Topic 3.1 Business objective and Growth

Question 1

What is a mission statement ?

Answer 1

A way for a business to express their main intent

Question 2

Limitations of Mission statements

Answer 2

• Unrealistic and over optimistic
• Can be a waste of management time
• Conflicts when not properly written
• Can be obsolete if the business changes/develops

Question 3

Advantages of mission statements

Question 4

What is a corporate objective?

Answer 4

• Set by a senior management for the whole company
• Aimed at satisfying the shareholders so may be related to profit and dividends

Question 5

What are department objectives?

Answer 5

• Each department will set their own objectives
• Marketing department may aim to increase sales by 3% in the first quarter
• This will help the business achieve its corporate objectives of more dividends for the shareholders

Question 6

What is SMART?

Answer 6

S - Specific
M - Measurable
A - Achievable
R - Realistic/ relevant
T - Timed

Question 7

What is market penetration ?

Answer 7

• Existing products and existing markets
• “Business as usual”

Question 8

Advantages of Market penetration

Question 9

Product development

Answer 9

• New product developed for an existing market
• eg. shampoo for curly, dry hair

Question 9

Disdvantages of Market penetration

Question 10

Advantages of Product development

Question 11

Disadvantages of Product development

Question 12

Market development

Answer 12

• Selling existing products to new markets
• Eg. colouring books for adults

Question 13

Advantages of Market development

Question 14

Disadvantages of Market development

Question 15

Diversification

Answer 15

• New products into new markets
• eg. Mcdonalds hotel

Question 16

Advantages of Diversification

Question 17

Disadvantages of Diversification

Answer 17

• High risk

Question 18

What is the Boston matrix?

Answer 18

• Helps you to classify your businesses products based on their market share and market growth
• Helps business decided which products to invest in and which ones to stop producing

Question 19

Star

Answer 19

• High market share
• High market growth
• Growth stage of the product life cycle
• Production should remain constant

Question 20

Difficulties with a star

Answer 20

• Could go straight into decline if the product is a trend
• New laws, accidents, safety may stop the production

Question 21

Question marks

Answer 21

• Low market share
• High market growth
  -Problem child
• Product may have just been launched and is building customer loyalty
• Should invest in these products

Question 22

Cash cows

Answer 22

• High market share
• Low market growth
• Reaching maturity
• Continue production until it starts to decline

Question 23

Drawbacks to cash cows

Answer 23

• Become complacent and other products stop being released

Question 24

Dogs

Answer 24

• Low market share
• low market growth
• Facing decline
• These products should be removed from sale

Question 25

Drawbacks of dogs

Answer 25

• Business may be loosing money

Question 26

Limitation of Boston matrix

Answer 26

• Only mentions about high or low market share and growth
• Considered too simplistic (Not all products fit into a box)
• Growth and market share are not the other way of seeing profitability

Question 27

Architecture

Answer 27

• The structure of relational contacts within or around the organisation with customers, suppliers and employees

Question 28

Reputation

Answer 28

• This includes customers own experience, quality signals, guarentees , word of mouth, warranty, association with other brands

Question 29

Innovation

Answer 29

• Bringing inventions to the market
  eg. new processes and ways of doing things