Business Objectives and Stratergy

Question 1

What is a mission statement?

Answer 1

A business will use it’s mission statement to create corporate aims which are long-term goals of the entire business. Corporate aims will allow the business to work towards it’s overall mission.

Question 2

What are corporate aims?

Answer 2

Corporate aims are used to create corporate objectives which are the specific tasks and activities a business must accomplish to satisfy its corporate aims. Corporate objectives can be broken down into further departmental, team and individual objectives.

Question 3

What will influence the business mission?

Answer 3

Culture, Ethos/Value, Shareholders and Stakeholders

Question 4

What is strategy?

Answer 4

Strategic approaches are long-term plans which require many resources and can be difficult to reverse once implemented.

Question 5

What are tactics?

Answer 5

Tactical approaches are short-term plans which often require few resources and can be stopped or reverse if required.

Question 6

What is the link between a mission, corporate objective and strategy?

Answer 6

A business mission will inform the choice of corporate objectives as corporate objectives are designed to meet the overall mission. Businesses can use strategies to work towards their overall corporate objectives.

Question 7

What is Google’s mission?

Answer 7

To organise the world’s information. This informs Google’s objectives which include improving user experience and a strategy to support this objective by investing in long-term research and development to discover new technology.

Question 8

What is Tesco’s example of a tactical approach?

Answer 8

Tesco deciding to trial new scanning technology in one of its stores. This improves the use of technology which requires fewer resources and can be abandoned or reserved.

Question 9

What is a Tesco example of strategic approach?

Answer 9

Tesco taking over Booker in 2018 which may require many resources and can be hard to reverse. Booker is a food supplier and merging with Tesco could have provided purchasing economies of scale.

Question 10

What is Ansoff’s Matrix?

Answer 10

Helps businesses analyse their strategic direction.

Question 11

What is the Ansoff Matrix made up of?

Answer 11

Market development, diversification, market penetration and product development.

Question 12

What is market penetration?

Answer 12

Involves increasing sales of existing products to existing markets.
McDonald’s promoting its Happy Meal product range involves targeting an existing market with an existing product.

Question 13

What is market development?

Answer 13

Involves targeting existing products at new markets to increase sales.

Question 14

What is product development?

Answer 14

Involves targeting new products in existing markets to increase sales.
KFC introducing a range of pizza involves targeting a new product at an existing market.

Question 15

What is diversification?

Answer 15

Targeting new products at new markets to increase sales.

Question 16

Advantages of diversification

Answer 16

Can provide large rewards as a business can benefit from selling a new product and accessing a new market.
Can spread risk as it gives business an alternative if demand for one product declines.

Question 17

Disadvantages of diversification

Answer 17

Involves new products and new markets and a business will therefore have limited expertise which increases risk.
Higher advertising costs and research and development costs when entering a new market.

Question 18

What are influences on strategic direction?

Answer 18

The level of risk accepted by a business can influence the overall choice of direction.
Opportunity costs can influence the overall choice of direction as a business may need to decide if it is willing to forfeit the benefits of an alternate decision.
Business culture can influence the overall choice and direction.