3.1

Question 1

what is a mission statement

Answer 1

sets out the purpose and primary objectives of a business

Question 2

what does SMART stand for

Answer 2

specific
measurable
achievable
relevant
timed

Question 3

what are the limitations of mission statements

Answer 3

can be unrealistic and over optimistic
waste of management time and resources
lead to conflicts and inconsistencies when not properly written
can be ambiguous
can become obsolete as the business develops but the mission statement stays the same

Question 4

what are porter’s 4 generic strategy models

Answer 4

cost leadership
cost focus
differentiation leadership
differentiation focus

Question 5

what is differentiation leadership

Answer 5

involves making your products/services and business different from your competitors

Question 6

what is cost leader

Answer 6

aim is to become the lowest cost producer in the industry, increasing profits by reducing costs to increase market share by charging lower prices while still making a profit

Question 7

what is cost focus

Answer 7

when a business takes a lower cost advantage in one or more market segments

Question 8

what is differentiation focus

Answer 8

a business seeks to differentiate its products in one or more target market segments

Question 9

what are the 4 main components of ansoffs matrix

Answer 9

market penetration
market development
product development
diversification

Question 10

what is diversification

Answer 10

when a business markets a new product in a new market

Question 11

what is market development

Answer 11

uses an existing product trying to be sold in new markets

Question 12

what is market penetration (eg)

Answer 12

increasing sales in an existing market (eg loyalty schemes)

Question 13

what is product development

Answer 13

new product/service developed for an existing market

Question 14

what are the advantages of ansoffs matrix

Answer 14

takes into account internal & external factors
builds on strengths
explores opportunities

Question 15

what are the disadvantages of ansoffs matrix

Answer 15

depends on situation, objectives and resources

Question 16

what are the 4 components of boston matrix

Answer 16

star
cash cow
dog
question mark/problem child

Question 17

why should a business use the boston matrix

Answer 17

it can tell a business where to invest their budget and whether their products are worth continuing

Question 18

what is a question mark/problem child

Answer 18

products with low market share but high market growth they have often just been launch so are building customer loyalty so should be invested in as they could become a star

Question 19

what is a cash cow

Answer 19

products with high market share but low market growth, they have reached maturity but should still be continued until they become dogs

Question 20

what is a dog

Answer 20

products which have low market share and low market growth, these should be discontinued as they likely won’t be making a profit

Question 21

what is a star

Answer 21

products with high market share and high market growth, these will continue to grow and gain market share increasing sales as they develop

Question 22

what are the limitations of the boston matrix

Answer 22

there can be a middle ground making some products hard to categorise
the market is not clearly defined
high market share doesn’t equal high profits

Question 23

what are focus strategies (porter)

Answer 23

concentrate on particular niche markets and by understanding the dynamics of that market and the unique needs of the customers within it

Question 24

how do you calculate capacity utilization

Answer 24

current output/maximum output x 100

Question 25

what is architecture

Answer 25

a structure of relational contacts within or around the organization with customers, suppliers and with employees

Question 26

why can you not have a reputation without first having architecture

Answer 26

it is built on architecture

Question 27

what is a reputation

Answer 27

this includes customers own experience, quality signals, guarantee, word of mouth, warranty, association with other brands and staking the reputation once it's established

Question 28

what is swot analysis

Answer 28

a method for analysis a business, its resources and its environment, commonly used as part of strategic planning

Question 29

what does SWOT stand for

Answer 29

strengths weaknesses opportunities threats

Question 30

what are the advantages of swot analysis

Answer 30

identifying the strengths of the business identifying threats help the business prioritize issues that are key to success look at opportunities that are available for the business

Question 31

what are the limitations of using swot

Answer 31

identifies threats doesn't give solutions may oversimplify problems takes time & money to conduct

Question 32

what does the P stand for in pestle

Answer 32

political- tax policy, trade restrictions, tariffs, political stablilty

Question 33

what does the first E stand for in pestle

Answer 33

economic- economic growth, interest rates, exchange rates, inflation rates

Question 34

what does the S stand for in pestle

Answer 34

social- health consciousness, population growth rate, age distribution, career attitudes

Question 35

what does the T stand for in pestle

Answer 35

technology- R&D activity, automation, technology incentives, rate of innovation

Question 36

what does the L stand for in pestle

Answer 36

legal- employment laws, trading laws, marketing restrictions, up and coming laws

Question 37

what does the second E stand for in pestle

Answer 37

environment- environmental regulations, eco-customers, wastage, recycling laws

Question 38

what are porters 5 forces

Answer 38

competition, bargaining powers of customers, threat of new entrants to the market, threat of substitute products, bargaining powers of suppliers

Question 39

what influence does competition have on the market

Answer 39

price wars, investment in innovation + new products, intensive promotion, higher spending on advertising -> all of these increase costs & lower profits

Question 40

what influence does bargaining power of customers have on the market

Answer 40

pressure to drive down prices, increase quality -> reduce overall profits in an industry

Question 41

what influence does threat of new entrants to the market have on the market

Answer 41

if new businesses enter the market they will gain market share and rivalry will intensity, the position of existing firms is stronger if there are barriers to entering the market, barriers to entering determind the threat of new entrants

Question 42

what influence does threat of substitute products have on the market

Answer 42

this is a product that can be regarded as something that meets the same need, the extent of the threat depends upon; how well the price and performance match that of the industries product, the willingness of customers to switch -> customer loyalty -> switching costs