Business Objectives And Stratagy (steeds) Flashcards
What is an internal and external shareholder
-internal: actually in the business
-people external to the business that can influence the decisions made in the business
What is a mission statement and give an example.
-Why an organisation exists and it’s goal
-eg/ Nike: bring inspiration and innovation to every athlete in the world
What makes an effective mission statement:
-differentiates the business to competition
-relevant to all major stakeholders
-motivates customers
Why are mission statements often criticised:
-not always supported by the actions of a business
-view as a PR stunt
-often too vague and general or states the obvious
-not supported wholeheartedly by management
What is a business aim
The long term goal
What is the strategic objective of a business
The big picture goals for the company, steps the businesses will follow to achieve the mission
What is tactile objective for a business
-immediate short term desired result for business
What is strategic decision making:
-made based of a company’s mission and vision, impacts the whole business
What is a tactics and operational decision
-decisions to complete a task
-decisions made day to day eg/ who is working each shift.
What factors constraint the achievement of objectives for a business
-stakeholder conflicts
-changing objectives
-lack of communication
What are ethics
Moral guidelines which govern good behaviour, the moral knowledge between right and wrong but not illegal.
What is corporate social responsibility
CSR is about responsibility to all stakeholders in behaving ethically not just shareholders. Eg/ business employees people on low wages and therefor customers shouldn’t buy form them due to their unethical practices
What implications of code of practice do businesses follow:
-corporate social responsibility
-dealings with customers and supply chain
-environmental policy and actions
-rules for personal and corporate integrity
What is corporate strategy:
Overall purpose and scope of the business to meet stakeholders expectations.
What is business unit strategy:
-is concerned more with how a business competes successfully in a particular market. Concerns strategic decision about choice of products, meeting needs of customers, gaining advantages over competitors.
What is operational strategy:
-concerned with how each part of the business is organised to deliver the corporate and the business-unit level strategic direction. Focuses on issues of resources, processes and people
Strategic alliance tools: (8)
-PEST analysis
-scenario planning
-five forces analysis
-market segmentation
-directional policy matrix
-competitors analysis
-critical success factor analysis
Strategic alliance tools: PEST analysis
A technique for understanding the environment in which a business operates
Strategic alliance tools: scenario planning
A technique that builds various plausible views of possible futures for a business
Strategic alliance tools: five forces analysis
-a technique for identifying the forces which affect the level of competition in an industry
Strategic alliance tools: market segmentation
A technique which seeks to identify similarities and differences between groups of customers or users
Strategic alliance tools: directional policy matrix
A technique which summaries the competitive strength of a businesses operations in specific markets
Strategic alliance tools: SWOT analysis
A useful summary technique for summarising the key issues arising from an assessment of a business internal position and external environment influences
What is a strategy for business and what does it include
Clear set of plans, actions and goals that outline how a business will compete in a particular market
-where the business is trying to get to in the long term
-which markets they should compete in
-the resources needed for each market
-what external influences affect the business
What is a business plan
Written document that describes a business, its objectives, strategies, the makers it is in and financial forecasts
Advantages and disadvantages of a business plan
+sense of direction, evaluation of objectives, considers constraints, establishes individual roles
-time consuming, may limit individual creativity, useless unless followed, needs to be able to be flexible to adapt to change in outsider circumstances.
What is the plan do review cycle
-plan: establish objectives, course of action and resources
-do: implement the plan ensuring that all parts of the business understand responsibilities and deadlines
-review: formal ongoing evaluation of progress towards objectives and final review
Plan do review 4 step cycle
Step 1: planning and preparing
Step 2: gathering evidence
Step 3: taking action
Step 4: reviewing and improving
Advantages and disadvantages of plan do review cycle
+clear what everyone has to do, encourages Kaizen, allows adaption.
-lengthy process, can be inflexible, all staff need to work together for it to work, long and complicated process
What is risk in a business and the 3 types of risks
-anything that threatens a company’s ability to achieve its financial goals
-quantifiable risk: likelihood of predictable risk occurring
-unquantifiable risk: risks that are unexpected and not possible to plan
-calculated risk: a risk that has been given thoughtful consideration and for which the potential costs and potential benefits have been weighted and considered
What are the rewards of taking risks
-financial rewards
-sense of satisfaction
-good feedback
-good publicity
-being in control
How can a business manage risks
-economic: indicators, use of businesses data
-political: understand party intentions, international politics
-competitive: research, Boston matrix
-organisational: working towards same goal, cultural change, restructuring.
-stakeholders: consultation
What is opportunity costs
-Other cost of any choice in terms of the next best alternative foregone
-work leisure choices
-government spending priorities:
-investing today for consumption tomorrow
-making use of scarce farming land
What is a contingency plan
Planning business continuity in the event if an unexpected outcome. It forms part of the business disaster recovery and risk management plan.
The aim is to minimise the impact of a significant foreseeable event and to plan for how the business will resume normal operations after the event.
What is included in contingency planning
-identifying what and how things can and might go wrong
-devising plans to cope with the threats
-putting in place strategies to deal with the risks before they happen
What is crisis management and the solutions
-process by which an organisation deals with an event that threatened harm to the business and its stakeholders
Solutions:
-insurance policies up to date
-crisis budget
-private health care
-data monitoring
-trail runs
What should be done in a effective crisis response
3 elements:
-management response: asses crisis severity, contact senior execs, over see implementation
-operational response: implement contingency plan, minimise impact on stakeholders
-communication response: contact key stakeholders, media briefing
What are decision trees
decision support tool that uses a tree-like model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility
-square: choose
-circle: add
How to calculate decision trees: (need to write in this)
- You will be given a set of data.
- There will be multiple options/ lines to follow.
- Write the numbers along side the lines
- Continue this along all lines
- For each line times the high sales by the last number eg/ 0.6 x 1m = £600,000 + 0.4 x 750,000=300,000 =900,000
- Add the two numbers for each choice and choose the one with the higher
- Take away the number in the first line by the overall number (900,000) - 500,000 = 400,000
Advantages of decision trees
-allows managers to analyse possible options and identify opportunity costs
-forces mangers to inject quantifiable analysis into teh decision making process
-useful for mangers when they have encountered similar situations before
Disadvantages of decision trees
-accuracy of estimations
-managerial bias
-less useful when business faces new problems
-may lead to qualitative factors being ignored
What are the 4 factors in ansoff matrix and what is it
-marketing planning model that helps a business determine its product and market growth strategy;
-market penetration: entering in an existing market with existing products
-product development: existing market with new products
-market development: new market with existing products (eg/ electric car)
-diversification: new market with new products
Evaluate diversification
-risky strategy
-no direct experience of the product or market
-few economies of scale
-if successful overall risk of the business is spread
What are teh approaches to diversification
-innovation and research and development
-acquire an existing business in the market
-extend an existing brand into the new market
What is porters five forces model
method of analysing the operating environment of a competition of a business. It draws from industrial organization economics to derive five forces that determine the competitive intensity and, therefore, the attractiveness of an industry in terms of its profitability.
What are the 5 forces in porters five forces model
-bargaining power of suppliers
-threat of entry
-bargaining power of buyers
-threat of substitutes
-rivalry
Porters five forces model: bargaining power of suppliers. Why do they have power and what can they do with it
-if a firms suppliers have bargain Power due to only having a few substitutes of suppliers or resource they supply is scarce, cost of switching is high so they will;
-sell their products at a higher price, squeeze industry profits, can influence supply and demand as customers won’t want to buy too expensive products.
Porters five forces model: bargaining power of customer. Why do they have power and what will they do with it
-powerful customers are able to exert pressure to drive down prices or increase quality for the same price
-customers can have power when;
There are only a few of them, customers are buying large masses of product, can choose from a wide range of supply firms, easy and inexpensive to switch to alternative suppliers
Porters five forces model: threat of new entrants
-if new entrants move into an industry they will gain market share and rivalry will intensify.
-the position of existing firms is stronger if there are barriers to entering the market
-if they are low then threat of new entrants will be high and vice Versa.
-barriers to entry are important in determining the threat of new entrants
Porters five forces model: threat of substitute products
-a substitute is a product that meets the same needs as the original
-the extent of threat depends upon; the extent to which the price and performance of teh substitute can match the industry’s product, the willingness of customers to switch, switching costs
Where would you use the 5 porters model
-moving into a new market
-during a recession
-developing new products
What is porters generic strategies
-produced a series of generic strategies to show how a company can gain a competitive edge in its industry. These are;
•cost leadership (lowest in the field)
•differentiation
•focus on niche strategy
-stick in the middle (adopting all 3)
The strategic challenge for most businesses is to find a way of achieving a competitive advantage
What are the 4 results of porters generic strategies model
-cost leadership (needs costs advantage in broad market)
-cost focus (needs cost advantage in a narrow market)
-differentiation leadership (needs differentiate in their products in a broad market)
-differentiate focus (needs differentiate in their products in a narrow market)
Porters five forces model: market rivalry
-overall degree of competitive rivalry.
-if their is intense rivalry in an industry it will encourage businesses to engage in;
Price wars, investment in innovation and new products, intensive promotion.
-factors affecting entering the market; number of competitors, market size, product differentiation and brand loyalty, exit barriers.
Evaluate porters 5 forces model
+helps estimate competition in industry, shows where threats are, shows if you can expand, applicable to most industry’s
-may only be used for larger businesses, time consuming, won’t make a judgement just on the model, no external factors included
Applying porter 5 forces model in an essay
-technological change: effects on barriers to entry
-takeover: change bargaining power of buyer/customer
-low cost/ differentiation: most profitable
-innovation: increased threat of substitutes to an industry
-ansoff matrix: attractiveness of new markets
What are financial and non financial measures of performance
-Financial:metrics organisations measure, and analyze the financial health of the company. These financial KPIs fall under a variety of categories, including profitability, liquidity, efficiency.
-non financial: Outcome-based measures such as customer satisfaction, market share, category ownership, and new product adoption rate
What is the importance of using non financial measures of performance
Nonfinancial measures are superior predictors of the future economic performance of the firm. It allows the business to understand where they are going wrong in the business even if the finance is good
What is forecasting and what can it be made about
-the use of existing data to predict future events. Businesses need to use this to make plans for the future. These can predict: costs, market size, and sales.
Why do businesses use forecasting while making a business plan
In order to:
-employ right amount of staff
-ensure positive cash flows
-make the right operational decisions to meet sales forecasts
What are the 4 forecasting methods and what do they do:
-*DELPHI technique: experts are asked their opinions ok the likely outcome of a business’s or an economic situation often take the form of a questionnaire and will take the medium. (Qualitative)
-brainstorming: technique that brings together individuals Yk discuss their ideas for solutions (QL)
-managers intuition: managers rely on their knowledge and previous experience of the markets and the economy (QL)
-Time series analysis: a moving average takes a data series and smooths the fluctuations in data to show an average.
How to calculate time series analysis
-add the Latest 4 months of sales and divide by 4
-eg/ find the average you would add May, June, July, August and then divide by 4
When do you use Qualitative forecasting:
-when there is little accurate or predictable historical data available
-where a market is subject to wide fluctuations in demand
-when a market experiences significant change
Advantages and disadvantages of qualitative and quantitative forecasting
+flexibility, often accurate, human experience and knowledge, data is accurate, can see what to do if they have seen data like this before, exposes patterns, attracts stakeholders.
-predictions are biased, unexpected changes, errors of judgement, lacks detail, costly.
What factors influence decisions
-level of risk
-nature of risk
-accuracy of forecasts
-finance
-competition
-aims and objectives of a business
Types of decisions time line
-short term: says to day but up to a year
-medium term: monthly up to 3-5 years
-long term: longer then 5 years.
