Business Theme 3 Flashcards
mission statement
-gives an overriding/reason for existence
-make a commitment to customers/promise
critical appraisal of corporate aims/mission statements
-mission statements have to be constantly reassessed to ensure they have continued relevance to the business
-purpose
-audience
-realistic/achievable
Ansoff’s Matrix
1.)Market penetration -existing product in existing market
2.)Product development-existing market with new product
3.)Market development - new market for existing product
4.) diversification - new both
Porter’s strategic matrix
1.)Cost-leadership - striving to be the lowest cost provider
- doesn’t need to offer lower prices = Profit margins
2.)Differentiation - mass market with USP
3.)Focus - niche market -target customers
-cost or differentiation focus
aim of portfolio analysis (Boston matrix)
a method of categorising all of the products and services of a firm to decide where each fits within strategic plans - all products evaluated according to their competitive position and potential growth
Distinctive capabilities
- form of competitive adv that is difficult for competitors to understand.
-importance = cannot be easily reproduced, can be a source of sustainable competitive advantage
1.) Innovation
2.) Reputation
3.) Architecture
Strategies vs Tactics
strategies - longterm direction to achieve objectives
tactics - short-term responses to everyday changes in the market
Internal vs External audit
internal -analysis of the business itself + how it operates - strengths and weakness
external - analysis of the environment
SWOT analysis
1.) STRENGTHS
2.) WEAKNESSES - poorly motivated workforce, obsolete product
3.) OPPORTUNITIES - political change, fall in exchange market
4.)THREATS - new entrants into the market
PESTLE
1.) POLITICAL -leaving/joining EU (uncertainty)
2.) ECONOMIC - employment, prices, inflation
3.) SOCIAL - education(skills), migration
4.) TECHNOLOGICAL - capital
5.) LEGAL - taxes, legislation
6.) ENVIROMENT -renewable sources
Porter’s 5 forces
1.) bargaining power of suppliers
2.) bargaining power of buyers
3.) threat of new entrants
4.) substitutes
5.) rivalry among firms
External economies of scale
-Labour - training
-co-operation - concentrated in the same market
-disintergration - production broken up - more specialised
Internal economies of scale
-Purchasing
-Technical
-Specialisation
-Finance
-Risk
Increased market power
- customers - able to charge high prices
-suppliers - higher bargaining power
Diseconomies of scale
-communication becomes tougher - too many departments
-motivation might suffer
Reasons for mergers/takeovers
- Entry into new markets
- Exploit synergies - E.O.S
- Quick way to expand
Horizontal integration
-two firms of the same stage of production join together
-less likely to fail - more skills
-less disruption
Vertical integration
-firms at different stages join together
- forward = next stage of the production
- backwards = previous stage
financial risks of a M/T
-regulatory intervention (CMA)
-resistance from employees
-integration cost
-bidding wars
financial rewards of a M/T
-speedy growth
-higher remuneration for senior staff
-rewards to previous owner
-increased profitability
Problems of rapid growth
- drain on resources
-coping with change - the alienation of customers
-loss of control
shortages of resources
organic growth
growing naturally internally by increasing output
Methods of growing organically
1.) new customers
2.) new products
3.) new markets
4.) new business model
5.) franchising
ADVS of organic growth
- less risky - achieved by extension strategies
- relatively cheaper - financed from RP
- remain in control
-less likely to encounter diseconomies of scale
