business strategy Flashcards
strategy
resources available
strengths of the business
competitive environment
objectives
strategic management
analysis of the current business situation, setting long term objectives, deciding on business strategies to achieve them and then implementing these stretegies
strategic analysis the process of conducting research into the business itself, in order to help identify future strategies
strategic choice taking important long term decisions that will push the business toward set objectives
strategic implementation- allocating sufficient resources to put decisions into full affect and evaluating success
strategic implementation
an appropriate organisational structure to deal with change
adequate resources to make change happen
well motivated staff who want the change to happen successfully
leadership style and organisational structure that allow change to be implemented with wide ranging support
control and review systems to monitor the firms progress towards desired firms final objectives
strategy and tactics
tactics are concerned with making short term decisons aimed at reaching
porters five forces model
a technique for analysis competitive forces within an industry
barriers to entry- the ease with which other firms can enter the industry threat when economies of scale are low, the technology needed to enter is cheap, distribution channels are easy to access, no patent restrictions on entry, product differentiation is low.
power of buyers- power customers have over producing industry, undifferentiated small supplying firms, the cost of switching suppliers is low, buyers can easily buy from other suppliers
the power of suppliers- cost of switching is high, the brand is powerful,suppliers could open their own forward integration operations, customers are small firms and fragmented
P5F
the threat of substitutes- substitute products in other industries eg demand for aluminium affected by price for plastic containers, new technology makes other options available, price competition forces customers to consider alternatives, any significant new product leads to a switch in consumer spending
competitive rivalry- based on other 4 factors, large number of firms with similar market share, high fixed costs force firms to try obtain economies of scale, slow market growth forces firms to take a share from rivals to increase sales
core competence
an important business capability that gives a firm competitive advantage
-provide clear benefits to consumers
-be difficult for other businesses to copy
-be applicable to a range of different products and markets.
core product- product based on a businesses core competencies, but not necessarily for the final consumer to end user.
developing core competencies
developing a core competency according to Prahalad and Hamel depends on integrating multiple technologies to produce skill, some of these may already exit in business. If a management can bring together designers, production specialists and IT experts into a team eg Sonys ability to miniaturise electronic components which led to many core products
the Ansoff matrix
a model used to show the degree of risk associated with the four growth strategies of market penetration, market development, product development and diversification.
-the market in which the business is going to operate in
-the products it plans to sell
-to remain in existing markets or enter new one
selling existing products or developing new ones
AM MMPD
market penetration- achieving higher market shares in existing markets with existing products- least risk bc fewer unknowns but lowering market prices could damage price war
product development- the development and sales of new products or new developments of existing products- involves innovation and can give a distinctive identity to the business
market development- the strategy of selling existing products in a new market-
diversification- the process of selling different unrelated goods or services in new markets-the riskiest may be out of core competencies but if its balanced by chance of high profit its a possible option
AM evaluation
the matrix allows to analyse the degree of risk associate with each area
limitations- only considers two main factors in strategic analysis, lacks important environmental evidence, no detailed marketing options, important to consider SWOT and PEST in order for a more complex picture.
force field analysis
a technique for identifying and analysis the positive factors that support a decision- driving force- and negative factors that constrain it-restraining forces-
total the scores and establish from this weather the change is viable, discus how the success of the change can be affected by decreasing the restraining forces and increasing the strengths of the driving force.
unskilled managers could fail to identify all relevant forces involved in the change process, numerical values are subjective
decision trees
a diagram that sets out the options connected with a decision and the outcomes and economic returns that may result
