Strategy implementation Flashcards
What is a strategy ?
Where the business is trying to get to in the long term
What is a corporate strategy ?
Where the entire business is trying to get to in the long term to meet stakeholder needs
What is a divisional strategy ?
Plans implemented by a product or geographical division
What is a functional strategy ?
Single operational areas within a division to help achieve the corporate strategy
What is strategic direction ?
Course taken by a business in order to achieve its goals
What are tactics ?
Smaller and short term goals that help achieve the strategy, need to be flexible and adaptable
What is a corporate plan and what does it do ?
Determines goals to achieve in the future and how it intends to accomplish them.
1. Sets outs business strategy
2. Help plan and prepare resources needed
3. Set out measurable targets
4. Reviewed each year
What are 3 advantages of corporate planning ?
- Give business certainty
- Clear targets = motivating
- Managers can anticipate potential threats
What are 3 disadvantages of corporate planning ?
- Risk of being quickly outdated = trends
- Time consuming
- Must be flexible or will miss out on opportunities
What are 3 advantages of strategies ?
- Enables understanding customers better
- Can anticipate wants and needs
- Help product meet customer needs while being differentiated
What are 2 disadvantages of strategies ?
- Required collaboration with all business and suppliers
- Has to be monitored to avoid competitors gaining advantage or missing opportunities
What is a SWOT analysis ?
A method for analysing a business, its resources and environment. Looks at strengths, weaknesses, opportunities and threats
What are 2 advantages of SWOT analysis ?
- Encourages strategies to covert weaknesses into strengths
- Can help with strategic plan
What are 2 disadvantages of SWOT analysis ?
- May oversimplify what’s happening within business
- Can be time consuming and complicated
What are Porter’s five forces ?
Analyses nature of competition within an industry or market
1. Threat of new entrants
2. Bargaining power of suppliers
3. Bargaining power of buyers
4. Threat of substitute products or services
5. Rivalry amongst existing competitors
What is a threat to new entrants ?
Harder for new businesses to enter the market and makes a market less competitive to make monopoly profits
How can you combat barriers to entry ?
- Loyalty schemes
- Bonuses to customers
- Discounts
What is bargaining power of suppliers ?
Once suppliers have influence in market, can charge higher prices
What are strategies for bargaining power of suppliers ?
Vertically integrating to secure supplier and take it away from competitors
What is bargaining power of buyers ?
Customers ability to influence the goods and services they pay for
What are strategies for bargaining power of buyers ?
- Promotions
- Loyalty schemes
- Price competitive
- Creating strong brand image
- USP
What is threat of substitutes ?
New technologies and government action can cause this, causes weaker individual power
What are strategies to combat the threat of substitutes ?
- Improve quality
- Reduce selling price
- Increase investment in marketing
What is competitive rivalry ?
The intensity of competition within the market, can change the pricing strategy implemented
What are strategies to combat competitive rivalry ?
- Availability
- Reward loyalty
- Innovation
- Trends
- USP
- Advertising
- Pricing strategies
What are advantages of Porter’s five forces ?
- Can evaluate current situation in the market
- Shows how to adapt products
What are 3 disadvantages of Porter’s five forces ?
- Assumes market forces stay static
- Doesn’t consider non-market forces
- Only provides snapshot at one point in time
What is Ansoff’s matrix ?
Alternative growth strategies in a matrix
1. Market penetration
2. Market development
3. Product development
4. Diversification
What is market penetration ?
Focuses on increasing sales within existing market with current products
What are 2 strategies of market penetration ?
- Increase market share
- Loyalty cards
What is market development ?
Identifying new markets for existing products
What are strategies of market development ?
- New geographical markets
- Finding new customers
What is product development ?
Targeting new products at existing customers
What is diversification ?
Marketing new products into new markets
What are advantages of Ansoff’s matrix ?
- Indicates risk in strategies
- Shows opportunity cost
What are disadvantages of Ansoff’s matrix ?
- Theoretical model
- Doesn’t take into account competitor activities
What is organic/internal growth ?
Seeking growth by the business’ own abilities and resources through new product development, market development, expanding distribution
What is inorganic/external growth ?
Seeking growth by completing a merge or takeover
What is a merger ?
Two businesses of roughly equal size agree to combine
What are advantages of mergers ?
- Friendly agreement
- Split ownership
What are disadvantages of mergers ?
- Risk of weak and ineffective leadership
- Lacking clear corporate strategy
What is a takeover ?
A business acquires a controlling interest in another
What are advantages of takeovers ?
- Reduced competition
- Gain new management
- New markets
What are 3 disadvantages of takeovers ?
- Expensive
- No guarantee of success
- Customer dissatisfaction
What is horizontal integration ?
Two businesses operating in the same industry at the same stage of supply chain become one
What are advantages of horizontal integration ?
- Increased EOS, market share and power
- Reduced production costs
- Reduction competition
What are 2 disadvantages of horizontal integration ?
- DEOS
- Possibility of complacency
What is vertical integration ?
A business acquires another in same market at different stage of supply chain
What are 3 advantages of vertical integration ?
- Greater control over supply chain
- Improved access to raw materials
- Better control over retail distribution channels
What are disadvantages of vertical integration ?
- Less scope for EOS
- Possibility of complacency
What is franchising ?
An agreement where the franchisor allows other franchisees to sell its products or use its name
What are advantages of franchising ?
- Tried and tested products
- Promotional activity paid for
- Established business
What are disadvantages of franchising ?
- Royalty fees
- Limited opportunities to show initiative
- Risk of DEOS
What is rationalisation ?
Reorganising production to increase productivity and efficiency
What are 3 strategies of rationalisation ?
- Relocating staff
- Locating nearer to suppliers
- Reducing unit costs while maintaining quality
What is outsourcing ?
Transferring jobs to an externally third party for a significant period of time
What are advantages of outsourcing ?
- Lower unit costs
- Specialised suppliers and services
- EOS
What are disadvantages of outsourcing ?
- Poor employee and public relations
- Loss of brand recognition
