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Business Studies > Business Objectives and Strategy > Flashcards

Business Objectives and Strategy Flashcards

1
Q

give some examples of stakeholder objectives

A

shareholders-dividends

customer-quality of product/service

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2
Q

give an example of stakeholder objectives

A

customer wants to buy from business with ethical behavior

business wants low costs

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3
Q

mission statement

A

idea of what did business exists to do

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4
Q

aims

A

overall long term thing business wants to achieve

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5
Q

objective

A

short term, measurable achievement

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6
Q

tactical objective

A

short term objectives, likely to do with day to day activities

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7
Q

strategic objective

A

how a business plans to achieve its aims or goals

longer term approach

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8
Q

what is the criteria for setting objectives

A

SMART

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9
Q

what does SMART stand for

A 
specific 
measurable 
achievable 
realistic 
time-bound
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10
Q

corporate objective

A

help to define the culture of the business

change over time

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11
Q

hierarchy objectives

A

overall purpose
vision for future
aims for achieving mission+vision
objectives in place

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12
Q

constraints of objectives

A

lack of finance
poor communication
state of the economy
laws which change operation of the business

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13
Q

what is the difference between objective,strategy and tactics

A

objective-to reach a goal
strategy-action plan to reach objective
tactic-step taken to achieve strategy

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14
Q

how can a business formulate a strategic plan

A

internal/external audit

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15
Q

what do internal and external audits look at

A

internal-strengths+weaknesses

external- opportunities+threats

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16
Q

what four areas does an internal audit look at

A

people
marketing
operations management
financial

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17
Q

what are some of the areas an external audit looks at

A

competition
economy
political issues
ethics

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18
Q

what is a PEST analysis

A

external factors in an audit

political,economic,social,technological

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19
Q

how can a business formulate a strategy

A

using SWOT analysis

strengths,weaknesses,opportunities,threats

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20
Q

apart from a SWOT what else can a business use to formulate strategy

A

market research
ratio analysis
government stats

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21
Q

how can employees influence business objectives

A

could be part of trade union
lots of them collective power
experts/specialists hard to replace, power position

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22
Q

how can suppliers influence business objective

A

could be in a monopoly position

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23
Q

what does porters 5 forces model do?

A

analyse level of competition in an industry

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24
Q

what are porters 5 forces

A 
threat of new entrants
bargaining power of suppliers 
bargaining power of consumers 
threat of substitutes (includes changes in technology)
degree of existing competitive rivalry
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25
Q

how would porters 5 forces model be displayed

A

intensity of rivalry in the middle with arrows to other four forces

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26
Q

what are the criticisms of porters 5 forces

A

assumes a classic perfect market
people apply it to an individual businesses not industry
markets can change (e-commerce)

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27
Q

what do porters generic strategies show

A

how company can achieve competitive advantage in its industry

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28
Q

what are porters three generic strategies

A

cost of leadership
differentation
focus/niche

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29
Q

explain porters generic strategy of cost of leadership

A

aim of being lowest cost producer in field

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30
Q

explain porters generic strategy of differentiation

A

produce a range of goods perceived as different to competition

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31
Q

explain porters generic strategy of focus/niche

A

produce for particular sector of market-usually consumers in sectors prepared to pay premium
if no patent, product can be copied+no advantage

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32
Q

what is the fourth strategy of porters generic strategies

A

‘stuck in the middle’

business that tries to adopt all 3 generic strategies likely to be unsuccessful

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33
Q

what are the functions of a business

A 
marketing 
production and operations 
accounting and finance 
human resources 
customers service
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34
Q

why would a business change its objectives

A

economic change
legal issues
political issues
social attitudes

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35
Q

accounting and finance (business functions)

A

monitors+controls monetary resources

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36
Q

production and operations (business functions)

A

transforming resources into goods

operations-controlling+designing process of production e.g stock control

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37
Q

marketing (business functions)

A

creates the desire to buy a product

conducts market research

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38
Q

human resources (business function)

A

responsible for well being of employees

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39
Q

customer service (business functions)

A

ensuring satisfaction with a product or service

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40
Q

operational objective

A

specific production targets set by organisation to ensure goals are achieved

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41
Q

give examples of some operational objectives

A

maintain quality

maximise utilisation of materials

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42
Q

social enterprise

A

set up with main objective is to help people

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43
Q

Privatisation

A

public sector enterprise sold by the gov

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44
Q

nationalisation

A

private sector enterprise taken over by the gov

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45
Q

corporate social responsibility

A

businesses address social and environmental considerations as part of their normal business activities.

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46
Q

which areas do businesses have to consider their corporate responsibility

A

environment+ethics
charity+fundraising
diversity
financial

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47
Q

advantages of being a socially responsible corporation

A

reputation

attract more staff

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48
Q

disadvantages of being a socially responsible coporation

A

large amount of time

short term costs

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49
Q

how could a business become more socially responsible

A

less plastic packaging (environment)

charity/community schemes, (EDF gives workers day off per/y to work on community projects)

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50
Q

business plan

A

sets out how a business intends to achieve its objectives

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51
Q

what is the content of a business plan

A 
the idea 
finance 
objectives 
target market 
competitors
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52
Q

advantages of a business plan

A

requires strategic review, see how well each functional area is performing
sense of direction
sets out role of each department
encourages communication+coordination

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53
Q

disadvantages of a business plan

A

opportunity cost of time
demotivates those responsible for carrying it out if have no input
useless unless implemented

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54
Q

opportunity cost

A

cost of the next best alternative foregone

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55
Q

benefits of a strategic review

A

analysis of SWOT/PEST undertaken
lead to improvement in long term profitability
consensus established among senior managers

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56
Q

strategic review

A

review which is about improving+sustaining business performance

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57
Q

what kind of business uses a strategic review

A

already established

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58
Q

why would employees have an interest in a businesses plan

A

objective-pay rise

is likely to happen looking at the plan?

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59
Q

why would suppliers have an interest in a business plan

A

objective-regular orders+increasing size

plan might include business growth which could increase their order

60
Q

what is the purpose of a plan-do-review process

A

make sure that the business is ‘on track’

61
Q

stages of plan do review cycle

A

plan-establish objectives
do-implement plan
review-formal on going evaluation

62
Q

advantages of a plan do review

A

methodical, forces strategic approach
deparments get clarity on what they have to ‘do’
regular reviews of departments-deviations from plan can be corrected

63
Q

disadvantages of a plan do review

A

lengthy-opportunity cost
not flexible once objectives have been set
some employees regard on going review of work ‘spying’ don’t feel trusted

64
Q

contingency plan

A

plan devised for an outcome other than what is the expected outcome

65
Q

disadvantages of a contingency plan

A

opportunity cost

people who construct plan,not honest with their assessment of risk

66
Q

advantages of a contingency plan

A

co-ordination amongst employees
operations can continue to run as best as possible
if plan for worst can prevent some outcomes

67
Q

what would happen to stakeholders if a contingency plan wasn’t in place

A

supplier could receive fewer orders
bad reputation, let customers down
gov lose tax revenue

68
Q

crisis management

A

organization deals with an event that threatens to harm the business
deal wi potentially damaging even quickly after it occurs

69
Q

how is risk management different to crisis management

A

risk management but looks more at minimizing risk

70
Q

what are some solutions to possibility of a crisis

A

make sure insurance policies up to date

‘trial runs’

71
Q

what is the relationship between risk and reward

A

big risk expected big reward

72
Q

uncertainty

A

inability to calculate the costs and benefits of a decision

73
Q

risk

A

chance of an adverse occurrence

74
Q

reward

A

possible return particular activity may make

75
Q

what are the external causes of uncertainty

A

economy
politics
competition

76
Q

what are the internal causes of uncertainty

A

organization+HR
stakeholders (shareholders+employees)
technology

77
Q

how could human resources be an internal cause of uncertainty

A

does culture of business support decision?

can employees implement new decision?

78
Q

how is stakeholders an internal cause of uncertainty

A

shareholder revolt?

industrial action from employees

79
Q

how does uncertainty affect aims and objectives

A

the decision to adopt objective may still be make but is done with cautious, not ambitious

80
Q

how does uncertainty affect decision making

A

making decision in groups harder

severity of risk is subjective

81
Q

how can economic risk be managed

A

analysis of economic indicators (GDP,interest rates, unemployment rate)
time series analysis

82
Q

how can political risk be managed

A

up to date with current policy intentions

83
Q

how can competitive risk be managed

A

strategy based on SWOT

market research

84
Q

unquantifiable risk

A

unexpected, can’t put a value on it

85
Q

quantifiable risk

A

can be predicted, value can be placed on

86
Q

give an example of a quantifiable and unquantifiable risk

A

if factory burnt down
cost to rebuild known
amount of revenue from future customers not known

87
Q

how can organizational risks be managed

A

foster a ‘change culture’ less risk of resistance if wanted to
appropriate incentive during restructuring

88
Q

how can stakeholder risk be managed

A

consultation

89
Q

risks faced by an entrepreneur

A

not securing finance

unsuccessful product/service

90
Q

local market

A

where customers are short distance from suppliers

91
Q

national market

A

where customers are spread throughout the country or over large area

92
Q

international market

A

where customers are spread throughout the world

93
Q

what is forecasting

A

use of existing data to predict future trends

94
Q

what are the two types of forecasting

A

qualitive (experience) and quantitative (numbers)

95
Q

what are the structured methods of qualitative forecasting

A

Delphi technique

forecasting

96
Q

what are the unstructured methods of qualitative forecasting

A

brainstorming

intuition

97
Q

describe the Delphi technique as a form of structure qualitative forecasting

A

relies on expert info
takes form of questionnaire
ask experts opinions on outcome of business situation
all info is summarised

98
Q

describe intuition as a form of unstructured qualitative forecasting

A

rely on knowledge of business,markets,economy and past experience

99
Q

describe expert opinion as a form of structured qualitative forecasting

A

people who have extensive knowledge about the market

100
Q

describe brainstorming as a form of unstructured qualitative forecasting

A

using a group to solve problems

discuss ideas for solutions

101
Q

advantages of structured forecasting

A

people have experience likely to know more than you

predictions could be more accurate

102
Q

disadvantages of structured forecasting

A

not part of your business don’t know how it operates

103
Q

advantages of unstructured forecasting

A

you know your business and likely outcomes

104
Q

disadvantages of unstructured forecasting

A

isn’t based on experts

105
Q

advantages of forecasting

A

show trend in figures, helps business plan ahead

see how well business is likely to perform in future

106
Q

disadvantages of forecasting

A

only as reliable as the data put forward, if not accurate

external influences aren’t taken into account

107
Q

what is cyclical variation

A

amount by which actual sales in a period vary from moving average figures

108
Q

what is time series analysis

A

calculates a moving average

109
Q

how do you calculate cyclical variation

A

actual sales-moving average sales

110
Q

how do you use time series analysis to predict future values

A

moving averages-odd number of years

111
Q

how do you calculate the moving average and use it to forecast

A 
find trend period 
calculate moving total 
calculate moving average 
calculate cyclical variation 
plot trend, line of best fit 
add/subtract av cyclical varitation to forecast figures on graph
112
Q

financial measures of business performance

A 
final accounts
ratio analysis 
gearing 
cash flow 
budgets
variance analysis
113
Q

non-financial measures of business performance

A 
markets share 
resource utilization 
environmental impact
quality
customer satisfaction
114
Q

cashflow forecast

A

estimates of likely inflows and outflows into and out of business

115
Q

variance analysis

A

difference between actual and budgeted figures

116
Q

why is cash flow important for a business

A

monitor,compare forecast with statement

potential lenders want to see it

117
Q

why does a businesses published accounts not provide a complete picture of performance

A

only looking at financial performance

118
Q

what do liquidity ratios asses

A

level of cash in business

119
Q

how to improve cash flow

A

more sales

factoring

120
Q

what is factoring

A

‘selling’ debt of business revenue from debtors can be received earlier
factoring company with take proportion of value of debt as pay

121
Q

advantages of measuring business performance

A

identifies weak points
helps set objectives
compare as your business grows

122
Q

disadvantages of measuring business performance

A

time consuming

123
Q

importance of non financial performance measures

A

assess the impact business is having on stakeholders

help indicates future finance performance

124
Q

why do businesses measure performance

A

see where weaknesses are

see how its progressing

125
Q

what are the decision making tools for a business

A

decision trees

Ansoff matrix

126
Q

decision trees

A

when business is considering two or more options
show likely financial return for each decision
combine risk and return

127
Q

what two aspects are decision trees based on

A

probability of outcome

estimated monetary reward

128
Q

whats the difference between ethical business and socially responsible corporation

A

CSR-responsibility to all stakeholders

morally correct behavior

129
Q

which characteristics did porter identify with high profit industries

A

weak supplier
weak buyer
high barriers to entry

130
Q

what do the symbols in decision trees show

A

square-a decision, no. of lines drawn from shows amount of options
circle-possible outcomes

131
Q

how do you calculate expected values on decisions trees

A

estimated monetary valueXprofitability

132
Q

benefits of decision trees

A

Choices are set out in a logical way
options & choices are considered at the same time
Use of probabilities enables the “risk” of the options to be addressed
Likely costs are considered as well as potential benefits
Easy to understand & tangible results

133
Q

drawback of decision trees

A

just estimates – always prone to error
Uses quantitative data only – ignores qualitative aspects of decisions
Assignment of probabilities and expected values prone to bias

134
Q

ansoff matrix

A

is a marketing planning model that helps a business determine its product and market growth strategy.

135
Q

what does an ansoff matrix suggest

A

that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets

136
Q

advantages of an Ansoff matrix

A

forces think about the expected risks of moving in a certain direction
It lays out possible strategies for growth
it focuses the business
Presentable to stakeholders
Creates a risk aware culture

137
Q

disadvantages of an Ansoff matrix

A

Only a theoretical model
Does not take into account the activities of external competitors
Accurate predictions are difficult- unforeseen events

138
Q

what are the quadrants of the Ansoff matrix (top two left to right then bottom two left to right)

A

market penetration + product development

market development +diversification

139
Q

what are the arrows going on the x and y axis of an ansoff matrix

A

x-left at top existing product then new product

y- side top existing markets then new markets

140
Q

which factors need to be taken into account when making a decision

A

level+nature of risk
accuracy of forecatss
potential for bias
volatility

141
Q

types of decision making based on length

A

short-term-Day to day, up to a year
medium-term –Monthly up to 3-5 years
long-term decisions-Longer than 5 years

142
Q

describe tactical, operational and strategic decisions

A

strategic- Long term affecting whole business
tactical –Middle management impact part of business
operational decisions-day to day taken by department managers

143
Q

when would you use qualitative forecasting

A

fluctuating demand

little historical data available

144
Q

qualitative decision making tool

A

ansoff

145
Q

quantitative decision making tool

A

decision tree

146
Q

what three responses should a business have in a crisis

A

communications response
management response
operational response

Business Studies (14 decks)

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