Strategic Management

Question 1

What is the purpose of strategic planning?

Answer 1

• establishes overall goals for a business and develops a plan to achieve these goals
• is a formal process involving stepping back from the day-to-day operations of the business and deciding on the direction to take the business
• strategic plans need to be controlled through regular monitoring
• assists managers to assess whether they should expand their business

Question 2

Why Strategic Planning Is Important to Growing Businesses?

Answer 2

businesses can reduce and manage risks

Question 3

As the size and complexity of the business increases, its strategy will need to become more sophisticated, how do these business manage to grow ?

Answer 3

The business will need to review its strategy, collect and analyze a wide range of business data, such as information about how the business operates, developments in its current and potential markets, PEST information relevant to the particular industry.

Question 4

The 5 key features to strategic planning are:

Answer 4

1. Identify the organisation’s mission and objectives.
2. Environmental Scan
3. Strategic Formulation
4. Strategic Implementation
5. Evaluate and control

Question 5

What is mission statement ?

Answer 5

A business mission statement outlines its purpose of going into business, what it wants to achieve and how it is different to its competitors.

Question 6

What can be used to set goals ?

Answer 6

SMART Process

Question 7

What are goals ?

Answer 7

• Goals are expressions of strategic intent.

- Usually long-term

Question 8

What are objectives ?

Answer 8

• Objectives give more detail to the goals.

- Usually short and medium term

Question 9

What is Environment scan ?

Answer 9

Environment scan is also known as a situational analysis, a scan that researches and analyses the business environment to identify and anticipate factors that will affect business growth and success.

Question 10

3 different business environment layers

Answer 10

1. Internal
2. Operating
3. Macro

Question 11

Internal business layers include :

Answer 11

•culture •employees •management style •business form

Question 12

Operating business layer includes :

Answer 12

• competitors •customers •suppliers

* local community

Question 13

Macro business layer includes:

Answer 13

• laws and regulations •technology •economy

* social trends

Question 14

Factors of PEST analysis

Answer 14

Political, Economic , Social, Technology

Question 15

Porter’s five forces explains :

Answer 15

Porters Five Forces explains an industry’s level of competition. Analyzing a market on the basis of the five forces assists management to evaluate the viability of entering a new market or expansion into an existing one.

Question 16

The five forces :

Answer 16

1. Rivalry among existing competitors .
2. Threat of new entrants .
3. Threat of substitutes
4. Bargaining power of suppliers
5. Bargaining power of buyers

Question 17

What happens if it is easy for the new businesses to enter a market?

Answer 17

competition will increase

Question 18

What are the other factors that can affect ease of entry to market?

Answer 18

government policy, capital requirement and customer brand loyalty.

Question 19

How can bargaining power of suppliers affect the market ?

Answer 19

their ability to change prices of supplies, affecting the cost of production and profitability.

Question 20

The supplier power typically depends on?

Answer 20

the number of suppliers able to provide the necessary raw materials.

Question 21

When will the bargaining power of buyers has the strongest effect on pricing ?

Answer 21

When

• the buyers are organised and collectively count for much of the producer’s income
• the buyers are interested in making substantial purchases
• they are interested in products that is in excess supplies

Question 22

What is a substitute product?

Answer 22

a product from another industry that offers similar benefits to the
consumer as the product produced by the firms within the industry.

Question 23

If the cost of switching is

low?

Answer 23

then this poses a serious threat

Question 24

What is the earning of Highly competitive industries ?

Answer 24

Low as cost of competition is high

Question 25

Function of SWOT analysis

Answer 25

A SWOT analysis is used to gather and categorize information about a business opportunity, new market, strategy formulation or change.

Question 26

What is SWOT analysis

Answer 26

planning tool that is useful when evaluating the current state of the business

Question 27

SWOT stands for

Answer 27

Strengths , Weaknesses, Opportunities and Threats .

Question 28

Internal factos of SWOT

Answer 28

strengths and weaknesses

Question 29

External factors of SWOT

Answer 29

Opportunities , Threats

Question 30

Aim of strategic formulation

Answer 30

improving business performance and profits

Question 31

Focus of strategic formulation

Answer 31

They focus on how the business can gain a competitive advantage and succeed in the market

Question 32

What are the steps to formulate strategies ?

Answer 32

1. Analyze the business & business environment
2. Set a clear strategic direction
3. Develop projects or initiatives
4. Establish action plans

Question 33

examples of strategic goals that can be implemented in a business are:

Answer 33

1. Market development :
   • involves modifying the marketing of your current products by adding distribution channels or updating advertising and promotions
   2.Product Development:
   • involves modifying existing products or creating new related products which are marketed to your existing customers.

Question 34

How does strategic implementation works ?

Answer 34

Overcoming resistance to change and communications are part of successful strategy implementation.

Question 35

Five- step process in strategic implementation :

Answer 35

1. Allocation of responsibilities
2. Detailed action plans
3. Timeless
4. Allocation of resources
5. Accountability