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A Business Studies Complete Overview of Specification > Business objectives and Strategy > Flashcards

Business objectives and Strategy Flashcards

1
Q

What is a mission statement?

A

A mission statement gives a general idea of what the business exists to do and its purpose is to set this down for the benefit of all stakeholders.

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2
Q

What are aims/goals?

A

Is where the business wants to go in the future, its goals. It is a statement of purpose, e.g. we want to grow the business into Europe.

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3
Q

What are objectives?

A

Business objectives are the stated, measurable targets of how to achieve business aims.

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4
Q

What are strategic objectives?

A

How a business plans to achieve its aims or goals often in the long term approach

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5
Q

What are tactical objectives?

A

The day-to-day short term objectives needed to ensure the strategic objectives are achieved

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6
Q

What is SMART used for?

A

When deciding on objectives to ensure that they are SMART.

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7
Q

What are corporate objectives?

A

Corporate objectives are those that relate to the business as a whole. They are usually set by the top management of the business and they provide the focus for setting more detailed objectives for the main functional activities of the business.

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8
Q

What is an objective?

A

An objective is set by a business in attempt to reach a particular goal

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9
Q

What is a strategy?

A

Is the action plan that the business puts in place to reach its objectives.

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10
Q

What is a tactic?

A

A tactic is a particular step that a business takes to achieve its strategy.

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11
Q

What is an internal audit?

A

An internal audit allows a business to assess its strengths and weaknesses in relation to its competitors across the whole of the business.

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12
Q

What is an external audit?

A 
The external audit looks at the opportunities open to the business and the threats it faces in its external environment.
Such as:
Ethics
Pressure groups
Enviroment
PEST Analysis
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13
Q

What is PEST analysis?

A

Political, Economic, Social, Technological used in the external audit when looking at threats and opportunities to a business.

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14
Q

When would you use a SWOT analysis?

A

After completing an audit use a SWOT analysis.

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15
Q

What is the companies act 2006?

A

A statement of directors’ duties and responsibilities, this includes having a regard for employee’s suppliers and the environment.

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16
Q

What is the use of porters five forces?

A

To analyse the level of competition in an industry.

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17
Q

What are porter’s five forces?

A 
Threat of new entrants to the market
Bargaining power of suppliers
Bargaining power of consumers
Threat of substitute product entering the market including technological changes
Degree of existing competitive rivarly
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18
Q

What is the use of porter’s five forces?

A

To analyse the level of competition when entering a market.

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19
Q

What is porter’s generic strategies?

A

Shows how a company can achieve a competitive advantage in its industry.

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20
Q

According to porter’s generic strategies, how can a company achieve a competitive advantage?

A

Cost leadership (Lowest cost producer)
Differentiation (Range of goods)
Focus or niche

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21
Q

What is management by objectives?

A

Managers and employees define and agree a series of objectives for the business. Including the employee from the outset, particularly in setting targets.

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22
Q

What are the advantages of managing by objectives?

A

Improve in motivation of the employee
Organisation should be working towards the same goals
If employees are involved in setting goals they are more likely to accept them and achieve them.

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23
Q

What are the disadvantages of managing by objectives?

A

Meeting the targets at any cost may result in poor quality output.

Goals can become more important as a focus than having a cohesive and achievable plan.

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24
Q

What is a business plan?

A

A business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them.

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25
Q

How are business plans used for established companies?

A

It mainly addresses questions such as where are we now, where do we want to go, can we get there and how can we get there.

26
Q

What is a strategic review?

A

A strategic review is a analysis of the key performance indicators from the four functional areas in the firm, analysis of SWOT and PEST, identification of ‘good practice’,.

27
Q

What are the advantages of a business plan?

A

Gives a sense of direction
Forces an evaluation of current strategic and tactical objectives
Sets out the role of each department of the business and the part it has to play in the achievement of the overall strategic objectives
Encourages communication between different departments and stakeholders of the business.

28
Q

What are the disadvantages of a business plan?

A

An opportunity cost of the time spent gathering the data fort he planning process and then analysing and evaluating it. This could be a considerable cost for a small business.

A plan may be too rigid and leave little room for individual employee creativity, possibly demotivating employees.

29
Q

What is opportunity cost?

A

The cost of the next best alternative forgone when making a decision.

30
Q

What should be included in a business plan?

A

What are we aiming to achieve?
Why?
What will need to be done to achieve this?
By whom?
When?
Using what resources?
Planning must involve all the functional areas of the business.

31
Q

What are the four functional areas of a business?

A

Human resource management
Accounting and finance
Operations management
Marketing

32
Q

What is the plan do review process?

A

Plan- Establish objectives and the course of action, and the resources necessary to achieve them.
Do-Implement the plan ensuring that all areas of the business understand their part of it in terms of responsibilities and deadlines
Review- There will need to be a format evaluation of progress towards objectives and a final review.

33
Q

What are the advantages of the plan do review process?

A

If those in each department of the business are clear about what they have to do then employees should be more focused on achieving the desired results.

It encourages Kaizen

34
Q

What are the disadvantages of the plan do review process?

A

It is a lengthy process that will have a lengthy process that will have a considerable opportunity cost in terms of manager’s time.

Some employees will dislike the ongoing review of their progress. They may feel as if they aren’t trusted.

35
Q

What is contingency planning?

A

Planning for what will happen if things go wrong, this means that an agreed course of action is in place and is ready to be used if necessary.

36
Q

What is crisis management?

A

Crisis management is the process by which an organization deals with a disruptive and unexpected event that threatens to harm the organization or its stakeholders.

37
Q

What is a unquantifiable risk?

A

The risk of an event that is unexpected. It is not possible to put a value on this sort of this risk.

38
Q

What is a quantifiable risk?

A

The likelihood of a predictable risk occurring. It is possible to put a value on this sort of risk.

39
Q

How do you work out the three period moving average?

A

The number above and the number below added to the number selected.

40
Q

How do you work out cyclical variation?

A

If it was a three period moving average, you would minus the three period moving average from the sales achieved.

41
Q

How do you calculate the average cyclical variation?

A

Add all the variations from the period of interest then divide that by how many periods there are. E.g. -5.6+3+2/3

42
Q

Limitations of forecasting?

A

The forecast will only be as reliable as the data used. It is vital that the data is as accurate as possible

It may be using data that was from a period of economic downturn and as a result may impact the prediction of future sales, limiting the usefulness.

43
Q

What are strategic decisions?

A

Long term decisions affecting the whole of the business. They are taken at board or senior management level.

44
Q

What are tactical decisions?

A

They are medium term decisions affecting a particular department.

45
Q

What are operational decisions?

A

Those taken on a day to day basis; these decisions are taken by managers of departments.

46
Q

List 5 decision making tools?

A 
SWOT analysis
Market research
Pest Analysis
Porter's five forces
Decision Trees
Time series analysis
Brainstorming
Ansoff Matrix
47
Q

What is the Ansoff’s Matrix?

A

Is a strategic tool used to help a business that wishes to grow. The matrix looks at the business’s markets in terms of existing and new products, and existing and new market opportunities.

48
Q

What are the four possible strategies for growth according to the Ansoff’s Matrix?

A

Market Penetration
Market development
Product development
Diversification

49
Q

When would you use market penetration?

A

When you try to sell more of an your existing product in an existing market.

50
Q

When would you use market development?

A

If you have an existing product in a new market.

51
Q

When would you use product development?

A

If you have a new product in an existing market.

52
Q

When would you use Diversification?

A

If you have a new product in an new market.

53
Q

What is market penetration?

A

This is a situation where the firms tries to sell more of its existing product in its existing product. An example of how it could do this is aggressive promotion.

54
Q

What is market development?

A

This involves selling the existing product in a new market segment.

55
Q

What is product development?

A

Changes are made to an existing product, but it continues to sell in the same market. An example may be a new flavour.

56
Q

What is diversification?

A

This entails selling a new product in a new market, a high risk strategy, market research will be required to be are of any threats in the market.

57
Q

What are conflicts in decision making?

A

When information acquired from different sources is conflicting, two decision making tools suggest different actions. If this is the case the managers judgement is final.

58
Q

When a business makes a decision, the stakeholders are affected, what would each stakeholder want from when a business makes a decision?

A

Stakeholders-Profits and dividends
Customers-Quality, Reliability, Low price
Employees and Unions-Profits-More Wage
Local community-Growth-More Jobs-More Pollution
Environment Groups-Greener production methods

59
Q

Decision Trees

A

Make sure you know how to do them recap.

60
Q

The benefits of decision trees?

A

It is a simplistic method to aid the decision making process when faced with several alternatives.

It is relatively quick and therefore cost effective method of aiding the decision making process.

61
Q

The limitations of decision trees?

A

Depends upon the accuracy and reliability of the figures used.

No mention of time period over which the decision is made, the longer the time period the less reliable the data is.

When selecting the probabilities management may be in favour of one decision and as a result be tempted to increase the probability of that option to ensure it is perceived as more successful.

A Business Studies Complete Overview of Specification (7 decks)

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