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Business Studies - Theme 3 > Business Objectives And Strategy 3.1 > Flashcards

Business Objectives And Strategy 3.1 Flashcards

1
Q

What is the definition of an aim?

A

A generalised statement of where a business is heading

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2
Q

What is the definition of an objective?

A

A short term action to achieve an aim

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3
Q

What is the definition of a mission?

A

An aim expressed in a particularly inspiring way

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4
Q

What is the definition of a mission statement?

A

a short passage of text which sums up an organisations mission

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5
Q

What are the four main influences on a business mission:

A
  1. purpose - reason why the business exists
  2. values - what the company believes in
  3. standards and behaviours - standards expected from staff
  4. strategy
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6
Q

why may a clear sense of mission help a business to succeed?

A

a believable but inspiring mission can unite staff and customers behind the business

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7
Q

why may a mission be especially important in a new business?

A

Its invaluable to have customers who ‘buy in’ to the business, they’ll not only be loyal but spread the word

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8
Q

What are 4 reasons to have a mission statement?

A
  1. it determines the companies direction
  2. it focuses the employees and motivates them towards a common goal
  3. explains why a business exists
  4. to communicate to customers their vision
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9
Q

what are 5 criticisms of mission statements?

A
  1. it can be quite confusing to understand
  2. actions don’t always match the mission statements
  3. can be too vague
  4. are they just a PR stunt
  5. businesses aren’t held accountable for mission statements
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10
Q

what are the four sections of the Boston matrix?

A
  1. rising star
  2. cash cow
  3. problem child/ question mark
  4. dog
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11
Q

what are the four sections of ansoffs matrix?

A
  1. Market penetration
  2. product development
  3. market development
  4. diversification
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12
Q

what increases on ansoffs matrix as you move to the bottom right corner?

A

the risk

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13
Q

what is an existing product on an existing market called in the ansoffs matrix?

A

market penetration

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14
Q

what is an existing product on an new market called in the ansoffs matrix?

A

market development

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15
Q

what is an new product on an existing market called in the ansoffs matrix?

A

product development

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16
Q

what is an new product on an new market called in the ansoffs matrix?

A

diversification

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17
Q

what is market penetration?

A

a business that focuses on what they do well

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18
Q

what is product development?

A

business staying in the same market but developing new products

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19
Q

what is market development?

A

a business taking an existing product and bringing it into a new trial market

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20
Q

what is diversification?

A

a business looks at a new product in a new market

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21
Q

what does a business doing market penetration need to do? (3)

A
  1. use the same strategy as they were previously (as long as it works)
  2. promotion of the product
  3. create brand loyalty
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22
Q

what does a business doing product development need to do? (3)

A
  1. market research
  2. modify/ change range
  3. research and development - innovate
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23
Q

what does a business doing market development need to do? (3)

A
  1. look at a new market to decide whether the product will succeed
  2. identify gaps
  3. test the market
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24
Q

what does a business doing diversification need to do? (2)

A
  1. research and develop into product and market research

2. have a high risk strategy

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25
Q

what are the two parts of the axis where ‘markets where business competes’ on the porters generic strategies diagram?

A
  1. broad

2. narrow

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26
Q

what are the two parts of the axis where it is labelled ‘source of competitive advantage’ called on the porters generic strategies diagram?

A
  1. differentiation

2. costs

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27
Q

on the porters generic strategies what is in the box with the source of competitive advantage costs and a broad market where business competes called?

A

cost leadership

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28
Q

on the porters generic strategies what is in the box with the source of competitive advantage costs and a narrow market where business competes called?

A

cost focus

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29
Q

on the porters generic strategies what is in the box with the source of competitive advantage differentiation and a broad market where business competes called?

A

differentiation leadership

30
Q

on the porters generic strategies what is in the box with the source of competitive advantage differentiation and a narrow market where business competes called?

A

differentiation focus

31
Q

how to achieve competitive advantage through distinctive capabilities:

A
  1. the companies ability to learn from mistakes and successes so the business is constantly moving forward
  2. the operational skills within a business (if theres a highly talented research team then differentiation in the future is viable)
32
Q

why is corporate strategy so important?

A

because finding the right strategy can put a business on course for success/ failure for the future

33
Q

what is the definition of distinctive capabilities?

A

ways a firm operates that cannot easily be copied by rivals

34
Q

what is the definition of economies of scale?

A

factors that cause the average cost per unit to decrease as the scale of output increases

35
Q

what is the definition of generic strategy?

A

a strategic position that will prove effective in every market (i.e. generically). Porter said lowest cost and highest differentiation were perfect positions of strength

36
Q

what is the definition of product differentiation?

A

the extent to which consumers perceive one product as being distinct to its rivals

37
Q

what are corporate objectives?

A

the whole businesses objectives - the key objectives

38
Q

what are functional objectives?

A

objectives for each function (department)

39
Q

what are two risks of market penetration? AM

A
  1. Decline in product lifecycle

2. Lack of ambition may lead to staff looking for challenge elsewhere

40
Q

What are two rewards of market penetration? AM

A
  1. Know customers and competitors, so should make error free decisions
  2. returns on extra investment are predictable
41
Q

what are two risks of market development? AM

A
  1. Subtle cultural differences add hugely to the risk

2. Practical differences - like distribution channels, consumer legislation and differences in managing staff

42
Q

what are two rewards of market development? AM

A
  1. Huge potential economies of scale
  2. If you take the time to understand the cultural differences you may be able to localise your product range effectively
43
Q

what are two risks of product development? AM

A
  1. Most new products fail so the risk is very high
  2. as product success is tough, companies put their best people on it, could mean too little people are devoted to the ordinary brands
44
Q

what are two rewards of product development? AM

A
  1. Nothing adds value more than innovation and product development
  2. continuous, successful product development should mean the organisation lives for a long time
45
Q

what are two risks of diversification? AM

A
  1. not knowing the market and having a brand new product means the risk level is multiplied by two
  2. Vital to plan the operational risk of diversifying to make sure the financial position is secure
46
Q

what are two rewards of diversification? AM

A
  1. when it works it can transform the size and opportunities for the business
  2. radical diversification can be exciting for the workforce, helping recruit the best people
47
Q

What is the definition of diversification?

A

when a company expands its activities outside its normal range. This may be done to reduce risk or to expand possible markets

48
Q

what is the definition of repositioning?

A

changing a product or its promotion to appeal to a different market segment

49
Q

what is swot analysis?

A

an analysis of the businesses position

50
Q

what does swot stand for?

A

Strength
Weakness
Opportunities
Threats

51
Q

what two categories of swot are internal?

A

strengths and weaknesses

52
Q

what two categories of swot are external?

A

opportunities and threats

53
Q

what are the two main ways to undertake a swot analysis?

A
  1. top down process - controlled by the boss and carried out by management consultants.
  2. consultative manner - boss spending time in each key department, talking to staff in an informal manner
54
Q

what is a benefit and a negative of the top down process in swot analysis?

A

benefit - being dispassionate so they are unaffected by emotion or tradition
negative - might lack insight which is required as employees may try to hide it to prevent job losses

55
Q

what is a benefit in the consultative manner in swot analysis of using an outsider?

A

no staff member need feel worried about what they say as previous failings can be blamed on the old management

56
Q

what are five external factors which can give rise to opportunities or threats? SWOT

A
  1. economic changes
  2. technological changes
  3. demography - population change
  4. new laws and regulations
  5. commodity prices
57
Q

what are some key performance indicators (KPI)? (4)

A
  1. sales per employee
  2. market share
  3. like for like sales - sales revenue this year in comparison to last
  4. capacity utilisation
58
Q

is it better for a business to have loads of key performance indicators or just a few?

A

just a few are necessary

59
Q

what is the definition of benchmarking?

A

comparing your own performance with that of rivals, to try to identify and learn from best practice

60
Q

what is the definition of demography?

A

factors relating to the population, such as changes in the number of older people or levels of immigration

61
Q

to analyse external factors, you can use pestle, what does it stand for?

A 
Political
Economic
Social
Technological
Legal
Environmental
62
Q

what is another word for external factors?

A

externalities

63
Q

What are two political factors and their impacts: PESTLE

A
  1. BREXIT - additional barriers to entry

2. Tariffs/ taxation - VAT, income tax, corporation tax

64
Q

What are two economic factors and their impacts: PESTLE

A
  1. exchange rates - the pound is weaker now, so we get less for our money and this is good for people buying from us
  2. changing economic climate - pricing strategies change
65
Q

what is one social factor and the impact: PESTLE

A

cultural change/ demographics - average age increasing

66
Q

what are two technological factors and their impacts: PESTLE

A
  1. innovation - research and development

2. ecommerce business increasing

67
Q

what is one legal factor and the impact: PESTLE

A

legislation - employment legislation

68
Q

what are two environmental factors and their impacts: PESTLE

A
  1. natural disasters

2. sustainability/ ethical decision making

69
Q

with other economic factors of importance what three things is it important to consider? PESTLE

A
  1. exchange rate and its effect on the international competitiveness of the businesses
  2. inflation rate - possible impact on the value of peoples savings and on their real wages
  3. rate of unemployment - youth unemployment is exceptionally high
70
Q

what can firms do about external influences? (2)

A
  1. make the most of favourable external influences whilst they last
  2. minimise the impact of unfavourable external influences
71
Q

What are porters 5 forces?

A
  1. rivalry among existing competitors
  2. threat of new entrants
  3. changes in the buying power of customers
  4. changes in the selling power of suppliers
  5. threat of subsitutes
72
Q

What are the 4 big factors leading to a changing competitive environment?

A
  1. shortening product lifecycles - driven by rapid developments in technology
  2. more rapid changes in consumer taste
  3. globalisation - more UK markets can be disrupted by competition from overseas
  4. tougher profit pressures on companies

Business Studies - Theme 3 (8 decks)

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