topic 7 (stragetic possition) Flashcards
mission statements are
a statement of an organisation’s general purpose and reasons for existence
corporate aims are
long-term targets set to allow a business to develop and achieve its mission
corperate objectives are
quantifiable SMART (specific, measurable, achievable, realistic, time) goals or targets hat give the business direction and focus
green washing is when ?
a company tries to make themselves look environmentally friendly
external influences on Corporate objectives and decisions
The state of the economy
Rivals actions
internal infulences on Corporate objectives and decisions
The company’s current finical position
New leadership
stratergy is
long term, involves whole business, decided by senior management to achieve the mission by attaining its corporate objectives
tatatics are
short term everyday actions completed by individuals lower down so don’t involve whole business, they carry out firms’ strategy towards achieving its objectives
Influences on the mission of a business
- The views, beliefs and values of the company founder
- The industry the firm operates in
- The product or service they produce
- Societal views, values, trends and customer expectations
- Target audience/ existing market structure and competition
strategic decison making
decisions made at corporate, senior management or executive level
functional decsion making
decisions made at function, department or division level.
SWOT analysis is
SWOT analysis is a technique that allows an organisation to assess its overall position
It’s a method of analysing the current situation by examining the internal strengths and weaknesses of the business and the external opportunity and threats.
the S is SWOT means
Strengths – things that a business is good at
the W is SWOT means
weaknesses – areas that a business has weaknesses in
the O is SWOT means
Opportunities – what is happening in the market that the firm would want to be involved in that could be a source of future success
the T is SWOT means
Threats – anything that will negatively impact a firms performance or constrain their actions in the external environment
current ratio -
short term liquidity (current assets : current liabilities)
gearing ratio looks into a ?
a firms reliance on borrowing and what proportion of capital invested has come back from bank loans
gearing ratio calcualtion
non-current liabilities/total equity +non-current liabilities x 100
benifits of high gearning for firm
- There will be less need to raise finance through share capital when bank loans are used, so there will be less shareholders making it easier to keep control of the company and make long term strategic decisions
- Less dividend payments will be required as share capital will not be needed so when the firm makes high profit there will be more retained profit for reinvestments
benifits of low gearing
- It makes the business more attractive investment to potential shareholders
- The firm will not be as vulnerable to the cost impacts of interest rate changes
- There is reduced risk as the business has less debt and fewer creditors who could but the business into liquidation if these debts go unpaid
you can analysing operations data by looking at?
- Productivity: the average output per worker or piece of capital equipment. Higher productivity increases a firm’s efficiency and gets the most value from its costs
- Unit costs: the average cost of making each unit. As a firm grows in size it can spread its total cost over a large number of units to benefit from economies of scale.
- Quality levels: the quality of product/service will be vital in developing a strong brand image and developing customer satisfaction
payback calculation
income required/income gernergated next year x 12
average rate of return calcualtion
average annual profit from investment/ capital of investment
net present value =
predicted present value - initial cost
