Corporate Strategies Flashcards
What is a strategy?
A long term business plan made up of multiple objectives to reach an aim.
What is a mission statement?
A short way of a business expressing their main interest - a phrase that describes how a business operates
What are corporate objectives for and who sets them?
- Set out by management for whole firm
- Should flow from mission statement and corporate vision
- Aimed at satisfying share holders = related to profit or dividends
What are department functional objectives?
Objectives divided into department’s work - each sets their own that should follow corporate objectives
What are the SMART objectives?
Specific, measurable, achievable, realistic, time-related - expected to evaluate mission statement and make judgement based on this
Specific
Must be a clear definition
Measurable
Achievement can be checked
Achievement
Can achieve a target but you may need to stretch yourself
Realistic
A target should be sensible so it can be achieved
Time-related
Setting a date for the achievement or review
What are the 3 uses of a mission statement?
- Focus - creates high focus and involvement while assisting the direction that will be taken
- Identity - creates an identity for the business and helps to establish a position in the market
- Profitability - strong corporate objectives = profitability and motivated staff as they are aware of what they are doing
What are the limitations of mission statements?
- Unrealistic and overoptimistic
- If not used effectively and mechanism understood can be waste of management’s time and resources
- Can be badly written and lead to conflicts
- Can be ambiguous
- Can become an obsolete as business develops
What is Ansoff’s Matrix for?
It is a strategy to looking at how a business wants to grow and expand
What are the 4 sections of Ansoff’s Matrix?
Market penetration, market development, product/service development, diversification
Market penetration
Encourages existing customers to buy more
Market development
Existing products in a new market
Product/service development
New product/service in existing market
Diversification
New product/service in a new market
What are the uses of Ansoff’s Matrix?
- Identify current products and markets
- Consider future options for expansion
- Consider opportunities, costs, benefits, risks
What are the limitations of Ansoff’s Matrix?
- Only shows a part of the picture and in a simplistic form = needs more analysis
- Must consider SWOT and PESTLE for whole picture
What is Porter’s strategic mix?
Used so businesses can achieve competitive advantage - if not will be ‘stuck in the middle’ (customers ignore)
What are the 3 strategies in Porter’s strategic mix?
Cost leadership, differentiation, focus
Cost leadership
The aim to make products at the lowest price (not charging lowest price)
How can cost leadership be achieved?
- Outsourcing
- Lean management
