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Business A Level Definitions CIE > Section 6 > Flashcards

Section 6 Flashcards

1
Q

Strategic management

A

The highest level of managerial activity (CEO/ board of directors)

  1. Assess business position
  2. Mission + objectives
  3. Make long term decision + objectives
  4. Integrate/coordinate activities for functional areas
  5. Allocate resources
  6. Evaluate

Hierarchy :
1. Corporate strategy - strategy development of entire organisation
2. Business strategy - strategy development for different divisions of business for competitors advantage
3. Functional strategy - strategy plans form functional departments

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2
Q

Establishing corporate strategy

A

Resource availability
Strength of business
Competitive environment
Objectives

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3
Q

Competitive advantage

A

Superiority gained by business when it can provide same value product as competitors or lower prices or can charge higher price by providing greater value through differentiation.

Can be achieved through to get value creation:
~ Automation
~ Rationalisation
~ Innovation

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4
Q

Strategic analysis

SWOT analysis

PEST analysis

A

Process of conducting research into the business environment to help form future strategies.

Strategic analysis that identifies main internal strengths and weaknesses with external opportunities and threats that will influence future direction and success of business.

Strategic analysis of a firm’s macro environment including political, economic, social and technological factors.

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5
Q

Mission statement

A

Statement of a business’s core purpose and focus - phrased to motivate employees and stimulate interest by outside groups

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6
Q

Vision statement

A

Statement of what the organisation would like to achieve in the long term

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7
Q

Boston matrix

A

• Highlights position of every product, by measured in terms of market growth/share
• Analysis of existing portfolio
• indicates possible future strategies

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8
Q

Boston matrix and strategic analysis

A

Building:
~> support problems child product with cash from cash cow

Holding:
~> support star products to maintain good market position (might need to remind customers)

Milking
~> take positive cash flow from good products and investigating in other products

Divesting
~> identifying dogs and stops supplying products (can’t be done lightly)

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9
Q

Porter’s 5 forces

A

• Rivalry among existing comnpetitors
• Threat of new entrants
• Bargaining power of buyers
• Threat of substitutes
• Bargaining power of suppliers

In terms of business strategy:
~ Help decide whether to enter a market
~ Help decide whether to stay in current market
~ Help develop strategies to gain competitive position

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10
Q

Core competency

A

Business capability that gives a firm a competitive advantage

To be profitable/commercial:
• Provide recognisable benefit to customer
• Not easy to duplicate
• Applicable to range of products/markets

Developing CC:
~ Lead to development of core products - helps the production of products for final consumers
~ Depends on integrating multiple technologies + different product skills
~ Once developed, allows for strategic opportunity

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11
Q

Core product

A

Product based on business’ core competencies not necessarily for a final consumer

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12
Q

Strategic choice

A

Have to be challenging enough to gain competitive advantage; yet achievable with given resources

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13
Q

Ansoff’s matrix

A

Used to show the degree of risk associated with the four growth strategies of market penetration, market development, product development and diversification

~> Different options available to marketing manager for sales growth

Variables in strategic marketing decisions:
• The market
~ Remain in same one
~ Enter new one
• The product
~ Sell existing products
~ Develop new ones

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14
Q

Market penetration

A

Achieving higher market shares in existing markets with existing products

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15
Q

Product development

A

Development and sales of new products/development of existing products in existing markets

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16
Q

Market development

A

Strategy of selling existing products in new markets

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17
Q

Diversification

A

Process of selling different unrelated goods/services in new markets

Most to least risky:
• Diversification
• Market + product development
• Market penetration

Notes:
• Risks differ in each strategy
• Allows for analysing the degree of risk associated with each option
• Managers will do cost benefit assessment
• Reality = combination of strategies used
• Requires more situational analysis info
• Managerial experience plays a role

18
Q

Force-field analysis

A

Technique for identifying/analysing the positive factors that support a decision and negative factors that constrain it

~> Strengthen forces that support decision and reduce forces

Notes
• Driving forces = Positive factors
• Restraining forces = Negative factors

Conducting:
1. Analyse current + desired situation
2. List driving factors
3. List constraining factors
4. Allocate numerical score to each factor to indicate significance (1 = weak)
5. Chart forces ( left = positive ; right = negative)
6. Total scores and establish wether change is viable
7. How will change be affected by. Decreasing the restraint factors/increasing the driving force

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19
Q

Decision tree

A

Diagram that sets out the options connected with a decision and the outcomes and economic returns that may result.

4 main features of business decisions:
1. All options open to the manager
2. Different possible outcomes resulting from these options
3. Chance of these outcomes occurring
4. Economic returns from these outcomes

~> Analysis of info should result in decreased risk

Construction:
1. Constructed from left to right
2. Each branch of tree represents an option and chance
3. Decision points are ‘square’ and called decision nodes
4. ‘O’ is known as chance nodes -shows the outcome of a decision tree
5. Probabilities shown alongside each possible outcome
6. Gains/losses shown at the end of each outcome

20
Q

Expected value

A

Likely financial results of an outcome .

Calculation of each chance node:
~> Multiplying probability by the forecasted economic return of both branches

21
Q

Strategic implementation

A

Process of planning, allocating and controlling resources.

Needs to be in place:
• Appropriate organisational structure to deal with change
• Adequate resources to make change happen
• Well motivated staff, -want change to be successful
• Supportive organisational culture/leadership style
• Control and review systems

22
Q

Business plans

A

Written document that describes a business, objectives,strategies,market its in and financial forecasts.

~> Often assists lenders to finance a business proposal
~> Gives sense of purpose/direction
~> Provides targets to aim and monitor
~> Adapt and rewrite strategies
~> Use financial forecasts as benchmarks/budgets
~> Apply for additional funding

Describes the following:
• Executive summary
• Opportunity
• The market
• Management team + personnel
• Operations
• Financial forecast

23
Q

Executive summary - Business plans

A

The entrepreneur, business idea, info about workers needed

24
Q

Opportunity - Business plans

A

Product/service + why be a success (market research)

25
Q

The market - business plans

A

Size, growth, marketing/sales elements, competitors

26
Q

Management team - business plans

A

Skills and experience of entrepreneurs/intended recruits

27
Q

Operations - business plans

A

Premises, facilities and systems

28
Q

Financial forecasts - business plans

A

Cash flow forecasts + sales, revenue, profit

29
Q

Corporate plans

A

Methodical plan containing details of then organisations central objectives and the strategies to e followed to achieve it.

  1. Overall objectives of organisation in time frame
  2. Strategy to be used to meet objectives
  3. Main objectives for key departments

Internal influences:
• Finance
• Capacity
• Managerial skills
• Staff
• Organisational skills

External influence:
• Macro-economic conditions
• Central bank
• Technological change
• Competitors

30
Q

Corporate culture

A

Values, attitudes and beliefs of the people working in an organisation that control the way they interact with each other and external stakeholder groups

31
Q

Power culture

A

Concentrating power amongst just a few people

32
Q

Role culture

A

Each men member of staff has a clearly defined job title/role

33
Q

Person culture

A

Individuals given freedom to express themselves + make decisions for themselves

34
Q

Task culture

A

Base on operations and teamwork

35
Q

Entrepreneurial culture

A

Encourages management/workers to take risks and come up with new ideas

36
Q

Changing organisational culture

A

When change is needed
• Stands inn the way of growth/development/success
• Become more transparent
• Change in market demands
• Change to profit /customer orientated
• Mergers
• Change future prospects

How to:
• focus on positives
• Full commitment from top/key personnel
• Establish/ communicate new objectives/missions
• Encourage bottom up participation
• Train staff
• Change reward system

37
Q

Change management

A

Planning, implementing, controlling and reviewing the movement of an organisation from its current state to a new one.

Ways to change:

~> Project groups
Created by organisation to address problem through numerous specialists.

~> Project champions
Person assigned to support and drive a project forward, support teams to put change in play

38
Q

Promoting change - Kotter’s strategy (8 step program)

A
  1. Establish sense of urgency
  2. Create effective project team
  3. Develop vision + strategy
  4. Communicate vision change
  5. Empower people to take action
  6. Generate short term gains from change to benefit as many people as possible
  7. Consolidate gains + produce more chamge
  8. Build change into culture to become a natural process
39
Q

Resistance to change

A

• Fear of unkown
• Fear of failure
• Losing something of value
• False beliefs about need for change
• Lack of trust
• Inertia (not wanting to change)

40
Q

Contingency planning/crisis management

A

Preparing an organisations resources fro unlikely events.

Process:
1. Identify potential disasters
2. Assess their likelihood of occuring
3. Minimise potential impact of crises
4. Plan for continued operations of the business

Business A Level Definitions CIE (6 decks)

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