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business a-levels > unit 6 Strategic management > Flashcards

unit 6 Strategic management Flashcards

1
Q

Strategic analysis

A

The process of conducting research into the business environment within which an organisation operates, and into the organisation itself, to help form future strategies

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2
Q

SWOT analysis

A

A form of strategic analysis that identifies and analyses the main internal strengths and weaknesses and external opportunities and threats that will influence the future direction and success of a business

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3
Q

Pest analysis

A

The strategic analysis of a firm’s macro-environment, including political, economincal, social and technological factors.

-Outside firm’s control

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4
Q

Benefits PEST

A
  • provides understanding of wider business environment
  • encourages future analysis of business environment
  • linked with SWOT, identify opportunities or threats
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5
Q

Disadvantages PEST

A
  • Need further critical analysis
  • Might need regular updates (outdated)
  • Only considers external environment
  • Info might be based on inaccurate forecasting
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6
Q

Core competencies

A

Important capabilities essential for a business to gain a competitive advantage

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7
Q

INFO

Core competencies can be used to help generate a business strategy considering them may suggest other areas a business could successfully operate in

A
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8
Q

Mision statement

A

A statement of the business’s core purpose and focus, phrased in a way to motivate employees and to stimulate interest by outside groups

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9
Q

Effective mission statement should answer

What do we do?
For whom do we do it?
What is the benefit?

A
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10
Q

Vision statement

A

A statement of what the organisation would like to achieve or accomplish in the long-term

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11
Q

Boston matrix

A

A method of analysing the product portfolio of a business on terms of market share and market growth

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12
Q

Boston matrix:

HIghlights the position
analysing pp
highlight future strategies that need to be taken
Size of each circle is the revenue

A
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13
Q

Boston matrix does not provide strategic choises for business,
It analyses business’s product portifolio and highlights those prodcts that need action to be taken at a strategic level

A
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14
Q

Cash cow

A

Low market growth but high market share

The cash of this products can be ‘milked’ and injected back into some of the other products in the portfolio

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15
Q

Star

A

HIhg market growth and high maret share

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16
Q

Problem child

A

High market growth, but low market share

Consumes resources but generates little revenue
New products need heavy promotion

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17
Q

Dog

A

Low market growth and low market share

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18
Q

Building- Supporting the problem child

Holding- continue support to star

Milking- Take positive cash flow to reinvest in other products

Divesting- Identify dogs and stop production

A
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19
Q

Benefits Boston matrix

A

Analyse the performance and current position of existing product portifolios

Planning actions

Planning the intro

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20
Q

Limitations boston matrix

A

Cannot forecast what might happen

assumes high market share are always more profitable than lower

provides information but does not explain why it is their position

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21
Q

Limitations boston matrix

A

Cannot forecast what might happen

assumes high market share are always more profitable than lower

provides information but does not explain why it is their position

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22
Q

Strategic choice

A

is concerned with the identification of different strategic options and deciding between them

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23
Q

Ansoff Matrix

A

A model used to show the degree of risk associated with the four growth strategies of market penetration, market development, product development and diversification

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24
Q

The matrix allows. managers to analyse the degree of risk associated with each one

A
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25
Q

Market penetration

A

Achieving higher market shares in existing markets with existing products

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26
Q

Product development

A

The development and sale of new products or new developments of existing products inn existing markets

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27
Q

Market development

A

The strategy of selling existing products in new markets

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28
Q

Diversification

A

The process of selling different, unrelated goods or services in new markets

29
Q

Ansoff matrix–> SWOT PEST

Recommendation based purely on ansoff will lack depth and hzrd environùental evidence

A
30
Q

Corporate strategy ‘how we get from where we are now to where we want to be in the future’

A

A long-term plan of action for the whole organisation, designed to achieve a particular goal.

31
Q

Tactic

A

Short-term policy or decision aimed at resolving a particular problem or meeting a specific part of the overall strategy

32
Q

Strategic management

A

The role of management when setting long-term goals and implementing cross-functional decisions that should enable a business to reach these goals

33
Q

Influences on strategy formation (4)

A

Strengths of a business

Competitive environment

Resources available

Objectives

34
Q

Key stages of strategic management

A

strategic Analysis: Where is the business now?

Strategic choice: Identifying, choosing and deciding between options

Strategic implementation: Planning or and managing change

35
Q

if business did not engage in strategic management it would fail to:

Plan for the future

Respond logically to the changing business environment

Make effective long-term decision based on clear objectives

A
36
Q

When analysing strategic decisions analyse

External and Internal changes that make strategic change inevitable

A
37
Q

Competitive advantage

A

A superiuority gained by a business when it can provide the same value product/service as competitors but at lower price, or can charge higher prices by providing greater value through differentiation

38
Q

Michael Porter said Lower costs or differentiated products can lead to competitive advantage

A
39
Q

Change is the only thing constant and strategic analysis attempts to identify how changes are affecting a business

A
40
Q

Without vision and mission statements, planning new strategies will be like trying to steer a ship with no idea of where it is or the direction is it meant to be heading to

vision and mission statments must be applicable to the business, understood by employees and convertible to genuine strategic choices

A
41
Q

Porter’s Five Force analysis

A

A framework that sets out 5 external influences that determine the intensity of competition in a market.

42
Q

By understanding the forces that determine competitive rivalry, the following types of strategic decisions could be made more effectively.

  • Which markets to enter and what are the potential barriers?
  • Do we stay in existing markets?
  • What actions can be taken to improve our competitive position?
A
43
Q

Ways to improve competitive position

A

Product differentiation
Buying out some competitors
Target less competitive market segments
Collude with rivals

44
Q

Porter’s Five forces

A

Barriers to entry

Supplier power

Consumer power

threat of substitutes

Competitive rivalry

45
Q

Advantages PFF analysis

A

Enables a business to asses its position in the market or the potential for entry to a market

Considering the forces acting on a business–> enables a business to assess its chances of survival

highlight internal strengths and weaknesses

Indicates possible actions need to be taken to reduce threats

46
Q

PFF Disadvantages

A
  • Rapid changing markets
  • Analysis out of date fast (short-term)
  • Best for simple markets, meaning complex to use for market structure with many business
47
Q

Prahalad & Hamal

“The key to competing the future is building, deploying, protecting and defending core competencies “

A
48
Q

core competencies

A

Important business capability that gives a firm competitive advantage

49
Q

To be of commercial value to a business, core competencies should:

A

Be able to offer recognisable benefits to consumers

Not be easy for other firms to copy

Be applicable to a range of products and markets

50
Q

Core products

A

Product based on a business’s core competencies, but not necessarily for final consumer

51
Q

Additional info about Core competencies

A

Depends on integrating multiple technologies and different product skills

Does not necessarily need R&D
Maybe difficult to apply to many businesses and valuable time and resources might be wasted.

52
Q

Disadvantages of core competencies

A

Accurate but only short-term

If not updated, loss of good relationship and loss of competitive advantage

Possible to be MISTAKEN about the core compt. is and base strategy might be misleading

53
Q

Force field analysis

A

Technique for identifying and analysing the positive factors that support a decision ( driving forces) and negative factors that constrain it (restraining forces’)

Provides overview of the balance between forces driving change and forces resisting change

54
Q

Ansoff’s Matrix can be. useful in assessing risk, and helping to choose between strategic options, but this is only a starting point for strategic choice-Detailed use of qunatitative techniques such as investment appraisal and decision trees are needed to give a more in depth analysis

A
55
Q

If restraining forces are more significant than the forces for change, it could be better not to take this strategic decision, however if management action can reduce the restraining forces and/or increase the forces for change, the decision might be worthwhile.

A
56
Q

Force field in notes:

There are forces driving change and forces restraining it

No change when they are at equilibrium

Driving forces must exceed restraining forces for change

A
57
Q

Examples of Forces drivign change

A 
Internal:
lack of innovation
need for higher profits 
poor efficiency 
change culture 
change of leadership 
External: 
competition
Legalisation & taxes 
customer demand 
politcal environment
58
Q

Limitations Force-field analysis

A
  • Numerical values are subjective

- unskilled or inexperienced managers fail to identify relevant forces

59
Q

Expected value

A

The likely financial outcome obtained

Profitability x forecast economic return

60
Q

Decision tree

A

A diagram that sets out the options connected with a decision and the outcomes and economic returns that may result

61
Q

Four main features of business decision

A

All options open to a manager
The different possible outcomes
chances of these outcomes occurring
The economic returns of tehse outcomes

62
Q

The purpose of a decision tree is to show that option that gives the most beneficial expected value

A
63
Q

Limitations of decision tree

A

High margin or error, economic returns probabilities based on assumptions and estimated
especially with one off projects

Qualitative factors such as objectives are not allowed

results are averaged results, assuming that the outcomes oocur more than once

64
Q

Limitations of decision tree

A

High margin or error, economic returns probabilities based on assumptions and estimated
especially with one off projects

Qualitative factors such as objectives are not allowed

results are averaged results, assuming that the outcomes oocur more than once

65
Q

Advantageous Decision trees

A

Systematic approach that requires managers to consider all options and outcomes

Identifies key aspect of a decision

Can be used to assess key assumptions through ‘what if analysis’

66
Q

Strategic implementation

A

The process of allocating and controlling resources to support chosen strategies

67
Q

Business plan

A

A document describing a new business or a development of an existing business, its objectives and strategies, the market it is in and the financial forecast

68
Q

Strategic implementation

A
69
Q

Strategic choices (3)

A

Ansoff matriX
Decision tree
Force field analysis

business a-levels (14 decks)

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