Business objectives and strategies

Question 1

What is a mission statement?

Answer 1

A statement which declares the overall purpose of the business

Question 2

What is meant by the aims of a business?

Answer 2

What the business is trying to achieve (long term)

Question 3

What is meant by a business objective?

Answer 3

Short term, specific targets

Question 4

Why is it important for a business to have a mission statement?

Answer 4

• Gives the company direction
• Communicates purpose to stakeholders
• Could motivate staff
• Help recruit and retain the best staff

Question 5

What is a strategic objective?

Answer 5

Slightly longer term target

Question 6

What is a tactical objective?

Answer 6

Very specific and short term

Question 7

What are 5 examples of a business objective?

Answer 7

• Maximise profits
• Launch a new product (Growth)
• Increase market share
• Provide good customer service
• Provide an environmentally sustainable business

Question 8

What might stakeholders be in conflict about?

Answer 8

• Prices
• Wages/costs
• Effect on environment

Question 9

What is a social enterprise?

Answer 9

A business that is set up in order to help people. it may also be known as the 3rd sector

Question 10

What does a social enterprise seek to do?

Answer 10

Provide a service that benefits society whilst running a successful and professional business

Question 11

Why might a business choose to operate as a social enterprise?

Answer 11

Give back to the community and help those who aren’t as privileged

Question 12

What are the 4 factors of production?

Answer 12

• Land (Natural resources)
• Labour
• Capital (Technology)
• Enterprise

Question 13

What constraints might there be on objectives?

Answer 13

• Lack of staff
• Lack of finance
• Not being able to get permission
• Shortage of demand

Question 14

What is a corporate social objective?

Answer 14

Being seen as a business that cares about the environment and the local community

Question 15

Why might a business have CSO?

Answer 15

To appeal to a wider market, more customers will be attracted if it benefits the environment and more revenue and profits will be made

Question 16

What are the problems with CSO?

Answer 16

• More staff required
• Expensive
• Need new materials/technology
• Costs time of business
• Short term inefficiency (slows production)

Question 17

What changing circumstances could affect a business and its objectives?

Answer 17

• Economic change (revenue)
• Legal issues (contracts)
• Political issues (Brexit)
• Social attitudes (Starbucks in Australia)

Question 18

What is a business plan?

Answer 18

A document drawn up to state how a business intends to achieve its objectives

Question 19

What might a business plan include?

Answer 19

Business idea
Market research
Financial plan
Objectives
Target market

Question 20

Why do businesses need a plan?

Answer 20

• Gives guidance and direction
• Helps control costs
• Easier for loan
• Helps achieve aims and objectives

Question 21

What is risk?

Answer 21

When the business owner invests their own time and money into a business

Question 22

What is reward?

Answer 22

Reward is a positive consequence from the risk. E.g, good profits, paying yourself a big salary and the lifestyle that comes with this

Question 23

What is quantifiable risk?

Answer 23

It can be measured

Question 24

What is non quantifiable risk? Give an example

Answer 24

It cannot be measured (e.g, risk leads to loss of tension or peace)

Question 25

What is Porters 5 forces model?

Answer 25

A tool for analysing competition in a business. It examines 5 forces that determine the competitive intensity of an industry in terms of its profitability

Question 26

What are the 5 forces in the Porters model?

Answer 26

1. Threat of new entrants 2. Threat of substitutes 3. Bargaining power of buyers 4. Bargaining power of suppliers 5. Degree of rivalry

Question 27

What are the limitations of Porters 5 forces model?

Answer 27

- Too simplistic - Disregards collusion - Only useful on an industry basis rather than individual companies - Markets can change, it is frozen in time

Question 28

What is meant by opportunity cost?

Answer 28

Giving up other potential options

Question 29

What is meant by a contingency plan?

Answer 29

A plan devised as a backup incase something goes wrong

Question 30

What are the 4 elements that make up the process of contingency planning?

Answer 30

1. Identifying what and how things might go wrong 2. Understanding the potential effects if things did go wrong 3. Devising a plan to cope with these threats 4. Putting strategies in place to deal with the risks before they happen

Question 31

What is meant by forecasting?

Answer 31

Using existing data to predict future trends

Question 32

What are some examples of qualitative forecasting?

Answer 32

- Delph technique (expert opinion) - Brainstorming - Consumer opinion - Leading academic opinion (Uni professors) - Frontline staff opinion (Sales staff)

Question 33

What is an advantage of qualitative forecasting (opinions)?

Answer 33

Expert/advanced opinions are likely to be credible and reliable because they have lots of knowledge in the subject

Question 34

What is a disadvantage of qualitative forecasting?

Answer 34

It is based on opinion rather than fact so there is a degree of uncertainty

Question 35

What is an example of quantitative forecasting?

Answer 35

Time Series Analysis

Question 36

What does a time series analysis do?

Answer 36

Calculate averages over a period of time

Question 37

What can be gathered from a time series analysis?

Answer 37

Raw Data - looks at trends over time Cyclical Variations - looks at economic patterns Seasonal Variations - considers seasonal patterns Random Fluctuations - looks at. unexpected changes in trends

Question 38

What are 2 benefits of using forecasts in a business?

Answer 38

- It is only as reliable as the data put forward | - It enables you to see trends and patterns

Question 39

What are 3 limitations of using forecasts in a business?

Answer 39

- Can't assume trends will continue - Only recent information is relevant - Doesn't consider internal changes for the business (discontinued product)

Question 40

What is a decision tree?

Answer 40

A mathematical model used to help managers make decisions

Question 41

What does a decision tree do?

Answer 41

Uses estimates and probabilities to calculate likely outcomes. It also helps decide whether the net gin from a decision is worthwhile for its risk

Question 42

What are 3 benefits of using decision trees?

Answer 42

- Options can be compared - Risk can be addressed - Easy to produce and understand

Question 43

What are 3 drawbacks of using decision trees?

Answer 43

- Only estimates - Ignorant of qualitative data - Doesn't reduce amount of actual risk

Question 44

What is meant by crisis management?

Answer 44

The response made by a business in the event of a major crisis

Question 45

What is the SWOT decision making tool?

Answer 45

Strengths Weaknesses Opportunities Threats