Strategy & Implementation Flashcards
Strategic planning tools
Decision trees
Critical path analysis
Investment appraisal
Planning importance
Ensuring the future success for the business
How to plan effectively
Need to make sure the future objectives match the planning objectives/strategy
How to they plan to still remain a success and be competitive
By considering:
New products
Changes in their market
Cash flow changes
Investment decisions
How do managers or owners plan
They need to take risks in order to maintain/increase profits
Effective planning will reduce risks
Business knows clearly what it’s future course of action will be
Those that don’t plan ahead will be overtaken by competitors and won’t receive great profits
What’s an objective
Set by a business in attempt to reach a particular GOAL
Main ones being: Survival Break even Profitability Expansion
What’s strategy
The action plan that a business puts in place to reach its objectives
I.e.
achieve survival as an objective
Strategy to use marketing to increase customer awareness
What’s a tactic
A particular step that a business takes to achieve its strategy
Marketing strategy to get to objective of survival
Tactic would be to target families in the local area offering 10% off using the internet
How to create a strategic plan
Collect information on many aspects of the business
An internal audit +
An external audit to the business
Should happen on a regular basis
What’s the internal audit
Strengths and weakenesses in relation to its competitors in the whole business
Managements in departments can do these or external organisations can be employed to complete these
Purpose:
To provide accurate information about each particular department
To compare their stats and figures with competitor stats and figures in terms of S + W
What’s an external audit
Looks at the opportunities open to the business
Looks at the threats which it faces in its external environment
All businesses operate in a constantly changing environment
MCSTEEPLE
Audits/SWOT criticsms
Need to be put into a summarised format = SWOT analysis
Only gives part of the picture - shouldn’t just be used alone
Looking at market research, ratio analysis (financial data etc.) sales figures, and government statistics should also be used
Something for a business to use in determining objectives and strategy
External agency looking at this can be better = biased and objective otherwise
What’s the Companies Act 2006
A statutory statement of directors’ duties and responsibilities
Having care for employees, suppliers and the environment
Consolidated and updated existing law relating to the running of a company
Each director must act honestly and in good faith
Still doesn’t solve the different stakeholder conflicts
Porter’s 5 forces
It’s a system for analysing the level of competition in an industry
Looks at the forces that determine the level of COMPETITIVE INTENSITY +
attractiveness of the industry in terms of profitability
Porters 5 forces model
Middle
- INTENSITY OF RIVALRY WITHIN THE INDUSTRY
Bottom
- THREAT OF NEW ENTRANTS
Right
- BARGAINING PIWER OF BUYERS (customers)
Top
- THREAT OF SUBSTITUTE PRODUCTS
Left
-BARGAINING POWER OF SUPPLIERS
Middle
The intensity of rivalry within the industry
High competitive intensity = Innovation
Price wars
Higher spending on promotion
Reduce level of profitability that can be achieved ^^^^^
Bottom
The threat of new entrants
New firms entering the industry will result in them
taking a share of the market
increasing competitive intensity
Greater barriers to entry = the smaller the threat will be (monopoly won’t be affected)
Right
Bargaining power of buyers (customers)
Customers can have a strong bargaining in an industry
Can force prices down
Reduce any likely profitability
Top
Threat of substitute products
Usually in the technology industry (tablets, phones, games)
Business that fails to keep up to date with new devices will quickly lose market share
Left
Bargaining power of suppliers
Suppliers are able to force up the price of their products through their strong power to bargain (in some industries)
This will cut profits made available to the firm in the industry
Suppliers faced with a lack of bargaining power to UK supermarkets = reduced competitive intensity
Porters 5 forces model
Advantages + Disadvantages
✅ when a business is moving into a new sector = use model to see the situation clearly
❎ not always easy to obtain all the required information about the threats in the market
What are Porter’s generic Strategies
They show how a company can achieve a competitive advantage in its industry
The generic strategies
Cost leadership
Differentiation
Focus on niche
Cost leadership as a generic strategy
Aims to be the lowest cost producer in its field
EOS needed
Reduced production costs
Passing production savings onto the consumer
Differentiation as a generic strategy
The firm producing a range of goods that is different or seen as different than from the competition
Firm able to charge a premium for the product
Increase profitability
Risk for this strategy = product can be copied easily with no patent in place (lack of competitive advantage)
What’s focus on nice strategy
Involves providing for a particular sector in the market
Customers in this sector willing to pay a premium for them able to be different
(Expensive handbags)
What’s the “stuck in the middle” generic strategy
Trying to adopt all 3 strategies above so unable to achieve success
Can’t please all consumers and doing so means no strategy at all
What’s management by objectives
Is a system where managers and employees define & agree a series of objectives for the business
Pete drucker (motivation)
