Theme 3 Flashcards
Mission statement
The overall reason for a businesses existence
Corporate aims
The long term targets and plans to fulfill the mission statement
Corporate objectives
The medium to long term quantifiable targets to fulfill the mission statements
Corporate strategy
The actions to be taken by the business to achieve its objectives
Ansoffs matrix
Existing. New
Existing MP. PD
New MD. D
Porter’s strategic matrix
Lowest cost. Highest diffe.
Mass market. CL. D
Niche market. FCL. FD
Kay’s way to achieving competitive advantage
Architecture - relationship with stakeholders
Reputation - based on customer experience
Innovation - new products and processes
Porter’s 5 forces
- Industry rivalry
- Threat of new entry
- Buyer power
- Threat of substitution
- Supplier power
Horizontal intergration
When a company joins with similar businesses in the same field to help them grow or lessen competition
Vertical intergration
When a company controls different stages of making a product to make things more efficient and cheaper
Reasons for staying small
- more personalised service
- response quickly
- rapid growth can cause diseconomies if scale
- owners goal is not profit maximisation
Short termism
The business is only interested in a quick financial reward
Long termism
Considers ethical behaviour of the business in decision making + incorporates CSR
Evidence-based decision making
Decisions are based on evidence and data - valued and trusted
Subjective decision making
Decisions based in feelings, opinions and personal perspectives
Handy’s Power culture
Spider on web = manager at the heat of the business
Central figure making decisions
Handy’s role culture
Bank = red tape in the rigid organisation
Decisions made through well-established rules and decisions
Handy’s task culture
Matrix = series of work teams in a large organisation
Involves team work on a project
Handy’s person culture
Petri dish = symbolises employees in an organisation that are autonomous and skilled
Work on a client by client basis rather than project basis like task culture
Changes must be
R realistic
A achievable
M measurable
Planned change
Change which is planned by the top management of the business
Emergent change
Change that happens at any level in the organisation and is the result of an event or need
Dr Kotter’s 8 steps
- Create a sense of urgency
- Build a guiding coalition
- Form a strategic vision and initiatives
- Enlist a volunteer army
- Enable action by removing barriers
- Generate short-term wins
- Sustain acceleration
- Institutes change
kay’s distinctive capabilities can be tested using 3 questions
- Do they allow for market development?
- Do they provide noticeable benefits to the end user?
- Are they difficult to imitate?
SWOT - Strengths and Weaknesses
- Financial performance
- Resource management
- Human resource management
- Marketing
- Culture of the business
- Corporate social responsibilities and ethics
SWOT - Opportunities and Threats (PESTLE)
- Economic environment
- Political and legal environment
- Degree of competition
- Technological change
- Legislation
- Consumer trends
- Demographics
Time-series analysis
- part of quantitative sales forecasting
- this uses historical data, smoothed out, to make better predictions for the future.
5 steps of evidence-based decision making
Step 1: Ask - translate a problem into a question.
Step 2: Acquire the evidence.
Step 3: Appraise the evidence.
Step 4: Apply the evidence to the problem.
Step 5: Assess the outcome of the decision.
Corporate Social Responsibility (CSR)
A business approach that contributes to sustainable development by delivering economic, social, and environmental benefits for all stakeholders.
Scenario planning
- The process of looking at potential future situations and planning for those events.
- The idea is that if we look creatively at what the future could look like (e.g., energy needs), the drivers and implications that a business can create a series of strategies to handle those situations.
Risk acceptance
- The balance between risk and reward is the very essence of the business: without taking risks companies cannot generate profits.
- Difference between calculated risks, taken with planning and careful judgement, and risks taken carelessly and unwittingly.
Risk avoidance
The elimination of hazards, activities and exposures that can negatively affect an organisation’s assets.
Risk management
Aims to control the damages and financial consequences of threatening events.
Risk limitation
Some risks are both identifiable and manageable, they can be limited by:
- becoming an Ltd. to gain limited liability.
- Having plenty of insurance.
- Managing data carefully.
Risk transference
A business will buy insurance, for example:
PUBLIC LIABILITY INSURANCE - Covers the business for claims made against the business by a client or member of the public for accidental injury.
EMPLOYER’S LIABILITY - Protects the business if an employee is injured and the business has been negligent.
