
-Reputation of lower quality

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9
Q

What are the pros and cons of differentiation leadership?

A

-USP
However:
-Higher risk

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10
Q

What is the cost focus strategy?

A

-Lower cost advantage in one or a small number of market segments
-Can define the market by demographics or sales channels

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11
Q

What is the differentiation focus strategy?

A

A company seeking to differentiate within just one or a small amount of target market segments

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12
Q

What is a focus strategy?

A

-Concentrating on niche markets
-Must understand the dynamics of that market and the unique needs of customers within it
-Developing uniquely low cost or well specialised products

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13
Q

What are the pros and cons of cost focus?

A

-Higher profits due to lower costs
-Can still charge higher prices
However:
-Can’t target wider audiences
-Must ensure the product is at market standard

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14
Q

What are the pros and cons of differentiation focus?

A

-People are willing to pay higher prices
-Customer loyalty
-Good customer relations
However:
-Can’t target wider audiences
-Even smaller market size
-Expensive market research

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15
Q

What is SWOT analysis?

A

Method of analysing a business, its resources and environment
-used in strategic planning
-aims to give businesses advantages over competitors

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16
Q

What does SWOT stand for?

A

Strengths, weaknesses, opportunities, threats
-strengths and weaknesses are internal factors (within the business)
-opportunities and threats are external factors (outside the business e.g market, economy)

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17
Q

What is the coherent strategy?

A

Maximising strengths and working to reduce/improve weaknesses
-can only be formulated when strengths and weaknesses are understood

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18
Q

What is a strategy?

A

Long term goals and how you plan to achieve them

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19
Q

What is a tactic?

A

Smaller steps done in a shorter time frame in order to reach a goal

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20
Q

What are the 4 key strategic questions?

A

-Where do we compete? (which market)
-What is the unique value?
-What are the resources and capabilities?
-Stabilisation

21
Q

What are distinctive capabilities?

A

Organisations can only succeed in the long term if they use one of the three distinctive capabilities which add value and create a competitive advantage
-architecture
-reputation
-innovation

22
Q

What is architecture?

A

The structure of a relational contract within or around the organisation with customers, employees and suppliers

23
Q

What is reputation?

A

Dependent on the relationship with customers, employees and suppliers which involves guarantees, word of mouth, experience and quality

24
Q

What is innovation?

A

Bringing new inventions to the market (may include new processes and new ways to do things)

25
Q

What is the boston matrix?

A

Helping to classify an organisation’s products based on market growth and market share which help determine which products need future investment or which need to be abandoned or sold
-cash cow
-star
-question mark
-dog

26
Q

What is a star?

A

-High market share, high market growth
-Could be in the growth phase of the product life cycle
-Continue producing and hold onto the product as it could become a cash cow

27
Q

What is a question mark?

A

-High market growth, low market share
-Could have just been launched and is still building customer loyalty
-Continue investing

28
Q

What is a cash cow?

A

-High market share, low market growth
-Could be reaching maturity in the product life cycle
-Already has customer loyalty
-Continue producing and harvesting the products until it goes into decline

29
Q

What is a dog?

A

-Low market share, low market growth
-In the decline phase of the product life cycle and in a declining market
-Product should be removed from sale

30
Q

What are the limitations of the boston matrix?

A

-Doesn’t clearly define the market
-Too simplistic
-High market share doesn’t always = high profits if production costs are high
-Some businesses may have middle market share

31
Q

What is a mission statement?

A

Defines the fundamental purpose of an organisation briefly describing why it exists and what it does to achieve its vision

32
Q

What is corporate vision?

A

Outlines what the organisation wants to be or how it wants the world it operates in to be

33
Q

What is a functional objective?

A

A departmental objective which helps the business to achieve its mission

34
Q

What is a SMART objective?

A

Specific, Measurable, Achievable, Realistic, Time-related

35
Q

What are the limitations of mission statements?

A

-Can be unrealistic/over optimistic
-Cause conflicts
-May change as a business develops
-Too open/vague

36
Q

What is Ansoff’s Matrix?

A

Suggests a business’ attempts to grow depending on whether its markets or products are new or existing
-creates an output showing a series of growth strategies which set the direction for the business strategy
-used for analysis to show how the business could grow

37
Q

What is market penetration?

A

-Focusing on the market and products the business knows well
-Increasing the sales to the existing market
-Penetrating a market more deeply
-Sell more to the same customers
-Encourage people to buy more often
E.g. loyalty schemes

38
Q

What is product development?

A

A new product/service developed for an existing market to sell to existing customers
-product must be differentiated in order to remain competitive

39
Q

What is market development?

A

A growth strategy where a business aims to sell its existing products into new markets
-risky because it targets new markets

40
Q

What is diversification?

A

A growth strategy where a business markets new products to new markets
-more risky as the business has less/no experience in the new market

41
Q

How does Ansoff’s Matrix work?

A

By identifying all current products and their markets then considering future options using the matrix by considering opportunities, costs, benefits, risks

42
Q

What are Porters 5 Forces?

A

Examining 5 forces of competition within an industry
-threat of substitute products
-threat of new entrants
-bargaining power of consumers
-bargaining power of suppliers
-competitive of rivalry within the industry

43
Q

What is competitive rivalry within an industry?

A

Encourages:
-Price wars
-Investment and innovations
-Promotions
All are likely to increase costs and lower profits

44
Q

What is bargaining power of customers?

A

Exerting pressure to drive down prices or increase the quality for the same price
-reduces profits within an industry

45
Q

What is the threat of new entrants?

A

-Must ensure products are differentiated to distinguish themselves from new entrants
-Depends on barriers to entry

46
Q

What is the threat of substitute products?

A

A product that meets the same need
-Depends of the price and performance of the substitute product and the willingness of customers to switch

47
Q

What is the bargaining power of suppliers?

A

Where suppliers are selling products at a higher price to squeeze industry profits, businesses must choose whether to help suppliers or choose a new one and risk lower quality

48
Q

What are the limitations of Porters 5 Forces?

A

-Can’t measure it, its more of a theory
-Dependant on industry
-Must take into account external factors as markets are ever changing

Business (11 decks)

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