Business Objectives And Startegy Flashcards
Three main types of decisions a business will consider + definitions
Strategic decisions concern the general direction and overall policy of a business.
Tactical decisions tend to be medium term decisions that are less far-reaching than strategic decisions.
Operational decisions are administrative decisions that will be short term and carry little risk.
There are then two sides to developing a strategy:
Formulation and implementation
Formulation
The formulation of strategy is basically the same thing as constructing a business plan. Implementation is putting the plan into practice.
Implementation
A plan should not be rigid; it should be sufficiently flexible to allow for changing circumstances. It should include a feedback loop to regularly check if the plan is working and adapting it as and when necessary.
The different types of strategy include:
Corporate strategy
Strategic direction
Functional
Divisional strategy
Corporate strategy
Corporate level strategy is concerned with the strategic decisions a business makes that affect the entire business. At the corporate level, strategy is concerned with setting objectives for overall financial performance, proposed mergers or acquisitions, long term human resource planning and the allocation of resources to different business divisions.
Strategic direction
Once the corporate strategy is established then the strategic planning that follows is used to establish the strategic direction i.e. sets out in broad terms how the objectives will be achieved. The strategic plan created will normally contain a clear mission statement but beyond this describes the businesses’ objectives, which divisions or functions need to be focused on to achieve these objectives and makes clear methods of measuring achievement of objectives.
Divisional strategy
a business strategy that defines the goals and activities of a company’s divisions or departments
Functional strategy
Functional strategy refers to a business strategy that focuses on the action plans by a particular functional area in order to achieve the set business objectives. It aims at improving the effectiveness of a firm’s operations across various functional units or departments.
The decisions made at this level of strategy are guided and limited by the higher level corporate and divisional strategies and will support these strategies. For example, the business’ marketing strategy, which will be a functional strategy, will be guided by objectives established at corporate level and made clear at divisional level. It is the responsibility of the functional managers to develop the systems and applications that allow the achievement of corporate and divisional strategies.
What influences a corporate plan (internal)
A corporate plan will be based on the management assessments of both internal and external factors that affect the business.
Business ownership
Attitude to profit
ethical stance
Organisational culture
Leadership
Stakeholder influence
Advantages of a corporate plan
Strategic alignment: Ensures that all company resources and activities are working towards the same goals
Risk management: Helps identify potential risks and develop strategies to reduce them
Decision-making: Provides a clear roadmap and data to help make informed decisions
Efficiency: Optimizes operations by aligning them with strategic goals
Market positioning: Helps anticipate market trends and customer needs, so strategies can be adjusted proactively
Competitive advantage: Helps businesses create a sustainable competitive advantage by identifying a target market, attracting customers, and making sales
Organizational strengths and weaknesses: Helps businesses identify their strengths and weaknesses so they can chart a path forward that plays to their strengths
Durability and sustainability: Helps businesses prepare to adapt to change and internal or external shocks
Market analysis: Helps businesses assess business opportunities, trends, and developments
Disadvantages of a corporate plan
slow or limited responsiveness to change
must be flexible
cannot predict future
can limit spontaneity
cannot avoid the unexpected.
External influences on corporate plans
external factors -current market conditions and opportunities available to the business, the economic situation, the political and legal environment, the social environment, and the technologies available to the business.
Corporate plan
A statement of goals to be achieved in the medium to long term
Likely to be written by senior managers
It will make clear, measurable objectives and formulate strategies for achieving these objectives
