theme 3 Flashcards
Business aim and objectives
Aim-is the overland goal or target
Objective- the steps a business takes to achieve their goal.
Mission statement
Is a formal summery of the aims and values of an organisation, often about what the business does, how and why they do it.
Coca Cola- refresh the world and make a difference.
Corporate objectives
Objectives set by top management relating to the business as a whole, SMART (specific,measurable,achievable, realistic and time bound.)
Heirachy of business objectives
Mission statement and general aims , cooperate objectives , department objectives.
Benefits and negatives of mission statements
+ convince customers to shop w you over rivals.
+aimed at shareholders setting a clear goal, leadership.
-can be biased used as a marketing tool.
What is a ansoffs matrix
Used to examine a company’s product range through four options, market penetration, product development, market development and diversification.
Four options in ansoffs matrix for coke
Penetration strategy- existing product in an existing market (coca cola share size)
Product development- existing product in new market(Diet Coke)
Market development-new product in existing market (Vanilla Coke)
Diversification- new product in new market (Powerade)
Benefits and cons to ansoff matrix
+ easy to analys the level of risk for each strategy
-too simple, more detail needed like market research or position e.g competitors
Porters strategic matrix
All markets segmented into 2 ways niche vs mass market and low cost vs high differentiation.
Aim of portfolio analysis
Helps with the decision making, what are the priorities and how mich cash to put behind.
What are distinctive capabilities
Knowledge and skills ina. Workforce
Achieving competitive advantage through distinct capabilities
If a workforce can learn from mistakes and success , no blame culture encourage to take risks.
Tactical decisions and strategic
Short term responses to ppportunites or threats e.g Waitrose selling own brand for half the price in January (a quiet time easily reversible)
Strategic long term, Morrisons 700 head office redundancies to employ more shop floor , impact on carrers , tactical unlikely to threaten careers.
Strategic decisions may affect finance but they have to be signed off by head office so if it’s unaffordable it won’t go ahead.
Swot analysis
Internal - strength and weakness, what are we good at?, using key permanence indicators , like for like sales.
External - opportunities and threats what’s happening outside the business.
Demographics , population change
Pestle analysing external factors
Political - cut of corporation tax in 2010-2015 28-20%
economic - gdp 2008-9 recession
Social - cigarette
Technological - time space compression - travel - trains HS2
Legal - minimum wage
Environmental - global warming co2 petrol
Factors leading to a ch age in competitive environment
Rapid changes in consumer taste - free from
Globalisation
Porters 5 forces
How to achieve and sustain competitive advantage
Threat of new entrants
Bargaining power of buyers
Barging g power of suppliers
Threat of subside products or services
+ - of porters 5 forces
Analytical tool used with swot
+M&S threat of subsidies from John Lewis online sales were better found their weakness.
-risk company uses once and never updates findings , re do every year
Objectives for growth
Increase profit -Netflix to Indian market
Achieve economies of scale-cost per unit decreases
Increased market power - over customers Colgate cover all segments - over suppliers -
Increased market share and recognition
Increased profitability .
Problems from growth
Diseconomies of scale - age cost per unit increases due to poor communication , motivation and manegment.
Over trading -by trying to grow to quickly so has cash flow problems
Reasons for mergers and take overs
Growth
Cost savings
Diversification- entering diff markets
Market power - same market
Integration
Vertical- take over or merge with a firm in same industry but at different stages in production process .
Horizontal - same industry same stage
Problems of rapid growth
Takeover -
Managers become too busy , staff with good ideas feel frustrated and leave , more leave, impact on customers , as staff are worried on who gets which job not them.
Organic and inorganic growth
Inorganic - outside a business e.g Facebook buying WhatsApp.instead of innovation just bought .
Organic - inside the business , safer slower. Methods , staff motivation good work environment google .
Reasons to stay small
Product differentiation - avoid direct competition from a mass market .
Flexibility responding to customer needs- consumer taste change analyse shop floor behaviour communicate to managers.
Customer service - staff feel more appreciated in a. Small business and offer a better service .
Problems of quantitative sales forecast techniques
Some future factors are certain like Christmas in December however some aren’t like - new entrants, social media support from a celeb ,pandemic
Decision trees
0.7 x final figure = expected value
Added both expected values = net gain.
+allows for a range in possible outcomes not just one.
-easily manipulated for a biased answer
Critical path
Determine the length of whole project and the quickest way .
+allow stakeholders to know timings and multitask .
-quicker to just get on and do it.
Short terminism vs lonf
S- immediate gains at a higher risk(financial incentives)
L- success over time
Evidence based vs subjective decision making
E- making decisions after analysing evidence e.g quantitative sales forecasting may be used.- time consuming and costly but based on data.
S- based on initiation or a gut feeling +quicker decisions -dominant leader may push certain decisions .
Strong vs weak cultures
S - staff show real feeling for customers e.g refund whereas weak cultures follow a script.
S-staff stick together through a time of crisis whereas a weak culture qualified staff look for other jobs.
Company cultures
Power - boss is power holder and everything goes through or around them. +quick decisions - have to have trust in boss as quality of decisions made based on them. E.g Alan sugar
Role -employees are expected to conform to the rules and procedures .heriscju e.g Microsoft key thing to preserve huge share of software market.
+good in a large business for each employee to know where they stand . - may lead to lack of communication.
Task -no single power source teams formed around projects +best output -low morale or own objectives
Person - each individual valued for skills. +highmotivatikn - difficulties in aligning skills.
Internal and external stakeholders
Internal - employees manager owners
External - customers suppliers government shareholder
Stakeholder objectives
Customers - quality of product
Share holders - rising profits
Ethics in a. Business
Dealing honestly and fairly with customers
Protecting environment
No discrimination
For and against corporate social reliability
Marketing advantages - morally correct
Lush
Against
Costs - cheap labour outsourcing
Balance sheet
Current assets are short term as they change daily - inventories (stock) receivables (sums owed by customers) and cash.
Non current assets are long term - land , property or machinery.
Stammer of comprehensive income
Includes all financial incomes and expenses of a business - public limited companies have to publish.
Human resource strategies to improve productivity and retention and reduce turnover and absenteeism
Financial rewards - price rate , commission
Employee share ownership - give a stake in business feel apart .
Consultation strategies
Empowerment strategies - delegate ,junior staff to set own objectives .
Causes of change
Change in organisational size - time of growth create new horizontal layers.
Poor business performance
New ownership
Transformational leader
Or external factors a like )new entrants in market or economic change.)
