strategy and implementation Flashcards
what is business strategy?
a long-term plan outlining how a company will achieve its objectives and maintain a competitive advantage
what are the 4 main types of business strategy?
- corporate strategy: overall direction of the business (mergers, acquisitions)
- strategic direction: defines how corporate strategy will be achieved
- divisional strategy: applied to specific business units (e.g. fast food chain expansion strategy in asia)
- functional strategy: focuses on specific departments (marketing, HR)
What is the purpose of corporate plans
- a corporate plan is a medium-to-long-term statement of business goals
- it helps: set objectives, aligns departments with strategy, guides decision-making
what is SWOT analysis
- Strengths: internal advantages
- Weaknesses: internal limitations
- Opportunities: external chances of growth
- Threats: external risks
what are porters 5 forces?
- threat of new entrants
- supplier power
- buyer power
- threat of substitutes
- competitive rivalry
what is the Ansoff matrix?
a strategic tool that helps businesses decide growth strategies based on existing vs new products and markets
what are the strategies within the Ansoff Matrix?
- Market penetration: sell more existing products in existing markets
- market development: sell existing products in new markets
- product development: create new products for existing markets
- diversification: introduces new products into new markets
what is the difference between horizontal and vertical integration?
- horizontal integration: a company merges with competitor in the same industry level (e.g. two car manufacturers)
- vertical integration: a company merges with suppliers or distributors (e.g. tesla buying a battery supplier)
Advantages of horizontal integration
- reduces competition
- increases market share
advantages of vertical integration
- better supply chain control
- reduces reliance on suppliers
disadvantages of horizontal integration
can lead to potential monopoly investigations
disadvantages of vertical integration
- requires high investment
what is the difference between organic and external growth?
- organic growth: expansion through internal investment e.g. opening new stores
- external growth: expansion via mergers or acquisitions
benefits of organic growth
- less risky
- maintains company culture
negatives of organic growth
- slower
- missed opportunities
benefits of external growth
- faster market entry
- access to new resources
- new customers
disadvantages of external growth
- high cost
- lose company image
- poor communication
what are the advantages of mergers
- shared expertise and costs
- increased economies of scale
advantages of takeovers
- quick market expansion
- eliminates competition
what is franchising and how does it help business expansion?
- a franchisor licenses its brand to a franchisee in exchange for fees
- used by McDonalds, Subway, Starbucks for rapid expansion
franchisee benefits
- less risk
- already existing brand loyalty
- support is offered by the franchisor e.g. full training and start up equipment
franchisee negatives
- less control over business decisions
- cannot sell the business
- must make regular payments to the franchise
franchisor benefits
- extra commitment from franchisees
- able to expand the market
- increased revenues
- risks are shared
franchisor negatives
- franchisees may not operate in a satisfactory manor which could impact reputation
- does not have complete control over day-to-day running of the business
what is rationalisation and how does it affect business?
- rationalisation means restructuring the business in order to increase efficiency
- usually leads to a reduction in business size, a change in policy or an alteration in strategy
examples of rationalisation
- closing branches
- transferring production
- trimming of product ranges
advantages of outsourcing
- reduced staffing costs
- existing workload and stress is reduced
- less investment risk
- capital needs are reduced
disadvantages of outsourcing
- potential of poor customer services
- existing employees may feel demotivated if they feel as if there jobs are at risk
- quality of production/product cannot be guaranteed
- loss of security of data
what is outsourcing?
- outsourcing occurs when outside suppliers are involved in activities that could be undertaken internally by a business
- e.g. call centres
