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Business Studies Theme 3 (A- Level) > 3.1 - Business Objectives and Strategy > Flashcards

3.1 - Business Objectives and Strategy Flashcards

1
Q

Define Aims

A

Are things the business intends to do in the long term

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2
Q

Define a mission statement

What is its use

A

Is a formal statement which explains the overriding purpose and values of a business

Done to make a commitment to its customers and used to bring a firms workforce together with a shared purpose

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3
Q

What will different stakeholders look for in a mission statement (6)

A

Owners - will want to maximise shareholder value
Managers - will look to core aims and objectives to lead their employees with
Employees- will look for motivational statements that make them feel proud to work for the business
Pressure groups- look for a clear environmental/ethical message
Customers - look to see ethical core principles
Competitors- look to see of the business is competitive, organised and innovative

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4
Q

What are the possible limitations of mission statements

A

Can be unrealistic
Can be a waste of management and time
Can lead to conflicts if not properly written
Can become obsolete as the business develops

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5
Q

Define corporate objectives

A

Are objectives of a medium to large sized business as a whole with a corporate vision

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6
Q

Define departmental and functional objectives

A

Are objectives of a department within a business

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7
Q

Define corporate strategy

A

Is a medium to long term plan for achieving the corporate objectives

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8
Q

Define Ansoff’s matrix

A

Is a marketing model that can be used to help a business decide its strategic direction in terms of growth

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9
Q 
Describe 
Market penetration 
Market development 
Product development 
Diversification 
In terms of Ansoffs matrix
A

Market penetration - existing product in a existing market
Market development - existing product in a new market
Product development - new product in a existing market
Diversification- new product in a new product

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10
Q

Define Market penetration in Ansoffs matrix

Advantages and disadvantages

A

Is a growth strategy where the business focuses on selling existing products into existing markets

A:
Good knowledge of customers and consumers
Easier to sales forecast

D:
Lack of ambition may demotivate employees

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11
Q

Define Market development in Ansoffs matrix

Advantages and disadvantages

A

Is a growth strategy aimed at expanding the market through new users

A: Huge potential Economies of scale
D: Means changes in distribution channels, legislation and managing staff

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12
Q

Define Product development in Ansoff’s matrix

Advantages and disadvantages

A

Is a growth strategy involved in bringing a new product to the market.

A: Avoid decline stage of the product life cycle
D: High risk level, can be expensive

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13
Q

Define Diversification in Ansoff’s matrix

Advantages and Disadvantages

A

Is a growth strategy aimed at reducing risks by expanding the range of products sold

A: Motivates employees, can lead to drastic growth if successful
D: Very high risk, may effect performance of existing products in other markets

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14
Q

Define Porters strategic matrix

What are the three factors of the matrix

A

Identifies the sources of competitive advantage for a business

Cost Leadership
Differentiation
Focus (cost and differentiation)

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15
Q

Explain Cost leadership as a strategy in porters matrix

A

Involves striving to be the lowest cost provider in the market to increase profits and market share

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16
Q

Explain differentiation as a strategy in porters matrix

A

Involves a business operating in a mass market but adopting a unique position through quality, design and customer service to charge a premium price

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17
Q

Explain Focus strategy as a strategy in porters matrix

A

Cost focus - emphasis on minimum costs within a niche market

Differentiation focus - pursuing different strategies within a focused market

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18
Q

Define Kay’s theory of distinctive capabilities

A

Is that a business has a valuable capability that it possesses but other firms have difficulty replicating

19
Q

What are the types of distinctive capabilities

A

Architecture- refers to the contracts and relationships with an organisation to grow

Reputation- refers to the positive associations a business builds , linking closely to brand image

Innovation- refers to a new product or process to grow

20
Q

Define portfolio analysis

A

Is a method of categorising all the products of a firm to decide where each fits within the strategic plans (boston matrix)

21
Q

Define SWOT analysis

A

Is an analysis of the internal strengths and weaknesses of the business and the opportunities and threats presented by its external environment

22
Q

Explain an Internal Audit

What are examples of what it includes

A

Is an analysis of the business itself and how it operates , identifying the strengths and weaknesses.

Products and their costs and quantity
Finance, profit, assets and cash flow
Production, capacity and efficiency

23
Q

Explain an External Audit

Give examples of what it includes

A

Is an analysis of the environment in which the business operates

Size and growth potential of the market
Characteristics of customers in the market
Number and size of competitors
PESTLE factors

24
Q

Explain strengths as a part of SWOT analysis for a business

Give examples

A

Are positive aspects of the business that may be identified , what helps make the business successful.

Highly motivated and loyal workforce
A product with a USP
Loyal customer base

25
Q

Explain weaknesses as a part of SWOT analysis for a business

Give examples

A

Are negative aspects of a business that may be identified , undermining the performance of a business

Poorly motivated workforce with high staff turnover
Poor cash flow and high debt
Outdated capital

26
Q

Explain Opportunities as a part of SWOT analysis for a business

Give examples

A

Are the options that a business may be able to exploit that could result in improvements

New overseas markets opening up
Fall in the cost of a raw material
Fall in the exchange rate

27
Q

Explain Threats as a part of SWOT analysis for a business

Give examples

A

Are the possible hazards that have the potential to damage the performance of the business

New entrant in the market
A looming recession
New legislation

28
Q

What are the advantages and disadvantages of SWOT analysis for a business

A 
A
Source of information for strategic planning
Helps in setting objectives
Maximises response to opportunities
Minimises level of threat

D
Time consuming
Can be expensive

29
Q

What can PESTLE analysis be used for

A

Shows the impact of external influences on a business

30
Q

What are political examples which can effect a business (3)

A

Members leaving or joining the EU, disrupting the financial markets

Improved national security restricts the movement of goods

Pressure groups who aim to reduce the consumption of a product

31
Q

What are economic examples which can effect a business (3)

A

Falling unemployment might increase demand for a product

Lower interest rates makes borrowing cheaper and encourages investment

Some businesses may suffer during a recession

32
Q

What are social examples which can effect a business (3)

A

More people going to university increases workforce quality

Increased migration makes recruitment easier

People becoming healthier creates opportunities for certain businesses

33
Q

What are technological examples that can effect a business (3)

A

Changes in technology can shorten product life cycles

Developments in technology allows capital to replace labour, lowering unit costs

Development of social media improves communications with customers

34
Q

What are legal examples which can effect a business

A

Businesses in the food industry are under pressure to reduce sugar in salt

Advertising on cigarettes has been banned

Legislation can effect tax laws

35
Q

What are environmental examples which can effect a business

A

People are buying more ethical and environmentally friendly goods

New ways of generating power using renewable sources

Trends in using recycled resources in production

36
Q

What is a competitive market

What are the positive and negative outcomes for a business

A

Is where there is a large number of buyers and sellers, where products are close substitutes.

Positive outcome -> Increased productivity (employees are more motivated) , increased innovation (product and process)

Negative outcome -> Increased costs (advertising, promotions, customer service, training), decreased revenues, decreased profit

37
Q

What is a uncompetitive market

What are the positive and negative outcomes for a business

A

Is where a market is dominated by a single producer (monopoly) or a few large businesses (oligopoly)

Positive outcome -> Decreased costs, Increased revenues, increased profits

Negative outcomes -> X-inefficiency, less innovation , government observation for monopolies, collusion for oligopolies

38
Q

Explain Porters five forces model

What is its impact on a business

A

Is a framework for analysing the nature of competition within a industry.

The ultimate aim of the competitive strategy is to cope with and potentially change the factors in favour of the business to boost returns

39
Q

List Porters Five Forces

A 
Bargaining power of suppliers
Bargaining power of buyers
Threat of new entrants
Substitutes 
Rivalry amongst existing firms
40
Q

Explain Bargaining power of suppliers as part of Porters Five Forces Model

A

Describes the power suppliers have over a business. Limiting the power, by seeking out new suppliers to increase competition or growing vertically to become a supplier, will improve the competitive position of the business.

41
Q

Explain Bargaining power of buyers as part of Porters Five Forces Model

A

Describes the power customers and businesses have over suppliers. If businesses have considerable market power they will be able to force suppliers to offer lower prices.

42
Q

Explain the Threat of new entrants as part of Porter Five Forces

A

Describes how easy it is for new firms to enter the market a business is operating in, barriers to entry. Firms can deter new entrants by creating patents/landmarks or developing strong brand loyalty

43
Q

Explain Substitutes as part of Porters Five Forces Model

A

Describes the amount of similar products sold by competitors. A firm can reduce substitutes through research and development to develop a USP and also predatory pricing to drive substitutes out of the market.

44
Q

Explain rivalry among existing firms as part of Porters Five Forces model

A

Describes the degree of rivalry which determines prices and profits for every single firm in the market. Firms can reduce this by collusion, mergers or instead bringing out new products

Business Studies Theme 3 (A- Level) (6 decks)

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