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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  • Might need regular updates (outdated)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
Market penetration
Achieving higher market shares in existing markets with existing products
26
Product development
The development and sale of new products or new developments of existing products inn existing markets
27
Market development
The strategy of selling existing products in new markets
28
Diversification
The process of selling different, unrelated goods or services in new markets
29
Ansoff matrix--> SWOT PEST | Recommendation based purely on ansoff will lack depth and hzrd environùental evidence
30
Corporate strategy 'how we get from where we are now to where we want to be in the future'
A long-term plan of action for the whole organisation, designed to achieve a particular goal.
31
Tactic
Short-term policy or decision aimed at resolving a particular problem or meeting a specific part of the overall strategy
32
Strategic management
The role of management when setting long-term goals and implementing cross-functional decisions that should enable a business to reach these goals
33
Influences on strategy formation (4)
Strengths of a business Competitive environment Resources available Objectives
34
Key stages of strategic management
strategic Analysis: Where is the business now? Strategic choice: Identifying, choosing and deciding between options Strategic implementation: Planning or and managing change
35
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
36
When analysing strategic decisions analyse | External and Internal changes that make strategic change inevitable
37
Competitive advantage
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
Michael Porter said Lower costs or differentiated products can lead to competitive advantage
39
Change is the only thing constant and strategic analysis attempts to identify how changes are affecting a business
40
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
41
Porter's Five Force analysis
A framework that sets out 5 external influences that determine the intensity of competition in a market.
42
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?
43
Ways to improve competitive position
Product differentiation Buying out some competitors Target less competitive market segments Collude with rivals
44
Porter's Five forces
Barriers to entry Supplier power Consumer power threat of substitutes Competitive rivalry
45
Advantages PFF analysis
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
PFF Disadvantages
- 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
Prahalad & Hamal “The key to competing the future is building, deploying, protecting and defending core competencies "
48
core competencies
Important business capability that gives a firm competitive advantage
49
To be of commercial value to a business, core competencies should:
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
Core products
Product based on a business's core competencies, but not necessarily for final consumer
51
Additional info about Core competencies
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
Disadvantages of core competencies
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
Force field analysis
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
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
55
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.
56
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
57
Examples of Forces drivign change
``` Internal: lack of innovation need for higher profits poor efficiency change culture change of leadership ``` ``` External: competition Legalisation & taxes customer demand politcal environment ```
58
Limitations Force-field analysis
- Numerical values are subjective | - unskilled or inexperienced managers fail to identify relevant forces
59
Expected value
The likely financial outcome obtained Profitability x forecast economic return
60
Decision tree
A diagram that sets out the options connected with a decision and the outcomes and economic returns that may result
61
Four main features of business decision
All options open to a manager The different possible outcomes chances of these outcomes occurring The economic returns of tehse outcomes
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The purpose of a decision tree is to show that option that gives the most beneficial expected value
63
Limitations of decision tree
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
Limitations of decision tree
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
Advantageous Decision trees
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
Strategic implementation
The process of allocating and controlling resources to support chosen strategies
67
Business plan
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
Strategic implementation
69
Strategic choices (3)
Ansoff matriX Decision tree Force field analysis

Business A-Levels (14 decks)

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