Flashcards in Business Objectives And Strategy 3.1 Deck (72):
What is the definition of an aim?
A generalised statement of where a business is heading
What is the definition of an objective?
A short term action to achieve an aim
What is the definition of a mission?
An aim expressed in a particularly inspiring way
What is the definition of a mission statement?
a short passage of text which sums up an organisations mission
What are the four main influences on a business mission:
1. purpose - reason why the business exists
2. values - what the company believes in
3. standards and behaviours - standards expected from staff
why may a clear sense of mission help a business to succeed?
a believable but inspiring mission can unite staff and customers behind the business
why may a mission be especially important in a new business?
Its invaluable to have customers who 'buy in' to the business, they'll not only be loyal but spread the word
What are 4 reasons to have a mission statement?
1. it determines the companies direction
2. it focuses the employees and motivates them towards a common goal
3. explains why a business exists
4. to communicate to customers their vision
what are 5 criticisms of mission statements?
1. it can be quite confusing to understand
2. actions don't always match the mission statements
3. can be too vague
4. are they just a PR stunt
5. businesses aren't held accountable for mission statements
what are the four sections of the Boston matrix?
1. rising star
2. cash cow
3. problem child/ question mark
what are the four sections of ansoffs matrix?
1. Market penetration
2. product development
3. market development
what increases on ansoffs matrix as you move to the bottom right corner?
what is an existing product on an existing market called in the ansoffs matrix?
what is an existing product on an new market called in the ansoffs matrix?
what is an new product on an existing market called in the ansoffs matrix?
what is an new product on an new market called in the ansoffs matrix?
what is market penetration?
a business that focuses on what they do well
what is product development?
business staying in the same market but developing new products
what is market development?
a business taking an existing product and bringing it into a new trial market
what is diversification?
a business looks at a new product in a new market
what does a business doing market penetration need to do? (3)
1. use the same strategy as they were previously (as long as it works)
2. promotion of the product
3. create brand loyalty
what does a business doing product development need to do? (3)
1. market research
2. modify/ change range
3. research and development - innovate
what does a business doing market development need to do? (3)
1. look at a new market to decide whether the product will succeed
2. identify gaps
3. test the market
what does a business doing diversification need to do? (2)
1. research and develop into product and market research
2. have a high risk strategy
what are the two parts of the axis where 'markets where business competes' on the porters generic strategies diagram?
what are the two parts of the axis where it is labelled 'source of competitive advantage' called on the porters generic strategies diagram?
on the porters generic strategies what is in the box with the source of competitive advantage costs and a broad market where business competes called?
on the porters generic strategies what is in the box with the source of competitive advantage costs and a narrow market where business competes called?
on the porters generic strategies what is in the box with the source of competitive advantage differentiation and a broad market where business competes called?
on the porters generic strategies what is in the box with the source of competitive advantage differentiation and a narrow market where business competes called?
how to achieve competitive advantage through distinctive capabilities:
1. the companies ability to learn from mistakes and successes so the business is constantly moving forward
2. the operational skills within a business (if theres a highly talented research team then differentiation in the future is viable)
why is corporate strategy so important?
because finding the right strategy can put a business on course for success/ failure for the future
what is the definition of distinctive capabilities?
ways a firm operates that cannot easily be copied by rivals
what is the definition of economies of scale?
factors that cause the average cost per unit to decrease as the scale of output increases
what is the definition of generic strategy?
a strategic position that will prove effective in every market (i.e. generically). Porter said lowest cost and highest differentiation were perfect positions of strength
what is the definition of product differentiation?
the extent to which consumers perceive one product as being distinct to its rivals
what are corporate objectives?
the whole businesses objectives - the key objectives
what are functional objectives?
objectives for each function (department)
what are two risks of market penetration? AM
1. Decline in product lifecycle
2. Lack of ambition may lead to staff looking for challenge elsewhere
What are two rewards of market penetration? AM
1. Know customers and competitors, so should make error free decisions
2. returns on extra investment are predictable
what are two risks of market development? AM
1. Subtle cultural differences add hugely to the risk
2. Practical differences - like distribution channels, consumer legislation and differences in managing staff
what are two rewards of market development? AM
1. Huge potential economies of scale
2. If you take the time to understand the cultural differences you may be able to localise your product range effectively
what are two risks of product development? AM
1. Most new products fail so the risk is very high
2. as product success is tough, companies put their best people on it, could mean too little people are devoted to the ordinary brands
what are two rewards of product development? AM
1. Nothing adds value more than innovation and product development
2. continuous, successful product development should mean the organisation lives for a long time
what are two risks of diversification? AM
1. not knowing the market and having a brand new product means the risk level is multiplied by two
2. Vital to plan the operational risk of diversifying to make sure the financial position is secure
what are two rewards of diversification? AM
1. when it works it can transform the size and opportunities for the business
2. radical diversification can be exciting for the workforce, helping recruit the best people
What is the definition of diversification?
when a company expands its activities outside its normal range. This may be done to reduce risk or to expand possible markets
what is the definition of repositioning?
changing a product or its promotion to appeal to a different market segment
what is swot analysis?
an analysis of the businesses position
what does swot stand for?
what two categories of swot are internal?
strengths and weaknesses
what two categories of swot are external?
opportunities and threats
what are the two main ways to undertake a swot analysis?
1. top down process - controlled by the boss and carried out by management consultants.
2. consultative manner - boss spending time in each key department, talking to staff in an informal manner
what is a benefit and a negative of the top down process in swot analysis?
benefit - being dispassionate so they are unaffected by emotion or tradition
negative - might lack insight which is required as employees may try to hide it to prevent job losses
what is a benefit in the consultative manner in swot analysis of using an outsider?
no staff member need feel worried about what they say as previous failings can be blamed on the old management
what are five external factors which can give rise to opportunities or threats? SWOT
1. economic changes
2. technological changes
3. demography - population change
4. new laws and regulations
5. commodity prices
what are some key performance indicators (KPI)? (4)
1. sales per employee
2. market share
3. like for like sales - sales revenue this year in comparison to last
4. capacity utilisation
is it better for a business to have loads of key performance indicators or just a few?
just a few are necessary
what is the definition of benchmarking?
comparing your own performance with that of rivals, to try to identify and learn from best practice
what is the definition of demography?
factors relating to the population, such as changes in the number of older people or levels of immigration
to analyse external factors, you can use pestle, what does it stand for?
what is another word for external factors?
What are two political factors and their impacts: PESTLE
1. BREXIT - additional barriers to entry
2. Tariffs/ taxation - VAT, income tax, corporation tax
What are two economic factors and their impacts: PESTLE
1. exchange rates - the pound is weaker now, so we get less for our money and this is good for people buying from us
2. changing economic climate - pricing strategies change
what is one social factor and the impact: PESTLE
cultural change/ demographics - average age increasing
what are two technological factors and their impacts: PESTLE
1. innovation - research and development
2. ecommerce business increasing
what is one legal factor and the impact: PESTLE
legislation - employment legislation
what are two environmental factors and their impacts: PESTLE
1. natural disasters
2. sustainability/ ethical decision making
with other economic factors of importance what three things is it important to consider? PESTLE
1. exchange rate and its effect on the international competitiveness of the businesses
2. inflation rate - possible impact on the value of peoples savings and on their real wages
3. rate of unemployment - youth unemployment is exceptionally high
what can firms do about external influences? (2)
1. make the most of favourable external influences whilst they last
2. minimise the impact of unfavourable external influences
What are porters 5 forces?
1. rivalry among existing competitors
2. threat of new entrants
3. changes in the buying power of customers
4. changes in the selling power of suppliers
5. threat of subsitutes