Business Objectives And Strategy Flashcards
Business plan includes
businesses objectives, strategies and financial forecast
Benefits business plan
Provides sense of direction
Drawbacks of business plan
Risky
Useless unless followed
Time management
Contingency plan
Outcome other than it’s usual plan often used for risk management
Porters 5 forces
Rivalry
Power of buyers
Threats of new entrants
Threat of substitutes
Power of suppliers
Forecasting
Use of existing data to predict future e.g trends, costs, sales
Ansoff matrix
Market penetration - aims to sell existing products in existing markets
Product development - introduce new products in existing markets
Market development -seeks to sell existing products into new markets
Diversification - new products into new markets
SMART Objectives
Specific, measurable, agreed, realistic, timeframe
Mission Statement
set out the overall purpose of the business and its vision
Corporate social responsibility
acting ethically with stakeholders
Plan do Review cycle
planning for a decision, implementing, reviewing and assessing the successfulness of the decision
Risk
negative outcome that can be predicted
Quantifiable risk
can measure it, see it coming
Unquantifiable risk
not able to be measured
Opportunity cost
value of next best alternative to do something else
Crisis management
actions business takes to overcome a disaster
Porters generic strategies
Cost leadership - business can reduce costs to increase profit margins or lower prices
Differentiation - having a USP
Focus - operating in niche market
Gearing
percentage of businesses capital that comes from borrowing
Cash flow
money flowing in and out of business
3 types of budgeting
income, expenditure, profit
Income budget
prediction of revenue
Expenditure budget
prediction of spending
Profit budget
prediction of profit
Variance analysis
explaining why budgeted figures are different to actual figures
Liquidity
position of business tells us how able it is to pay bills, if business has more cash available, then better liquidity position
Profitability
tells how much profit business makes in comparison to revenue
Market share
percentage of the sales revenue in a whole market that one business is responsible for
Resource utilisation
how much business resources they are using
Difference between profit and cash?
profit = revenue- costs
cash = how much money business has right now
Strategy
long term decision making
Tactics
short term decision making
Operational decisions
day to day decision making
Seasonal variation
caused by changes in demand in different seasons
Cyclical variation
variation over several years
Decision making process
risk
uncertainty
opportunity cost
rewards
