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EY Accounting - Business Acumen > Module 13 - Strategy And Analysis > Flashcards

Module 13 - Strategy And Analysis Flashcards

1
Q

What should happen in the mission statement?

A

The overall aim of the business should be summarised into a concise mission statement and then translated into strategy and more specific objectives

(Not sure about second bit - think overall aim should be summarised into a concise mission statement)

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2
Q

What does the mission statement allow?

A

Communication of the overall aim to employees, customers, suppliers and other stakeholders

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3
Q

Models an entrepreneur can apply when gathering and analysis information

A

SWOT analysis

PESTEC analysis

Porters Five Forces

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4
Q

SWOT analysis is a technique which may be used by an entrepreneur to identify:

A

Strengths

Weaknesses

Opportunities

Threats

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5
Q

Which elements of SWOT analysis are internal

A

Strengths

Weaknesses

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6
Q

Which elements of SWOT analysis are external

A

Opportunities

Threats

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7
Q

In SWOT, could a business use strengths to counteract threats?

A

Yes

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8
Q

What is PESTEC?

A

A technique which may be used by an entrepreneur to identify external characteristics that could impact a business

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9
Q

What does PESTEC stand for?

A

Political

Economic

Social (attitudes)

Technological

Environmental

Competitive

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10
Q

When may Porters Five Forces be considered by an entrepreneur?

Why?

A

Prior to launching a product/service in a market or moving into a new market (or segment)

As this analysis addresses the competitive environment within an industry

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11
Q

Michael E. porter believed that competition within an industry is dependent on five basic forces:

A

Threat of new entrants

Bargaining power of suppliers

Bargaining power of customers

Threat of substitute products/services

Rivalry

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12
Q

What does Porters Five Forces look like?

A
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13
Q

What does Ansoffs matrix provide?

A

Four strategic directions which may help an entrepreneur formulate a business strategy

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14
Q

What does ansoffs matrix look like?

A
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15
Q

Axis of Ansoffs matrix

A

Existing markets / new markets

Existing product / new product

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16
Q

What are the four different strategies in Ansoffs matrix?

A

Market penetration

Product development

Market development

Diversification

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17
Q

Where is market penetration in Ansoffs matrix on the axis?

A

Existing markets

Existing product

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18
Q

Where is product development on the axis of ansoffs matrix?

A

Existing market

New product

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19
Q

Where is market development on the axis of ansoffs matrix?

A

New markets

Existing product

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20
Q

Where is diversification on the axis of ansoffs matrix?

A

New markets

New product

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21
Q

Relative risk of market penetration?

A

One

22
Q

Relative risk of product development

A

Four

23
Q

Relative risk of market development

A

Two

24
Q

Relative risk of diversification

A

Sixteen

25
Q

What are business operations?

A

Day-to-day activities of a business that are conducted to generate income

26
Q

One way business operations may be summarised (four different factors)

A

Location - where it is run from

Equipment - assets (tangible and intangible required to run the business)

Labour - the human element

Process - the business processes and systems, control activities etc

27
Q

When creating a mission statement an entrepreneur may ask what kind of questions about the business

A

Purpose / brand promise

What is different

Key values

What does it do for customers

What does it do for employees

28
Q

The identification of an internal weakness may allow what? (Look in notes page 276)

A

An entrepreneur to exploit this and turn it into an external opportunity from the environment surrounding the business

E.g. an entrepreneur may be able to re-train or acquire something for the business to take advantage of an external opportunity

29
Q

PESTEC

Examples of the Political characteristic

A

Legislation (anticipated or actual) (eg changes in tax bands and rates)

Government policy (eg no longer providing grants to certain small business start-ups)

30
Q

PESTEC

Examples of the Economic characteristic

A

Level of disposable income available to consumers

Interest rates (eg lower interest rates may deter saving and encourage spending)

31
Q

PESTEC

Examples of the Social characteristic

A

Attitudes towards single-use plastic (eg decreasing sales as consumers avoid buying plastic water bottles)

Demographics (eg an ageing population may increase spending on cruise holidays)

32
Q

PESTEC

Examples of the Technological characteristic

A

Technology (E.g. advances in mobile phone cameras may impact the sale of digital cameras)

33
Q

PESTEC

Examples of the Environmental characteristics

A

Ecological and environmental factors (eg need for more sustainable business practices - sales of solar panels may increase)

34
Q

PESTEC

Examples of the Competitive characteristic

A

Competitors actions (eg new product launch / change in pricing)

35
Q

Does a lower barrier to entry have a higher threat of new entrants?

A

Yes

36
Q

May suppliers increase prices or reduce quality of goods/services they supply to exercise their bargaining power?

A

Yes

37
Q

Description of bargaining power of customers

A

Customers with large volumes of purchases of undifferentiated items will experience strong buying power

As they can often find alternative suppliers or can play suppliers off one another

38
Q

Threat of substitutes description

A

Substitutes are alternatives that, to the consumer, serve much the same purpose and can threaten to reduce market share

(Eg tablet devices reducing market share of laptops)

39
Q

Rivalry (competitive rivalry) description

A

Rivalry among existing competitors or ‘jockeying’ for market share by reducing prices, substituting products/services, launching new products/services

(Eg apple and Samsung)

40
Q

Having created a mission statement, analysed internal strengths and weaknesses, analysed external marker forces and analysed the competitive environment, an entrepreneur must then what?

A

Formulate a business strategy

41
Q

Market penetration description

How is it achieved?

A

Existing marker / existing product

Grow business by maximising sales of existing products/services (eg significant promotional spend to boost sales of existing product)

Maximise sales through gaining market share from competitors (eg lowering price below comparable products)

Maximise sales through increasing consumption by existing customers

42
Q

Product development description

Eg?

A

Grow the business by introducing a new product/service that is superior to existing products/services

(eg a car manufacturer releasing a newer model with additional and more modern features)

43
Q

Market development description

For example?

A

Grow the business by launching existing products/services on a new market

(Eg new geographical area or a new online platform)

44
Q

Diversification description

How is it often achieved?

A

Grow the business by introducing a new product/service in a new market

Often achieved through acquisitions of businesses in the new target market (eg under armour acquired several fitness apps to enter a market for services instead of goods)

45
Q

Features of business operations:

Location - description

A

Where the business is run from - physical retail or office space, online or both (links to Place in marketing mix)

46
Q

Features of business operations:

Equipment - description

A

Refers to the assets, both tangible and intangible, required to run the business

Useful life should also be considered due to future costs of repairs etc

(Tangible assets may be most essential and most start up costs)

(Intangible may include a patent to protect IP, or a license, software, businesses website)

47
Q

Features of business operations:

Labour - description (page 285)

A

Refers to the human element (the entrepreneur and employees)

48
Q

Features of business operations:

Process - description

What does it include?

A

Refers to business processes, systems and related control activities implemented to run the business

Includes structured activities performed by people or equipment to produce a certain outcome

49
Q

Each business process has what?

A

An input

The processing of the input

An output

50
Q

Example of process when making a product

A

Input = raw materials

Processing = actual manufacturing of the product (conversion)

Output = finished product, ready for sale

51
Q

Within business processes, an entrepreneur should consider what?

A

Control activities around the security of assets (cash, equipment and stock)

Design of sales systems

Design of stock systems

Design of accounting systems required to run basic day-to-day activities

52
Q

Is it more efficient for an entrepreneur to start by buying off-the-shelf software packages to avoid designing their own detailed systems with control activities and to pay for use of existing well-controlled warehousing facilities to avoid designing control activities around stock?

A

Yes

EY Accounting - Business Acumen (16 decks)

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