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Business Strategy Flashcards

1
Q

Define Objective

A

An objective is a specific, measurable, and time-bound goal that an organization aims to achieve

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2
Q

Define Strategy

A

A strategy is a broad plan or approach designed to achieve one or more objectives.

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3
Q

Define Corporate Strategy

A

Corporate Strategy is the strategy made at the very top of the business hierarchy (owners, managers etc.) which can affect the whole business

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4
Q

Define Strategic Direction

A

Strategic Direction is the course of action that ultimately leads to the achievement of the stated goals of the corporate strategy.

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5
Q

Define Division Strategy

A

Division Strategy, the overall corporate strategy will be communicated to the divisional managers

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6
Q

Define functional strategy

A

Functional Strategy relates to a single functional operation such as: production, marketing or HRM and the activities involved within each of these functions.

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7
Q

Define Strategic Decision

A

Strategic decisions concern the general direction and overall policy of a business.

Long-term, Difficult to reverse, Usually taken by senior management, made infrequently

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8
Q

Define Tactical Decisions

A

Tactical decisions tend to be medium-term decisions which are less far-reaching than strategic decisions.

  • Less resources involved
  • Can be changed in a short time scale
  • Taken by middle management
  • Made occasionally
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9
Q

Define Operational decisions

A

Operational decisions are administrative decisions that will be short-term and carry little risk

Few resources involved, fairly easy to reverse, Taken by junior management, made regularly

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10
Q

Define Corporate Plan

A

A corporate plan is a statement of organisational goals to be achieved in the medium- to long-term, it will make clear measurable objectives and formulate strategies for achieving these objectives. The corporate plan will include methods for monitoring the achievement of objectives.

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11
Q

Define SWOT analysis

A

SWOT analysis is a strategic planning tool that helps organisations identify and understand their internal strengths & weaknesses as well as external opportunities and threats to the organisation

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12
Q

What do firms look for in Strengths & Weaknesses

A

Strengths: Firms look how they can increase and improve their strengths

Weakness: Firms look to identify weaknesses so that they can improve on reducing these weaknesses

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13
Q

What do firms look for in Opportunities & Threats

A

Opportunities: Firms look to identify these opportunities and use them to their advantage as much as possible.

Threats: Firms look to identify threats to try avoid them or reduce it to maximum benefit.

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14
Q

What is porters 5 force theory used for

A

Porters 5 Forces, help businesses determine the market or industry is profitable or not

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15
Q

What are porters 5 forces

A

Threat of new entry

Competitive Rivalry

Supplier Power

Buyer Power

Threat Of Substitution

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16
Q

What is part of Threat of new entry

A
  • Specialist knowledge
  • Economies of scale
  • Cost advantages
  • Technology protection
  • Barriers to entry
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17
Q

What factors are there of Competitive Rivalry

A
  • Number of competitors
  • Differences
  • Switching costs
  • Customer loyalty
  • Costs of leaving market
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18
Q

What factors are there of Supplier Power

A
  • Number of suppliers
  • Size of suppliers
  • Uniqueness of service
  • Your ability to substitute
  • Cost of changing
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19
Q

What factors are there of buyer power

A
  • Number of customers
  • Size of each order
  • Differences between competitors
  • Ability to substitute
  • Cost of changing
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20
Q

What 2 factors are there of threat of substitution

A
  • Substitute performance
  • Cost of change
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21
Q

Define the Ansoff matrix

A

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

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22
Q

Define Market penetration

A

Market penetration - Concentrating on sales of existing products to existing markets.

Taking customers from competitors

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23
Q

Define Product development

A

Product Development - Involves the development of new products for existing markets. (or improvcing/changing current product)

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24
Q

Define market development

A

Market Development - Finding and developing new markets for existing products. (Identifying a new market (new country) or identifying a new customer e.g age)

25
Q

Define diversification

A

Diversification - Developing new products and new markets, Involves introducing a new product to a different market, highest level of risk but if successful spreads risk for the business.

26
Q

What are the advantages of the Ansoff matrix

A

Helps businesses make decisions on what products and markets they should focus on

Helps assess the level of risk associated with a strategy

27
Q

What are the disadvantages of the Ansoff Matrix

A

Ansoff matrix assumes the market and how it operates so rapid changes can effect the effectiveness of the Ansoff matrix

It doesn’t tell the business how to execute the chosen strategy.

28
Q

What are the different types of growth

A

Vertical Forwards & Backward integration
Horizontal integration
Franchise
Internal/organic
External
Diversification
Merge
Takeover

29
Q

What is horizontal integration

A

When a business takes over a firm in the same sector and in the same industry.

30
Q

What are the benefits of horizontal integration

A

Removes some of the competition – possibly for defensive reasons.

May benefit from increased economies of scale.

Increases market power to compete with market leaders by spreading the brand.

31
Q

What are the drawbacks of horizontal integration

A

management of the firm don’t match (culture)

risky

reduced flexibility

32
Q

Define Vertical Backwards

A

when a business takes over another business back down the chain of production.

33
Q

Define Vertical Forwards

A

when a business takes over another business further up the chain of production.

34
Q

What are the advantages of vertical integration

A

Security of supplies and control of suppliers’ prices.

Improves supply chain co-ordination.

Can guarantee the quality of its raw materials.

Use of outlets to determine brand image.

35
Q

What are the drawbacks of vertical integration

A

Your firm is not an expert in that part of the market

Can create communication problems

Vertical mergers will have fewer economies of scale because production is at different stages of supply.

36
Q

Define Organic Growth

A

When a business expands by using its internal resources and selling more of its existing products/expansion.

37
Q

How can organic growth be achieved

A

Expanding the product range

Targeting new markets

Expanding the distribution network, such as opening more stores or selling in new places

38
Q

what are the advantages of growth

A

Increase profits, increase market share, exploit new markets, benefit from economies of scale.

39
Q

What are the disadvantages of growth

A

Costs involved

diseconomies of scale

bad publicity

40
Q

Define External growth

A

is growth by acquisition, takeover or merger. Uses external resources to grow

41
Q

What are the advantages of external growth

A

Rapid Expansion

Increase In market Share

Spreads Risk

Increase in distribution channels

42
Q

What are the disadvantages of external growth

A

High Costs, Resistance to change, Brand and Reputation risks

43
Q

Define franchising

A

A growth method which includes an entrepreneur who has the legal right to use the brand name, products and business style of an existing business. McDonald’s outlets

44
Q

Define Franchisor

A

The franchisor is the individual who owns the business which is being franchised out

45
Q

What are the benefits of being a franchisor

A

Extra commitment from franchisees.

  • Able to expand the market and sales quickly.
  • Less costs of developing the business themselves
  • Risks and uncertainty are shared.
46
Q

What are the drawbacks of being a franchisor

A

Franchisees may not operate in a satisfactory manner

Loss in full profits (shared)

Does not have complete control

Reputation risk

47
Q

What are the benefits of being a Franchisee

A
  • May be supported by national advertising/promotion.
  • Reduced risk of failure
  • Support offered by franchisor
48
Q

Define Franchisee

A

The franchisee is the individual who is buying into the franchise

49
Q

What are the drawbacks of being a franchisee

A
  • Cannot sell the business without permission
  • Cannot operate with the same level of freedom
  • Risk of Franchisor cancelling their franchise
  • Make regular payments to the franchisor
50
Q

Define rationalisation

A

Rationalisation is the reorganisation of a business in order to increase its efficiency. This reorganisation normally leads to a reduction in business size.

51
Q

What are the factors deciding for rationalisation

A

Operational Efficiency

Market conditions

Financial Position

Risk assessment

52
Q

Define Outsourcing

A

Outsourcing occurs when outside suppliers are involved in activities that could be undertaken internally by a business. These suppliers are not directly employed by the business.

53
Q

Advantages of outsourcing

A
  • Significantly reduced staffing costs.
  • Existing workload and stress levels are reduced
  • Lower costs = more profit
54
Q

Disadvantages of outsourcing

A
  • Quality of production / product cannot be guaranteed.
  • Existing Staff May feel demotivated if they believe there jobs are at risk
  • More difficult to implement JIT systems
55
Q

What is the impact of rationalisation on the business

A

Increase efficiency
Cost Reduction
Employees redundant

56
Q

What is the impact of rationalisation on stakeholders

A

Employee, may lose there jobs

Customer, improved product and services

Local community, job losses

Shareholder/owner, more confidence as more profitable

57
Q

What requirements should be expected from a franchisor to the franchisee

A

Training, so the same quality is offered throughout the firms

Potentially provide materials

58
Q

What is a positive synergy

A

Successful financial synergy is when the merger of two companies results in increased revenue, tax benefits, and better debt capacity.

59
Q

What is a negative synergy

A

Negative synergy occurs when the combined firm’s revenue is lower than the value of each company operated separately.

Business (33 decks)

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