Strategy and Implementation Flashcards
What are strategic decisions?
long term, high risk decisions that determine the overall direction of the business
What are tactical decisions?
> Medium term, less complex decisions, made by middle management in functional areas
Aim to meet the objectives in strategic plan of a business
Need to be flexible & adaptable due to PESTLE influences
What are operational decisions?
decisions that concern the day-to-day activities of an organization
What is strategic direction?
The course of action a business takes to achieve its goals stated by the cooperate strategy. Strategic planning is used which contains a clear mission statement, describes objective and decides which functions are focused on.
What is cooperate strategy?
Concerned with the strategic decisions that affect the entire business. Overall financial performance, proposed mergers or acquisitions, long term human resource planning and allocating resources. Are the overall statements of intent set by the most powerful employees and everything ties into this broad strategy.
What is divisional strategy?
Corporate strategy communicated to divisional managers (functional or geographical). This information shapes the plans these managers create, which helps to achieve the overall corporate strategy.
What is functional strategy?
Relates to a single functional operation. The decisions are guided and limited by divisional and corporate strategy. The functional managers have the responsibility to nurture the systems that will allow overall goals to be achieved.
What are tactics?
-Are the short term small steps that help achieve the overall strategy.
-Involve plans and practices, and need to be flexible in order to adapt to changing business strategy.
-They often have start and end dates with milestones, allowing them to be measurable.W
What is a corporate plan?
A statement of organisational goals to be achieved in the medium to long term
-Internal influences help to plan and prepare resources.
-External influences are taken into account to see what affects the plan.
-Clear and measurable objectives, which formulates strategic decisions.
Strengths of a corporate plan?
-Common sense of direction and confidence in the goals of the business.
-Able to understand the customers needs and wants more, so they can be matched more effectively.
-Helps businesses look at risks and opportunities.
Weaknesses of corporate plans?
-Implementing business strategy requires collaboration between all stakeholders.
-Needs careful monitoring which increases management costs.
-A lot of time and money is invested in the plan, and sometimes no reward is gained.
-Forecasts need to be as accurate as possible.
What is SWOT analysis?
Strengths- internal positives.
Weaknesses- internal negatives.
Opportunities- external positives.
Threats- external negatives.
What does SWOT allow businesses to do?
Analyses its resources and environment to help plan business strategy.
Exploring new initiatives, executing new policies, identifying areas for change in a programme and redefining mid-plan.
Benefits of SWOT?
Encourages a business to identify weaknesses and see threats coming. Therefore, it can be more flexible.
Drawbacks of SWOT?
May oversimplify the issues a business faces.
What is determined by Porter’s five forces?
collectively, an industry’s potential for profitability and competition. but forces do not guarantee that an individual firm will be/ not be profitable.
-Porter proposed that businesses could exert a force on a market rather than being passive participants.
What are Porter’s five forces?
- Buyer Power
- Supplier Power
- Threat of substitute products or services
- Threat of new entrants
- Rivalry among existing competitors
Supplier power?
-The ability of suppliers to set prices.
-If suppliers have high power, they are able to push up prices for raw materials and components. This means lower profit margins for the business. Example: computer chips.
-If suppliers have low power, the business will be able to push prices down, allowing for greater profit margins. Example: farms supplying Tesco.
What factors affect supplier power?
-Factors affecting supplier power= number of alternative suppliers, cost of switching suppliers, importance of volume orders to suppliers, if inputs make up a large proportion of costs.
Buyer power?
-The ability of customers to determine price.
-With high buyer power, a business is forced to set lower prices, but with low buyer power, businesses can charge more for their products.
What factors affect buyer power?
whether the customer buys in bulk, the proportion of the business’ sales the customer buys, product USP, competitors, brand loyalty, price sensitivity.
Barriers to entry?
-The factors that prevent new competition entering the market.
-If new businesses can easily enter the market, then existing businesses have to put more effort into keeping high profits. The opposite is true with high barriers to entry.
Examples of barriers to entry?
Cost advantages (economies of scale) of existing businesses, high capital investment requirements, brand loyalty, access to distribution networks, access to production factors.
Threat of substitues?
-The risk of alternative products/services.
-In telecommunication, there was no threat to terrestrial TV or fixed line phones, but now mobile phones and satellite TV are a threat.
What factors affect the risk of substitutes?
rates of change in technology, availability for capital investment, switching costs for customers, level of substitution effect, price-performance trade off.
Competition?
-How much competition exists in the market.
-Determines the prices set and the profit made.
-Factors determining the amount of competition: level of collusion, maturity of market, product differentiation, strength of brands, industry concentration.
What makes an industry attractive?
-Where it is easy to make a profit, difficult for new businesses to enter the market, low risk of substitutes, low buyer power but loyal customers and low supplier power.
Benefits of porters five forces?
shows current environment and suggests how to protect and grow products.
Drawbacks of porters five forces?
assumes market forces stay static but they are always changing. Does not consider non-market forces such as legislation. Non predictive value.
What is Anzoff’s matrix?
A marketing planning model that helps a business determine its product and market strategy.
-Shows the options to grow and how they manage product development.
Elements of Anzoff’s?
Diversification, market penetration, market development, product development.
Market penetration?
Existing products in existing markets.
-Aims to increase sales in its current market.
-Can do this by: attracting customers who are not regular users (increase brand loyalty), attacking competitors’ sales (happens in mature markets, by adjusting the marketing mix) and increasing consumption from existing users (by offering bundles and package deals).
-Low risk but potentially low reward.
-Example: Square One advertising a new buy one get one free.
Market development?
-Existing products in new markets.
-New geographical markets, new distribution channels or new pricing methods to attract different groups of customers.
-Identifying users in different markets with the same needs as existing customers, identify new customers who would use the product in a different way.
-Example: Lucozade marketing drink as a recovery drink for when you’re ill, or Square One opening a new cafe in another area.
-Greater rewards than penetration but more risk (Starbucks in Australia).
