3.1 Business objectives and strategy Flashcards
(33 cards)
what is a mission statement
an attempt to put corporate aims into a way that would inspire workers
describe the mission model
how the companies purpose, values, strategy and standards/behaviours all interlink
what is a corporate strategy
provides a medium to long term plan for meeting company wide objectives
what is porters strategic matrix
suggests that all markets operate in the same way; he concluded 4 strategies;
- cost focus
- cost leadership
- differentiation
- differentiation focus
porters matrix - cost focus
- targeting and segmenting a particular market or niche, maximising the earning and profit potential
- can contribute to becoming market leader
- builds strong brand loyalty and recognition
- could limit future growth
- could only focus on a temporary demographic
porters matrix - cost leadership
= advantage by being the lowest cost operator
= building and maintaining a competitive advantage
- can be done by either reducing (manufacturing) costs or by lowering prices of goods/services
- prioritise economies of scale
- gain market share
- although, not all businesses compete solely on cost
porters matrix - differentiation focus
= identifying and developing the unique selling points of a product
= within a niche market or a more specific sector
- ideal for smaller businesses
porters matrix - differentiation
- customers prepared to pay a premium for product
- works when it adds greater value than the cost embedded in the differentiation
- brand loyalty
- can be through quality, service, speed, packaging etc
- can easily be replicated
- dynamic market so have the be creative
define distinctive capabilities
ways that a firm operates that cannot easily be replicated by rivals
define a generic strategy
a strategic position that will prove effective in every market
what is ansoff’s matrix
a grid that helps marketers identify opportunities to grow revenue for a business through strategies with different levels of risk :
- market penetration
- diversification
- market development
- product development
ansoff’s matrix - market penetration
= about increasing market share by concentrating on existing products within the market
= safest strategy
= can be done by increasing promotion, build brand image, build customer loyalty and pricing methods
- limited growth potential
- vulnerable if not innovative
ansoffs matrix - market development
= about finding new market for existing products
= more risky as have to discover and gain experience in unknown territory
- repositioning the product = target a different market segment, by broadening product appeal
- moving into new markets
= requires market knowledge
- competing against already established businesses
- limited understanding of customer needs
ansoffs matrix - product development
= develop new products for existing markets
- market research as well as research and development required
- respond to customer needs and have some knowledge of the market
- expensive
- time consuming
- can be done by changing an existing product or developing new products
ansoffs matrix - diversification
= most risky strategy
= developing new products in a new market
= forces a business to operate completely out of their expertise and comfort zone
- spreads risk by engaging in multiple markets
- no reputation or expertise
what does SWOT stand for
Strengths
Weaknesses
Opportunities
Threats
SWOT - Strengths
- advantages that a business has in the market
- internal to the business
- could be a product/usp/anything unique to the business
SWOT - weaknesses
- internal to the business
- things that the business could improve
- disorganised, lack of skill, no communication etc
SWOT - opportunities
= external to the business
- gap in the market
- research and development have invented a new product
- trends and patterns within consumer purchasing
- beyond the control of the business but may open up opportunities for product / market development
SWOT - threats
= are external to a business, and can be any of the pestle factors
p - politics
e - economic
s - social
t - technological
l - legal
e - environmental
what is an external influence
= factor beyond the firms control that can affect its performance
- such as changes in consumer tastes, laws and regulations and economic factors
how would pestle analysis be useful for a business
= aids strategic and tactical decision making
PESTLE - politics
changes in government, new laws and legislations, new trading blocs, tariffs and tax rates
PESTLE - economic
increasing interest rates, inflation, unemployment rates, recession, the business cycle
