3.1 - Business Objectives And Strategy

Question 1

What is an aim?

Answer 1

Generalised statement showing the direction of the business

Question 2

What is a mission statement?

Answer 2

Passionate way of of expressing aims in order to motivate staff

Question 3

What is a corporate objective?

Answer 3

Tasks that are put in place for the business to achieve its mission statement.

Question 4

What is one benefit of mission statements?

Answer 4

Increases profitability so employees feel their job has a significant purpose.

Question 5

How do mission statements provide direction for a business?

Answer 5

Provides a focus for the business.

Question 6

What is a potential drawback of mission statements?

Answer 6

They can be ambiguous

Ambiguity in mission statements can lead to misunderstandings about the organisations purpose.

Question 7

What can poorly written mission statements lead to?

Answer 7

Conflicts and inconsistencies

If not properly articulated, mission statements may cause disagreements among stakeholders.

Question 8

What is a common issue with mission statements regarding realism?

Answer 8

They can be unrealistic and overly optimistic

Mission statements that are overly ambitious may not reflect the actual capabilities of the organisation.

Question 9

What happens to mission statements as a business develops?

Answer 9

They can become obsolete

As businesses evolve, their original mission statements may no longer align with their current direction or goals.

Question 10

What is a strategy in a business context?

Answer 10

A medium to long-term plan for meeting company objectives.

Question 11

What does a strategy show a business?

Answer 11

It shows what steps they are going to take in order to achieve their corporate objectives.

Question 12

What is a tactic in a business context?

Answer 12

A short-term plan to help achieve a short-term goal.

Question 13

What are the four the four categories of Porter’s Generic Strategies?

Answer 13

• Cost leadership - low cost product in the mass market
• Cost focus - low cost product in the niche market
• Differentiation leadership - differentiated product in the mass market
• Differentiation focus - differentiated product in the niche market

Question 14

What is the primary objective of the cost leadership strategy?

Answer 14

To become the lowest-cost producer in the industry.

Question 15

How can a company achieve cost leadership?

Answer 15

By producing on a large scale to exploit economies of scale.

Question 16

What type of products are typically associated with cost leadership?

Answer 16

‘Standard’ products with little differentiation.

Question 17

What is a characteristic of the lowest-cost producer?

Answer 17

High level of productivity.

Question 18

Fill in the blank: Cost leadership often involves higher _______ utilisation.

Answer 18

capacity

Question 19

What bargaining strategy do cost leaders typically use?

Answer 19

Bargaining power to negotiate lowest prices for production inputs.

Question 20

What production method is commonly employed in cost leadership?

Answer 20

Lean production methods.

Question 21

What role does technology play in cost leadership?

Answer 21

Effective use of technology.

Question 22

What is important for distribution in a cost leadership strategy?

Answer 22

Effective distribution channels.

Question 23

What is the primary goal of a business that adopts a cost focus strategy?

Answer 23

To seek a lower-cost advantage in one or a small number of market segments.

Question 24

What type of product is typically offered by businesses with a cost focus?

Answer 24

A basic product that may be similar to higher-priced competitors.

Question 25

In a cost focus strategy, how is the product positioned in relation to market leaders?

Answer 25

It is acceptable to sufficient consumers, often mimicking the market leader.

Question 26

Fill in the blank: A business using a cost focus strategy aims to provide a product that is _______ to sufficient consumers.

Answer 26

[acceptable]

Question 27

True or False: A cost focus strategy involves offering a premium product with high features.

Answer 27

False ## Footnote It involves offering a basic product at a lower price cost

Question 28

What is differentiation leadership?

Answer 28

When a business sells a differentiated product to the mass market in order to gain competitive advantage. ## Footnote This approach focuses on unique positioning to meet buyer criteria.

Question 29

What does differentiation leadership involve?

Answer 29

Considering needs and wants of consumers in a market and positioning the business uniquely to meet these criteria’s. ## Footnote This helps to create a unique value proposition.

Question 30

List methods to achieve differentiation leadership.

Answer 30

* Superior product quality * Branding * Distribution across all major channels * Consistent promotional support ## Footnote These methods enhance the perceived value of the product or service.

Question 31

True or False: Differentiation leadership is usually associated with charging lower prices due to reduced costs.

Answer 31

False ## Footnote It is usually associated with charging premium prices due to added value.

Question 32

Fill in the blank: Differentiation leadership aims to achieve competitive advantage through _______.

Answer 32

[differentiation] ## Footnote This entails developing unique attributes that set the business apart from competitors.

Question 33

What is the classic niche marketing strategy?

Answer 33

Differentiation focus

Question 34

How can many small businesses establish themselves in the market?

Answer 34

By using a niche marketing strategy

Question 35

What is a key characteristic of products in a differentiation focus strategy?

Answer 35

Higher prices than undifferentiated products through special expertise

Question 36

What do businesses aim to provide in a differentiation focus strategy?

Answer 36

Products that are clearly different from competitors

Question 37

What are the the four categories of Ansoff’s Matrix?

Answer 37

- market penetration - existing product, existing market - product development - new product, existing market - market development - new market, existing product - diversification - new market, new product

Question 38

List ways to achieve growth in markets with existing products.

Answer 38

* Increase brand loyalty * Encourage regular use of product * Encourage to use larger quantity ## Footnote These strategies focus on maximising the potential of current offerings.

Question 39

What is the risk level of achieving growth in markets with existing products?

Answer 39

Lowest risk strategy ## Footnote This approach leverages existing customer bases and products, minimising uncertainty.

Question 40

Give an example of market penetration

Answer 40

Boots-Advantage Card ## Footnote A loyalty program that rewards customers for their purchases, enhancing retention.

Question 41

What is product development?

Answer 41

- new product in an existing market - trends and technology change quickly - associated with product innovation and continuous development - requires large investment in R&D - associated with medium level of risk

Question 42

What is market development?

Answer 42

- new product in a existing market - can be accomplished by: different customer segments, new areas of regions of the country, foreign markets - e.g., entering new geographical markets - ikea in china

Question 43

What is diversification?

Answer 43

- new product in a new market - firm is outside its area of expertise - high risk

Question 44

What is SWOT analysis?

Answer 44

A tool use by businesses to collect the information about strength, weaknesses, opportunities and threats to design effective strategies

Question 45

What does ‘SWOT’ stand for?

Answer 45

- S - Strengths; internal factors that helps to business to achieve in objectives e.g. loyal customer base - W - Weaknesses; internal factors that prevent a business from achieving its objectives e.g. poorly motivated workforce with high staff turnover - O - Opportunities; external business circumstances that can help it achieving its objectives e.g. low interest rates - T - Threats; external problems that may prevent a business from achieving its objectives e.g. a rival firm appointing a highly successful CEO

Question 46

What is meant by PESTLE?

Answer 46

- P - POLITICAL - how and what degree a gov intervenes in the economy - E - ECONOMIC - the general state of the economy can have a huge impact on a business - S - SOCIAL - areas that involve the shared belief and attitudes of population - T - TECHNOLOGICAL - technological development because they provide new opportunities and improve efficiency - L - LEGAL -gov provides legal framework in which businesses operate - E - ENVIRONMENTAL - factors relating to the increasing scarcity of raw materials

Question 47

What are Porters 5 forces?

Answer 47

- threat of new entrants - create barriers to entry to prevent new entrants, heavily advertise to build strong brands - bargaining power of buyers - make it too expensive for a customer to switch, froward vertically integrate - threat of substitutes - buy up patents of rivals and shelve to prevent product production, continuously invest in R&D and develop patents - bargaining power of suppliers - limit power of suppliers by looking for new supplies, backward vertical integration and merge or takeover the supplier - existing competitors - create a cartel - illegal but quite common place, buy up rivals through horizontal integration, continuously introduce new products to the market, heavily advertise to maintain market share