Business objectives & strategy

Question 1

What are business aims?

Answer 1

Business aims are things a business intends to do in the long-term. It is what a business strives to achieve. They are less specific than an objective and could be expressed as a vision.

Question 2

What is a mission statement?

Answer 2

Mission statements declare the business’ overriding purpose, but may also reflect its goals and values.

Question 3

What are the benefits of creating a mission statement?

Answer 3

1= Commitment to customers
2= Improves motivation

Question 4

What is a drawback of using a mission statement?

Answer 4

1= Time and resource consuming
2= Demotivating if false / unrealistic

Question 5

Objectives should be _ _ _ _ _

Answer 5

S= Specific
M= Measurable
A= Agreed
R= Realistic
T= Time Specific

Question 6

Ansoff’s Matrix:

1= Existing market, Existing product
2= Existing market, New product
3= New market, Existing product
4= New market, New Product

Answer 6

1= Market penetration
2= Product development
3= Market development
4= Diversification

Question 7

What is market penetration?

Answer 7

Market Penetration is achieving growth in existing markets with existing products. It can be done through increasing brand loyalty or encouraging more frequent use of products.

Question 8

What are the benefits of market penetration?

Answer 8

1= Increased customer loyalty
2= Good for successful products
3= Lowest level of risk

Question 9

What are the drawbacks of market penetration?

Answer 9

1= May overlook other opportunities, leading to high opportunity cost.

Question 10

What is product development?

Answer 10

Product Development is marketing new or modified products into an existing market.

Question 11

When is product development the best strategy?

Answer 11

In a market where product life cycles are very short or where consumer trends change very quickly.

Question 12

What are the benefits of product development?

Answer 12

1= Associated with Kaizen
2= Can be used to gain edge
3= Gains business reputation

Question 13

What are the drawbacks of product development?

Answer 13

1= Significant investment into R&D
2= Risk taken

Question 14

What is market development?

Answer 14

Market Development is the marketing of existing products into a new market. This could involve entering geographically new markets, or deciding to focus on a new target age group or ethnic group.

Question 15

What are the benefits of market development?

Answer 15

1= Allows business to expand into new markets.
2= Can aid international growth

Question 16

What are the drawbacks of market development?

Answer 16

1= Risky
2= You are inexperienced in the market and do not know their tastes.

Question 17

What is diversification? (Ansoff)

Answer 17

Diversification occurs when new products are developed for new markets.

Question 18

What are the benefits of diversification? (Ansoff)

Answer 18

1= Reduces overreliance
2= Spreads risk
3= Increases safety

Question 19

What are the drawbacks of diversification? (Ansoff)

Answer 19

1= Takes a business outside their area of expertise.

Question 20

What are the three components of Porter’s strategic matrix?

Answer 20

1= Cost leadership
2= Differentiation
3= Focus

Question 21

Cost leadership involves being the lowest-____ provider in the _______. It is not always associated with having the lowest ______. Helps a firm to ________ and have high __________ but often offers a “__ _______” product.

Answer 21

cost
market
price
compete
revenues
no thrills

Question 22

Differentiation involves taking a ________ ________ in the market. It can be adopted by ___ buisness and allows a firm to charge a __________ price. However it is difficult to ____________ that differentiation will _______ increased prices.

Answer 22

unique position
any
premium
guarantee
justify

Question 23

Focus involves targeting a ________ range of __________ in one of two ways. It can be by understanding ___________ very well and delivering products that are very ________ to customer _______. Linked to a _______ market.

Answer 23

narrow
customers
customers
specific
needs
niche

Question 24

Define distinctive capeability.

Answer 24

A distinctive capability is a form of competitive advantage that is difficult for competitors to understand or imitate.

Question 25

What are the three types of distinctive capeability that John Kay suggests there are?

Answer 25

1= Architecture 2= Reputation 3= Innovation

Question 26

Architecture is ___________ within and around an ___________. They can include relationships between the business and its __________, ___________ or _________. They allow a business to ___ _______ by being more ________ through easy and open transfer of ___________.

Answer 26

relationships organisation employees suppliers customers add value efficient information

Question 27

Reputation is positive ____________ a business builds around things such as q_______, reliability, s_______, prestige, and h________. They cannot be built __________, and _________ reputation can have _________ effects.

Answer 27

associations quality service honesty overnight / quickly negative lasting / long-term

Question 28

A sustainable competitive advantage can arise when a business __________ by creating a ____ product or service. It can sometimes create a whole new _______ or ________.

Answer 28

innovates new market industry

Question 29

_____-term strategies are taken out to achieve a __________ _________ but _____-term strategies are used to respond to an __________ or ______ in the ________.

Answer 29

long-term business objective short-term opportunity or threat market

Question 30

What is an internal audit?

Answer 30

An Internal Audit is an analysis of the business itself and how it operates, attempting to identify the pros and cons of its operations.

Question 31

What may an internal audit assess?

Answer 31

1= Products 2= Finance 3= Production 4= Human Resources

Question 32

What is an external audit?

Answer 32

An external audit is an analysis of the environment in which a business operates and over which it has little to no control.

Question 33

What may an external audit assess?

Answer 33

1= Market 2= Competition 3= PESTLE

Question 34

What does SWOT analysis analyse?

Answer 34

S= Strenghts W= Weaknesses O= Opportunities T= Threats

Question 35

What are some of the uses of SWOT analysis?

Answer 35

1= Aids decision making 2= Aids strategy building 3= Improves business performance

Question 36

What is PESTLE analysis and what does it stand for?

Answer 36

PESTLE Analysis is used to help monitor and analyse the likely impact of external influences on a business. Political Economic Social Technological Legal Environmental

Question 37

Why should a business be aware of political factors in the external environment?

Answer 37

Some parts of the world are particularly volatile and should be approached with caution, e.g. Gaza.

Question 38

Why should a business be aware of economic factors in the external environment?

Answer 38

Trading conditions can become very difficult for certain businesses during a recession, depending on the business type.

Question 39

Why should a business be aware of social factors in the external environment?

Answer 39

Social and cultural changes can influence changes to consumer needs and wants, but they are usually slow changes that take place over time.

Question 40

Why should a business be aware of technological factors in the external environment?

Answer 40

Businesses welcome technological advances as they help to improve efficiency, however it can shorten product life cycles.

Question 41

Why should a business be aware of legal factors in the external environment?

Answer 41

Legislation may be directed at businesses to protect vulnerable groups that might otherwise be exploited.

Question 42

Why should a business be aware of environmental factors in the external environment?

Answer 42

Global warming and climate change has led to people becoming more protective of the environment. People are more inclined to buy ‘green goods’ or buying products that come from businesses who are environmentally friendly.

Question 43

What is it called when a market only has one sole producer? What about if there is a few dominating firms?

Answer 43

A) A monopoly B) An oligopoly

Question 44

What are Porter's 5 forces?

Answer 44

1= Bargaining power of suppliers 2= Bargaining power of customers 3= Threat of new entrants 4= Threat of substitutes 5= Rivalry among existing businesses

Question 45

The more power that a supplier has, the higher ______ it can charge, reallocating _____. You can reduce their power by ________ _________ or encouraing _________.

Answer 45

prices profit growing vertically competition

Question 46

The more power customers have, the lower they can force ______ down. Firms can increase their power via __________ _________ ___________ or making it hard for a customer to _______ suppliers.

Answer 46

prices forward vertical integration switch

Question 47

If it is easy for a new business to start up, it becomes hard for existing firms to ______ _____ ______. Erecting ________ __ ______ can counteract this.

Answer 47

charge high prices barriers to entry

Question 48

Substitutes harm a businesses ______ _______, so they can _______ ideas to prevent others from copying them.

Answer 48

profit potential patent

Question 49

The degree of rivalry will also determine the ______ of that industry. Businesses can reduce rivalry by forming _______ or engaging in some ____-____________ practices.

Answer 49

prices cartels anti-competitive practices