business objectives + strategy Flashcards
SWOT analysis + two approaches
identifies a businesses key strengths and weaknesses along with the opportunities or threats it faces due to its external environment. it is a framework used to help begin the process of strategic planning.
- top down approach
- consultive approach
top down approach and benefits/disadvantages
uses external management consultants to work directly with the boss of the business
BEN
-detachment from company culture allows aspects of the business to be seen in a new light
DIS
-managers may fail to share all necessary info with those conducting swot in an attempt to present their area of responsibility in a more favourable light
Consultive approach + disadvantages/benefits
a boss that takes an opportunity to travel around the business, engaging in conversation with those who understand each aspect best, can conduct a more thorough analysis and understand what works well/what doesn’t
BEN
-greater insight from a wider range of contributors
-chance for boss to gain first-hand understanding of the whole business
DIS
-staff may be less willing to point out problems if they feel this will reflect badly on the leadership of the person they are talking to
How can. business ensure robust identification of internal strengths and weaknesses?
analysing the KPI figures and comparing these figures with rivals or previous years performance
What is KPIs
Key performance indicators - quantifiable measures of aspects of a businesses performance that the business considers to be the main determinants of its commercial success
Examples of common KPIs
like for like sales market share capacity utilisation unit costs brand recognition staff turnover
What does the external environment impose on a business?
it can either impose a business a threat or opportunities, depending on whether the business and its products can use it to their advantage. it is vital to carry out an assessment of the environments they are operating in to understand the situation the business is in.
what are they key areas to consider when looking for opportunities or threats in the external environment
demography - changes to population, using this to a businesses advantage
New laws and regulation - changes to the laws or regulations can open up opportunities or make a product obsolete overnight
Technological factors - those who drive for technological change may seize this opportunity, but others may find their product becomes outdated
Economic factors - e.g in economic growth, inflation, exchange rates, unemployment, interest rates, government taxation
PESTLE Analysis acronym which states all of the 6 external influences
political economic social technological legal environmental
political factors are decisions made in the political arena that can affect businesses fortunes, they can sometimes be beneficial or leave negative affects depending on the type of firm- what is the most recent political factor that affects UK businesses and what are the consequences?
leaving the EU:
- harder to access EU markets
- Harder to fill lower paid job vacancies without free movement of labour
- more expensive imports (reduction of the pound)
- less FDI in the UK from foreign MNC
- EU laws need to be replaced
- weaker pound may make exporting to non EU markets easier
- UK firms will find it easier to compete on price with more expensive foreign imports as the exchange rate shifts
what are some economic factors
- the state of the economy (in a recession it isn’t always bad, discount stores like poundland will be affected positively)
- the exchange rate (affects those who export, sell imported products or use imported materials, as well as domestic firms in competition with import products)
- the rate of inflation (as it rises it can cause uncertainty and lead to reductions in investment)
- the rate of unemployment (an increase reduces average incomes but make it easier to recruit without offering a high wage)
what are some social factors, threat or opportunity?
changes in social attitudes and behaviour frequently related to lifestyle trends such as
- need to be healthy
- changed attitudes to smoking
- increased desire for convenience / speed
- ageing population
can be either threat or opportunity, some firms find their products to become more desirable, or sieze and adapt to the changes and new opportunities.
Technological factors + affects
changes in technology can affect a business in a range of ways:
- allow for new ways of making existing products (lowers costs, improves quality, reliability and recyclability)
- enables the development of brand new and innovative products
businesses that harness the tech early will see this tech change as an opportunity, however with those a little slower, it can be a threat, as rivals are ahead.
legal factors
passing new laws can disrupt industries and force businesses to change the way they make products or ban them all together.
what are environmental factors and their effects on businesses
environmental pressures applied to a business to ensure that their operations do not have a negative impact on the environment.
These are generally seen as a threat as most businesses are encouraged to change their operations.
However others do see this as an opportunity, as it may bring more efficient methods that can reduce costs or as a differentiation technique.
