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business component two > strategy and implement + decision making models > Flashcards

strategy and implement + decision making models Flashcards

1
Q

what is the relationship between objectives and strategy?

A

a strategy is the way a business operates, so it may direct the way a business carries out its objectives.

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2
Q

corporate strategy

A

strategic decisions affecting the entire business.

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3
Q

strategic direction

A

the route a business will follow to achieve corporate objectives.

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4
Q

divisional strategy

A

directing the divisions, to help aid the corporate decisions, but are more specific to certain areas in a business i.e., geographical.

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5
Q

functional strategy

A

relates to a single functional operation (FMOP).

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6
Q

what is the relationship between strategy and tactics?

A

strategy is the overarching plan or goal that a business will set, and the tactics are the small steps they take in order to achieve that.

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7
Q

what is a corporate plan?

A

a corporate plan is a statement of organisational roles that are medium to long term, based on management assessments.

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8
Q

what is SWOT?

A

s trengths
w eaknesses
o ppurtunities
t hreats

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9
Q

explain the nature and purpose of the Ansoff Matrix.

A

analyses the various risks and rewards associated with different strategies, with a low-risk option (market penetration), two medium-risk options (product development and market development) and a high-risk option (diversification).

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10
Q

evaluate business strategy.

A
  • long term aspect gives a roadmap
  • this leads to productivity due to specificity
  • however, could fail due to the likes of insufficient management.
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11
Q

evaluate corporate plans.

A
  • as they affect the whole business, they all have one common goal.
  • may motivate employees to work harder, therefore, increasing efficiency.
  • however, businesses may not have efficient funds to maintain sufficient corporate plans, leading to failure.
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12
Q

evaluate the usefulness of the Ansoff matrix.

A
  • leads to the likelihood of minimised risks and rewards.
  • less likely to suffer loss.
  • however, it is only a forecast, so the market may change.
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13
Q

what are the two types of growth?

A

organic and artificial

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14
Q

what is organic growth?

A

internal growth (FMOP)

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15
Q

what are features of organic growth?

A

time consuming, low risk, easier to control

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16
Q

what are the advantages of organic growth?

A
  • helps motivate staff

- can lead to efficiency

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17
Q

what are the disadvantages of organic growth?

A
  • time consuming

- may affect employee motivation (internal)

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18
Q

what is external growth?

A

external (takeover or merger)

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19
Q

what are the features of external growth?

A

high risk, rapid

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20
Q

what are the advantages of artificial growth?

A
  • quick (quick sales, reputation)

- business already established

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21
Q

what are the disadvantages of artificial growth?

A
  • high risk

- cultural differences

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22
Q

what is horizontal growth?

A

-businesses are doing the same thing, and are at the same point of production.

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23
Q

what is vertical growth?

A
  • businesses join at different stages of production
  • (backwards vi = primary - tertiary)
  • (forwards vi = tertiary - primary)
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24
Q

what are the advantages of vertical integration?

A

allows the business to have control over more sections of the business i.e., extraction of materials.

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25
Q

what are the advantages of vertical growth?

A
  • more control over overall production

- motivate employees seeing process

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26
Q

what are the disadvantages of vertical growth?

A
  • corporate objectives may clash
  • cultural differences
  • different stage of production may lead to confusion
27
Q

what are the advantages of horizontal integration?

A
  • business interests are shared
  • share resources
  • economies of scale
  • advantage over competition
28
Q

what are disadvantages of horizontal integration?

A
  • reduced flexibility

- risk of diseconomies of scale

29
Q

what is franchising?

A

when one business (franchisor) gives another business (franchisee) permission to trade using the franchisors name, goods or service

30
Q

in what way is franchising a two way relationship?

A
  • franchisee pays initial fee to franchisor
  • franchisee pays annual fee to franchisor
  • franchisor must support the franchisee (advertising, training)
31
Q

what is an advantage of being a franchisor?

A
  • rapid expansion
  • economies of scale
  • investment
  • motivation
32
Q

what is a disadvantage of being a franchisor?

A
  • loss of control
  • managing growth
  • litigation (failed franchisee = court)
33
Q

what is an advantage of being a franchisee?

A
  • lower risk
  • established brand
  • assistance
34
Q

what are the disadvantages of being a franchisee?

A
  • lack of control

- higher than expected start up costs

35
Q

what is rationalisation?

A

the reorganisation of a business in order to increase its efficiency.

36
Q

what does rationalisation lead to in a business?

A
  • reduction in business size
  • change in policy
  • alteration of strategy
37
Q

what are examples of rationalisation?

A
  • closing of branches
  • transferring of production
  • trimming of product ranges
  • incorporation of IT systems (replacing paper systems).
38
Q

what are disadvantages of rationalisation?

A
  • loss of jobs
  • industrial action
  • resistance from staff
  • uncertainty
39
Q

what is competitive advantage?

A

advantage over competitors by offering consumers greater value i.e., lower prices, greater benefits

40
Q

what are pros of competitive advantage?

A
  • customer loyalty
  • market share
  • potential to charge a premium price
41
Q

what are some difficulties of maintaining a competitive advantage?

A
  • competitor’s actions (copying)
  • inability to maintain barriers to entry
  • changing external environment
42
Q

what are Porter’s five forces?

A
  • supplier power
  • threat of substitutes
  • customer power
  • threats of new entrants
  • market competitors
43
Q

what is business change?

A

change occurs when a business alters its structure, size or strategy to respond to internal or external influences/

44
Q

why does a business change?

A
  • meet objectives
  • respond to external forces
  • respond to internal forces
  • gain competitive advantage
45
Q

what is business growth?

A

increasing the size of business operations i.e., new stores, new products, new markets, buying other businesses.

46
Q

why do businesses grow?

A
  • increase shareholder value
  • increase market share
  • reduce average costs
  • fulfil an objective growth
47
Q

what is retrenchment?

A

decreasing the size of business operations i.e., closing branches, delayering

48
Q

why do business’ retrench?

A
  • restructure to increase efficiency
  • turn around poor performance
  • focus on core business
  • sell off less profitable parts of the business
49
Q

what are factors to consider when relocating a business?

A
  • regional (access to market, social reasons, historical reasons, cost of production).
  • international (tax advantages, footloose businesses, freedom from restrictions, access to international markets).
50
Q

what is outsourcing production?

A

using another business to produce your product in order to maximise business abilities, and allow more time to be allocated for different functions

51
Q

why is decision making important?

A

it plays a vital role in management, and allows business’ to decide what they want their goals to be

52
Q

what is scientific decision making?

A

using data in order to make a decision

53
Q

what is intuitive decision making?

A

making a judgement off of ‘gut instinct’ or a persons experience

54
Q

what is intuitive decision making?

A

making a judgement off of ‘gut instinct’ or a persons experience

55
Q

what is a decision tree analysis?

A

a flow chart that analyses possible response options, to then analyse resulting outcomes.

56
Q

what are the benefits of decision trees?

A
  • choices are set out logically
  • probabilities allow risk to be addressed
  • easy and tangible
57
Q

what are the drawbacks of decision trees?

A
  • probabilities are only estimates
  • uses quantitative data only
  • doesn’t necessarily reduce risk
58
Q

what is critical path analysis (CPA)?

A

a project planning method that focuses on identifying tasks that are dependant on other tasks for (time based) completion.

59
Q

what are the benefits of critical path analysis?

A
  • encourages careful assessment of requirements
  • decision-making and planning tool in one
  • helps reduce risk and costs of complex projects
60
Q

what are the drawbacks of critical path analysis?

A
  • based on assumptions and estimates
  • too many activities may become complicated
  • doesn’t guarantee success
61
Q

what is cost benefit analysis?

A

process used to measure the benefits of a decision minus the costs associated with making that decision.

62
Q

what are benefits of cost benefit analysis?

A
  • good guide for decision making

- can be standardised and quantified

63
Q

what are the drawbacks of cost benefit analysis?

A
  • time needed to carefully construct

- estimates and forecasts may be biased or wrong

64
Q

how does information technology help in decision making?

A

helps enhance data, easier retrieval and referral.

business component two (7 decks)

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