3.1 Business objectives and strategy

Question 1

List the hierarchy of objectives from top to bottom

Answer 1

Aims
Mission statement
Corporate objectives
Functional objectives

Question 2

What is an aim?

Answer 2

What the business is looking to achieve in the long term

Question 3

What is a mission statement?

Answer 3

An expression of a businesses overall aim as well as its core values and context

Question 4

What is a corporate objective?

Answer 4

The specific performance goals set by senior management for the business to achieve over time

Question 5

What is a functional objective

Answer 5

The day to day goals of departments within the business, often derived from corporate objectives

Question 6

What does the acronym SMART stand for

Answer 6

Corporate goals should be…
Specific
Measurable
Agreed
Realistic
Time-bound

Question 7

Why do functional objectives need to be carefully aligned across departments

Answer 7

So that all parts of the business are working towards the same shared goal

Question 8

What is competitive advantage

Answer 8

Anything that gives a company an edge over its competitors

Question 9

What is Ansoffs matrix?

Answer 9

A tool for businesses with a growth objective

Question 10

What is Ansoffs matrix used for?

Answer 10

To identify an appropriate corporate strategy and identify the level of risk associated with the chosen strategy

Question 11

What are the axis of Ansoffs matrix?

Answer 11

Horizontal- Market (existing and new)
Vertical- The product (new and existing)

Question 12

What are the 4 strategies to achieve growth in Ansoffs matrix?

Answer 12

Market penetration (existing product in an existing market)
Market development (existing product in a new market)
Product development (New product in existing market)
Diversification (New product in new market)

Question 13

What is the least risky strategy to achieve growth (according to Ansoffs matrix)

Answer 13

Market penetration

Question 14

What is the most risky strategy to achieve growth (according to Ansoffs matrix)

Answer 14

Diversification

Question 15

What is market penetration

Answer 15

Selling more (existing) products to existing customers by encouraging more regular use of the product, increased usage of the product and brand loyalty of customers

Question 16

What is brand loyalty

Answer 16

Where consumers continue to buy the same brand of goods rather than competing brands

Question 17

What is market development

Answer 17

Finding and exploiting new market opportunities for existing products.
This can be done by entering new markets abroad or repositioning the product and selling to different customers

Question 18

What is product development

Answer 18

Selling new or improved products to existing customers
This can be done by developing new versions or upgrades and redesigning packaging

Question 19

What is diversification?

Answer 19

Targeting new customers with entirely new or redeveloped products.
For example Greggs launching a range of clothing products.

Question 20

What is the use of porters generic strategic matrix?

Answer 20

To identify a range of strategies a business might adopt considering its source of competitive advantage and the scope of the market which they operate in

Question 21

What are the two axis of porters generic strategic matrix

Answer 21

Market scope (Niche and mass)
Competitive advantage (Cost and differentiation)

Question 22

What does SWOT stand for?

Answer 22

Strengths
weaknesses
opportunities
Threats

Question 23

What is SWOT used for

Answer 23

To identify internal strengths and weaknesses of a business. As well as external opportunities and threats

Question 24

What is a strength (SWOT)

Answer 24

What the business is good at

Question 25

What is a weakness (SWOT)

Answer 25

What the business does poorly

Question 26

What are opportunities for a business (SWOT)

Answer 26

Options a business may exploit to enjoy further success

Question 27

What are threats to a business (SWOT)

Answer 27

Hazards that have the potential to damage business performance

Question 28

What is PESTLE used for

Answer 28

To examine the external factors that are likely to impact the activities and outcomes of a business

Question 29

What does the acronym PESTLE stand for

Answer 29

Political Economic Social Technological Legal Environmental

Question 30

How can managers use PESTLE to help the business

Answer 30

They can use the information gathered to understand the potential threats and to identify future difficulties so that they can take action to help avoid and eliminate them

Question 31

What is meant by a political factor in PESTLE analysis

Answer 31

The extent to which local and national government is expected to influence the business

Question 32

What is meant by economic factor in PESTLE analysis

Answer 32

The extent which economic indicators are expected to directly impacted business performance. e.g. inflation or exchange rates

Question 33

What is meant by the social factor in PESTLE analysis

Answer 33

The extent to which personal attitudes and values, culture and demographic change are expected to affect the business. e.g. Education and religion

Question 34

What is meant by the technological factor in PESTLE analysis

Answer 34

How technological change and innovation are expected to impact the business. e.g. research and development

Question 35

What is meant by the legal factor in PESTLE analysis

Answer 35

How changes in laws and regulations are expected to impact the business. e.g. Taxation and red tape

Question 36

What is meant by the environmental factor in PESTLE analysis

Answer 36

How changes in attitudes and government policy towards environmental protection is expected to impact the business. e.g. How materials are disposed and how expensive/available energy is

Question 37

Why might a structure of a market change over time?

Answer 37

New and old businesses join and leave the market globalisation changes in consumer tastes Growth and innovation of technology

Question 38

What is meant by barriers to entry

Answer 38

Conditions that make it difficult/ expensive for a firm to enter a market to compete with he existing suppliers

Question 39

What does porters five forces identify

Answer 39

Identify and analyse an industrys competitive forces

Question 40

What are the five forces (porters five forces)

Answer 40

Threat of new entry Buyer power Threat of substitution Supplier power Industry rivalry

Question 41

What is meant by the force industry rivalry (porters five forces)

Answer 41

Many competitors selling similar products means the business has less power If it offers products in an industry with little competition then it has more power and cam dominate the market

Question 42

What is meant by the force threat of new entry (porters five forces)

Answer 42

If new competitors can enter an industry quickly and without investing a lot of money, then the barriers to entry is low and the threat of new entrants is high and the opposite

Question 43

What is meant by the force buyer power (porters five forces)

Answer 43

If a business sells to a small number of customers then the customers have more power to negotiate lower prices or if a business sells to a high number of customers then the customers have less power

Question 44

What is meant by the force supplier power (porters five forces)

Answer 44

When a business has a lot of choices over the suppliers then it can choose who it buys from or supplier can hold significant power over a business if it offers a specialised component that not many suppliers in the market have

Question 45

what is meant by the force threat of substitution (porters five forces)

Answer 45

Where customers can easily swap a business products for those of a rival or where a substitution is unlikely