strategy and implementation Flashcards
what is business strategy
The way a business operates to achieve its aims and objectives.
What is the difference between strategy and implementation?
Strategy is planning how to achieve goals, while implementation is putting the plan into action.
Name the four levels of strategy within a business.
- Corporate Strategy – Overall business goals and direction.
- Strategic Direction – Outlines how objectives will be achieved.
- Divisional Strategy – Individual department strategies aligned with corporate goals.
- Functional Strategy – Specific actions within departments like marketing or HR
what are the three types of business decisions
- Strategic (long-term),
- Tactical (medium-term),
- Operational (short-term)
what is involved in strategic business decisions
- high amount of resources
- made less often
- difficult to reverse
what is involved in tactical business decisions
- less resources than strategic
- made occasionally
- can be changed in a reasonably short time scale
what are operational business decisions
- fewer resources involved
- fairly easy to reverse
- made regularly
What does SWOT analysis stand for?
- strengths
- weaknesses
- opportunities
- threats
benefit of SWOT analysis
- business can assess its current market
- business can build on its strengths and protect itself against its weaknesses.
- It will show where there are market opportunities to exploit.
- It will enable a business to reduce the impact of any threats.
drawbacks of SWOT analysis
- It may be assumed that all strengths, weaknesses,
opportunities and threats have been thought of,
whereas something important might have been missed which means the business may take the wrong direction. - There may be unexpected exogenous shocks, such as a
recession.
What are Porter’s Five Forces?
- threat of new entrants
- competitive rivalry
- supplier power
- threat of substitution
- buyer power
what is threat of new entrants
- Time and cost of entry
- Economies of scale
- Cost advantages
- Barriers to entry
what is competitive rivalry
- Number of competitors
- Quality differences
- Switching costs
- Customer loyalty
what is supplier power
- Number of suppliers
- Size of suppliers
- Your ability to substitute
- Cost of changing
what is threat of substitutes
- Substitute performance
- Cost of change
what is buyer power
- Number of customers
- Size of each order
- Differences between
competitors - Price sensitivity
- Ability to substitute
What is horizontal integration?
When a business merges with or acquires another at the same stage of production.
What is vertical integration?
Merging with or acquiring a business at a different stage of production (forward or backward)
What is the difference between forward and backward vertical integration?
- Forward Integration – A company takes control of its distribution (e.g., a manufacturer opening retail stores).
- Backward Integration – A company acquires its suppliers to secure raw materials (e.g., a car company buying a tire manufacturer).
benefits of vertical integration
- Control over supply chain.
- Better coordination of production.
- Increased profit margins (no middleman costs).
What is a franchise?
A legal agreement where a business allows another to use its brand and business model.
What is the difference between a franchisor and a franchisee?
The franchisor owns the brand; the franchisee buys the rights to operate under it.
advantages of franchising for a franchisee?
- Reduced risk of failure.
- Established brand and customer base.
- Training and support from the franchisor
disadvantages of franchising for a franchisee?
- Limited freedom to operate independently.
- Must pay royalties to the franchisor.
- Cannot sell the business without permission.
What are the advantages of franchising for a franchisor?
- Quick business expansion with minimal investment.
- Receives royalty payments from franchisees.
- Spreads risk across multiple locations.
What are the disadvantages of franchising for a franchisor?
- Loss of control over daily operations.
- Poor franchisee management can damage the brand.
- Requires strong franchise agreements to avoid disputes.
What is the Ansoff Matrix?
- A strategic tool that outlines four growth strategies based on market and product combinations:
- Market Penetration – Selling existing products to existing markets.
- Market Development – Selling existing products to new markets.
- Product Development – Creating new products for existing markets.
- Diversification – Creating new products for new markets.
What is market penetration?
Increasing sales of existing products in existing markets.
methods of market penetration
- Increasing customer loyalty.
- Offering discounts and promotions.
- Attracting competitor’s customers.
what is product development
Creating new products for existing markets, e.g.:
- Modifying existing products (e.g., new flavors, packaging).
- Innovating new product lines.
What is diversification?
Developing new products for new markets, which carries the highest risk.
What is the difference between organic and external business growth?
- Organic growth – Expanding naturally by increasing sales, opening stores, or launching new products.
- External growth – Growth via mergers, takeovers, or acquisitions.
What are the reasons for mergers and takeovers?
- Increased market share.
- Cost savings (economies of scale).
- Expansion into new markets.
- Acquisition of new technology or products.
- Reduction of competition.
benefits of organic growth
- lower risk
- maintains company culture
- more sustainable
disadvantages of organic growth
- slow
- competitors may grow faster
- high investment
benefits of external growth
- fast
- economies of scale
- removes competition
- access to new tech and new customers
drawbacks of external growth
- high cost
- potential job losses
- integration issues e.g. merging systems, employees
