3.1 Business Objectives and Strategy Flashcards
(57 cards)
What is a mission statement?
The main purpose and vision of a business. Its a short way of expressing the businesses intent
What is a corporate objective?
quantifiable statement of business aims which should include measurable targets
What is a department objective?
aims set by each department in order to achieve corporate objectives
What are uses of mission statements?
- provides focus and shows direction
- identity - helps establish market place position
- profitability
What are limitations of mission statements?
- can be unrealistic
- waste of management time and resources
- can lead to conflicts
- can be ambiguous
- can become obsolete as business grows
- can be seen as another pr tool
What is corporate strategy?
The course that a business follows to achieve it’s corporate objectives
What is market penetration?
Existing products in existing markets (growth strategy)
Lowest possible risk and therefore lowest potential reward
What is ansoffs matrix?
A tool that assesses the risk of 4 growth strategies
What is product development?
A growth strategy where a business useS a new product in an existing market
What is market development?
A growth strategy where a business uses on existing product in a new market
What is diversification?
A growth strategy where a business creates a new product for a new market.
Approaches to market penetration?
- Changes to the marketing mix
- gain market share from competitors
- encourage more consumption
- extension strategy
- least costly as they know the market
problems with market penetration?
- Competitor reaction
- relatively short term
- market may already be saturated
- cannibalisation
Approaches to market development?
- New geographical markets
- new product dimensions/packaging
- New distribution channels
- different pricing policies to attract different income customers
problems with market development?
- More risky than P development - overseas expansion
- existing products may not suit new markets
- may require high market research costs
- alienation of current customer
- business may not understand new markets
Approaches to product development?
- Launch substantially improved version of existing products (innovation)
- introduce new complementary products
- new product innovation
Dangers of product development?
- Cannibalisation
- may shorten PLC of existing products
- damage to brand
- high r&d costs
- requires development of new skills
- requires market research
Approaches to diversification?
- R&d into new products and market research into new markets
- acquisitions of other businesses
- highest potential reword
Dangers to diversification?
- Relies on heavy investment
- cultural differences
- brand name may be diluted (may also bring attention to it)
- riskiest strategy due to lack of information of new markets
What are the uses of ansoffs matrix?
- identify all current products /services and markets
- allows for consideration of future options
- shows risk and opportunity
- identify potential new markets / strategies
Limitations of ansoffs matrix?
- Only shows part of the picture
- oversimplifies the market
- large MNCs may need thousands of suboptions and strategies
- may need no do a swat / pestle analysis to gain a better idea of the full picture
What is porters matrix?
A matrix that categorises the marketing strategies a business con adopt to try and achieve a competitive advantage
What does porters matrix analyse?
Cost leadership and differentiation
What is the Boston matrix?
Planning tool that helps managers plan for a balanced product portfolio
Compares market share and growth.
