Strategy Theory Flashcards
How do you do TSA?
- Plot real data on graph
- Work out 3/4/8 moving average
- Use this to plot on graph
- Extend the line and move prediction
- Work out variation and adjust the figure
What are the uses of TSA?
To predict future sales based on trend Shows changes in market size Business planning-marketing Decision making tool Stock Control
What are the drawbacks of TSA?
It is descriptive
Doesn’t take external factors in to account
Smooths out figures so prediction is less accurate
Flexible meaning you could not include data
What four categories are presented on the Ansoff Matrix?
Market penetration-present present
Product Development- new product, existing market
Market Development-existing product, new market
Product/market diversification-new new
What is critical path analysis?
Critical path analysis is a technique that identifies the cheapest and fastest way to complete an operation.
What are the advantages of critical path?
Can allow the business to plan appropriately for their operations
It isn’t too difficult to calculate the total float
Can make decisions based on delay time available
Used to help ordering
Detailed visualisation of operation
What are the disadvantages of critical path?
The diagram can be confusing if their are lots of activities involved
Does not account for external factors
Only deals with what the business controls
Doesn’t work if you don’t have the timings right initially
How do you calculate ROCE? (Both ways)
Profit before tax and interest/Long term capital employed x100
Profit before taxation/ Equity shareholders funds and loans x100
How do you calculate Gross Profit Margin?
Gross Profit/Turnover x100
How do you calculate Net Profit Margin?
Net profit/Turnover x100
How do you calculate return on equity? (both ways)
Net profit/Equity x100
Net Profit/Share Capital x100
How do you calculate Gearing Ratio?
Fixed Cost capital/Long term Capital x100
What is liquidity?
The ability to pay off short term debt
How do you calculate Working capital?
Working capital same as net current assets
Current assets-current liabilities
How do you calculate current ratio?
Current assets/current liabilities
How do you calculate Acid Test ratio?
Current assets-stock/current liabilties
How do you calculate asset turnover?
Turnover/Net Assets
How do you calculate Stock Turnover?
Cost of sales/Stock
How do you calculate Debtor collection period?
Debtors/turnover x365
How do you calculate Creditor Payment?
Creditors/Cost of Sales
What are the advantages of decision tree?
May make a business consider possible course of action not previously considered
Results are fairly accurate due to placing numerical values on the tree
Help separate important and unimportant risks
Shows opportunity costs
What are the disadvantages of decision trees?
Much of it is based on probabilities which are not often estimated
Time lags occur in decision making so some numerical data may become out of date
Process is time consuming using valuable business resources
Don’t take in to account dynamic nature of the business
What is incremental change?
Bit by bit, people have chance to get used to it
What is catastrophic change?
Massive change, takes effect immediately
How can change effect a business?
Effect their objectives Reputation May have positive or negative affect on sales Financial impacts Loss or gain of economies of scale Staff
What is a proactive method of change?
Businesses create the change themselves
What is a reactive method of change?
Business have to take effect to external factors. Change as the business world changes.
What would firms do in standard procedure to accommodate change?
Training Machinery Communication Business Plan Finance R+D
Why are businesses resistant to change?
Used to a product how it is Waste of time and money if the product fails Risk Creates uncertainty Potential unemployment
What is the hierarchy of objectives? (top to bottom)
Corporate objectives -the whole company
Business objectives
Functional objectives-marketing, finance etc
Employee objectives
What is functional/operational strategy?
To improve the business operation e.g. lean production
What are business level strategies?
Used to gain complete advantage e.g. Ansoff matrix
What is corporate strategy?
Effects the longer term position of the company e.g. joint ventures
What is international strategy?
Transfer of resources because of competition
What is multi strategy?
Where you adapt the product for different markets
What is global strategy?
Where production os concentrated in favourable locations
What is transnational strategy?
Firms will have different strategies according to different markets
What is a financial control system?
Has to be in budget
What is a production control system?
What they can produce
What other two control systems should businesses consider wen implementing a strategy? (Not financial or production)
Appropriate management and leadership style
Management of change
How would you quantify success?
Profit Labour turnover Expansion Market Share Productivity ROCE
What is the role of management in change?
Overcome fear-communication Be prepared for risk Clear plan-objectives Incentive Training
As employee and employer relationships become more important, what helps achieve this?
Regular meetings
Clear Targets
Appropriate leadership style
There can’t be an autocratic leadership style
Involvement from a their party representing workers trade
What is the role of a trade union?
An organisation that represents your interests
Why did the role of trade unions decline?
Legislation-reduced their need and power
What sorts of legislation reduced the needs of trade unions?
The equality act-2010
Minimum wage
How was the power of trade unions reduced?
Removal of closed shops-You couldn’t get a job unless you were in a trade union
Secondary picketing became illegal
More females in the workplace-they were less likely to join trade unions
Decline in primary and secondary sectors
What are single union deals?
Only want to work with one- businesses encourage their employees to all join the same trade union
What is the role of the state (Government)?
Legislation (national) EU directives (minimum wage) Government spending Consumer and employee protection Environmental legislation
What does ACAS stand for?
Advisory
Conciliatory
Arbitration
Service
What is A CAS?
Political body not assigned to any political party. Will intervene as requested to overcome industrial disputes
What is pendulum arbitration?
The decision may swing accordingly to different circumstances between both sides
The other area the Government is involved with changes, is working practices, name some of these?
Education until 18
Encouraging more people to go to university
Training
Empowerment
Flexibility in the workplace-opportunities
Technology
What is a strategic objective?
A long term objective
What is a tactical objective?
A long term objective
What is a mission statement?
The place the business wants to end up, shows a clear plan
What is the purpose of a mission statement?
It motivates staff
Encourages custom
Helps with business planning
Sets business ethics
What is market failure?
When the market fails to work effectively (clears itself)
What are the benefits of immigration?
They do jobs that we don't want to do Businesses can recruit more and make more profit Lower wage rate Increase of economic growth Enriches Culture