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Business > 7. Analysing the strategic position of a business > Flashcards

7. Analysing the strategic position of a business Flashcards

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1
Q

Influences on the mission of a business

A

Size of the business
Nature of owners and other important stakeholders
Changes over time
Business performance
External factors
Social responsibility

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2
Q

Internal and external influences on corporate objectives and decisions

A

Pressures for short termism
Business ownership
External and internal environment

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3
Q

Strategy

A

Medium to long term plan to achieve objectives

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4
Q

Tactics

A

How strategy is carried out

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5
Q

Corporate aims

A

Long term targets and plans to fulfill mission statement

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6
Q

Corporate objectives

A

Medium to long term quantifiable targets to fulfill mission statement

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7
Q

Corporate strategy

A

Actions taken by the business to achieve objectives

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8
Q

Business tactics

A

Actions taken on day to day business to support strategy

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9
Q

Strategic decision making

A

Strategic decision making concerns general direction and overall policy of an organisation

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10
Q

Functional decision making

A

Short to medium term and concerned with specific functional area rather than overall policy

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11
Q

Value of SWOT analysis

A

Strengths - internal
Weaknesses - internal
Opportunities - external
Threats - external

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12
Q

Balance sheet

A

Financial document that summarises net worth of business at given point in time

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13
Q

Income statement

A

Financial document that summarises firm’s trading activities and expenses to show whether firm has made profit or loss over specific period

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14
Q

Balance sheet contents

A

Assets
Liabilities
Net current assets
Net assets
Share capital and reserves
Trade credit
Working capital
Liquidity

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15
Q

Depreciation

A

Allows value of fixed asset to be spread over its useful life

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16
Q

Ratio analysis

A

Compares one piece of information with another
Ratios are more meaningful if you have at least two years to compare, so that you can identify a trend

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17
Q

Ratio analysis equations

A

Profitability
Liquidity
Gearing
Efficiency

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18
Q

Published accounts

A

Good source of finance, they allow a structure for comparisons over time and with other firms can be an aid to decision making

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19
Q

Core competencies

A

Fundamental areas that firm is good at and separates it from another firm
Leads to competitive advantage

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20
Q

Assessing short and long term performance

A

Decisions made in short term may allow firm to improve performance in long term but have negative impact in short term

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21
Q

Elkington’s triple bottom line

A

Model designed to encourage sustainability

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22
Q

Elkington’s triple bottom line key components

A

Profit
People
Planet

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23
Q

Kaplan and norton’s balanced scorecard

A

Strategic system used to plan and manage firm’s activities to its vision statement

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24
Q

Kaplan and norton’s balanced scorecard key areas

A

Finance - measures financial capability
Learning and growth - HR requirements
Customer - expectations being met

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25
Political environment
Government actions that impact on strategic and functional decisions made by a firm Can be local, national or international authorities
26
Legislation
Creating and enacting laws in order to protect individuals, firms and society
27
Competition law
Promotes fair competition in markets and stops abuse of consumers by firms due to monopoly power
28
Competition policy
Seeks to improve competitive nature of markets Protects interests of consumers and society
29
Competition policy impacts
Innovation Lower prices Improved quality
30
Labour market law
Protect worker from discrimination within workplace
31
Equal pay act
Both sexes should be treated equally at work
32
Sex discrimination act
Outlaws discrimination based on gender for recruitment, promotion, training and dismissal
33
Race relations act
Illegal to discriminate based on colour
34
Disability discrimination act
Illegal to discriminate against disabled people
35
National minimum wage
Minimum hourly wage rate introduced
36
Wage discrimination
Business pay workers different wage rate for same job
37
Labour market reforms
Impact on trade unions with reduction in trade union power and influence
38
Environmental law
Influence behaviour of individuals and businesses in order to reduce negative impacts on natural environment
39
SMEs
Small and medium size enterprises
40
Regulation
Undertaken by government to create competitive markets
41
De-regulation
Opening up of markets to new competition through removal of rules and regulations that created barriers to entry
42
Infrastructure
Governments will look to improve infrastructure to help firms operate more effectively
43
The environment
UK and EU governments use environment policy to control levels of pollution, waste management and climate change
44
International trade
International trade is exchange of goods and services between countries
45
Taxation
Process of imposing changes on business and individuals by government
46
Direct taxes
Taxes imposed on individual or property e.g. income tax, national insurance
47
Exchange rates
SPICED - Strong pound - Imports cheaper - Exports dearer WPIDEC - Weak pound - Imports deader - Exports cheaper
48
Inflation
General rise in prices or fall in value of money
49
RPI
Retail Price Index - measure of 'basket' of goods and services representative of what people buy in UK
50
CPI
Consumer Price Index - similar to RPI but mainly excluding housing costs
51
Fiscal policy
Manipulation of government, spending, taxation and government borrowing to influence level of economic activity
52
Fiscal policy aims
Keep inflation on 2% Maintain stable economic cycle Stimulate economic growth and employment during times of recession
53
Monetary policy
Manipulation of rate of interest, money supply and exchange rates to influence level of economic activity Main target is to maintain low rate of inflation
54
Free trade
No restrictions on flow of goods and services between countries
55
Protectionism
Policies imposed by governments to restrict free movement of goods and services between countries
56
Globalisation
Integration of international economies leading to world market in goods and services
57
Globalisation Adv vs Disadv
Adv: Cheaper labour costs abroad Cheaper raw materials from low cost countries Opportunities to sell in new markets Disadv: Communication and transport problems Increased competition Can gain bad rep for making UK workers redundant
58
Characteristics of globalisation
Increased investment flows Increased migration
59
Emerging economies
Emerging market is a country with low to middle average income per person
60
Urbanisation
General movement of people towards cities and away from rural areas
61
Migration
Movement of people between countries
62
Changes in consumer lifestyle and buying behaviour
Technology Viral marketing Social media Emotional branding Health care
63
CSR (Corporate social responsibility)
Continuous commitment by firm to behave ethically and contribute to economic developments
64
Carroll's corporate social responsibility
Highlights 4 aspects of corporate social responsibility, society experts firms
65
Carroll's corporate Social Responsibility Pyramid
Economic responsibilities Legal responsibilities Ethical responsibilities Philanthropic responsibilities
66
Technological change
Ongoing development of invention, innovation and sharing of technology or processes
67
Porter's five forces
Buyer power Supplier power Substitute threat Entry threat Rivalry
68
Entry threat (barriers to entry)
Any factor that stops a firm from entering a market
69
Buying power
Large firms are in a dominant position when buying from suppliers
70
Supplier power
Suppliers extremely powerful in marketplace as they supply the products they have exclusive access to
71
Rivalry
Monopoly - one firm dominates market Duopoly - two firms dominate market Oligopoly - small number of firms are in industry Monopolistic - many firms compete in industry selling differentiated products Perfect competition - many firms in industry with no influence on market price
72
Substitute threats
When firm within industry faced with threat of similar product from another industry
73
How 5 forces shape competitive strategy
5 forces look at impact of each force on profit of industry and how this is shared out between firms

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