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Flashcards in Strategy & Implementation Deck (28):
1

Strategic planning tools

Decision trees
Critical path analysis
Investment appraisal

2

Planning importance

Ensuring the future success for the business

3

How to plan effectively

Need to make sure the future objectives match the planning objectives/strategy

4

How to they plan to still remain a success and be competitive

By considering:

New products
Changes in their market
Cash flow changes
Investment decisions

5

How do managers or owners plan

They need to take risks in order to maintain/increase profits

Effective planning will reduce risks

Business knows clearly what it’s future course of action will be

Those that don’t plan ahead will be overtaken by competitors and won’t receive great profits

6

What’s an objective

Set by a business in attempt to reach a particular GOAL

Main ones being:
Survival
Break even
Profitability
Expansion

7

What’s strategy

The action plan that a business puts in place to reach its objectives

I.e.
achieve survival as an objective
Strategy to use marketing to increase customer awareness

8

What’s a tactic

A particular step that a business takes to achieve its strategy

Marketing strategy to get to objective of survival

Tactic would be to target families in the local area offering 10% off using the internet

9

How to create a strategic plan

Collect information on many aspects of the business

An internal audit +
An external audit to the business

Should happen on a regular basis

10

What’s the internal audit

Strengths and weakenesses in relation to its competitors in the whole business

Managements in departments can do these or external organisations can be employed to complete these

Purpose:

To provide accurate information about each particular department
To compare their stats and figures with competitor stats and figures in terms of S + W

11

What’s an external audit

Looks at the opportunities open to the business

Looks at the threats which it faces in its external environment

All businesses operate in a constantly changing environment

MCSTEEPLE

12

Audits/SWOT criticsms

Need to be put into a summarised format = SWOT analysis

Only gives part of the picture - shouldn’t just be used alone

Looking at market research, ratio analysis (financial data etc.) sales figures, and government statistics should also be used

Something for a business to use in determining objectives and strategy

External agency looking at this can be better = biased and objective otherwise

13

What’s the Companies Act 2006

A statutory statement of directors’ duties and responsibilities

Having care for employees, suppliers and the environment

Consolidated and updated existing law relating to the running of a company

Each director must act honestly and in good faith

Still doesn’t solve the different stakeholder conflicts

14

Porter’s 5 forces

It’s a system for analysing the level of competition in an industry

Looks at the forces that determine the level of COMPETITIVE INTENSITY +
attractiveness of the industry in terms of profitability

15

Porters 5 forces model

Middle
- INTENSITY OF RIVALRY WITHIN THE INDUSTRY

Bottom
- THREAT OF NEW ENTRANTS

Right
- BARGAINING PIWER OF BUYERS (customers)

Top
- THREAT OF SUBSTITUTE PRODUCTS

Left
-BARGAINING POWER OF SUPPLIERS

16

Middle

The intensity of rivalry within the industry

High competitive intensity = Innovation
Price wars
Higher spending on promotion

Reduce level of profitability that can be achieved ^^^^^

17

Bottom

The threat of new entrants

New firms entering the industry will result in them

taking a share of the market
increasing competitive intensity

Greater barriers to entry = the smaller the threat will be (monopoly won’t be affected)

18

Right

Bargaining power of buyers (customers)

Customers can have a strong bargaining in an industry

Can force prices down
Reduce any likely profitability

19

Top

Threat of substitute products

Usually in the technology industry (tablets, phones, games)

Business that fails to keep up to date with new devices will quickly lose market share

20

Left

Bargaining power of suppliers

Suppliers are able to force up the price of their products through their strong power to bargain (in some industries)

This will cut profits made available to the firm in the industry

Suppliers faced with a lack of bargaining power to UK supermarkets = reduced competitive intensity

21

Porters 5 forces model

Advantages + Disadvantages

✅ when a business is moving into a new sector = use model to see the situation clearly

❎ not always easy to obtain all the required information about the threats in the market

22

What are Porter’s generic Strategies

They show how a company can achieve a competitive advantage in its industry

23

The generic strategies

Cost leadership

Differentiation

Focus on niche

24

Cost leadership as a generic strategy

Aims to be the lowest cost producer in its field

EOS needed

Reduced production costs

Passing production savings onto the consumer

25

Differentiation as a generic strategy

The firm producing a range of goods that is different or seen as different than from the competition

Firm able to charge a premium for the product

Increase profitability

Risk for this strategy = product can be copied easily with no patent in place (lack of competitive advantage)

26

What’s focus on nice strategy

Involves providing for a particular sector in the market

Customers in this sector willing to pay a premium for them able to be different

(Expensive handbags)

27

What’s the “stuck in the middle” generic strategy

Trying to adopt all 3 strategies above so unable to achieve success

Can’t please all consumers and doing so means no strategy at all

28

What’s management by objectives

Is a system where managers and employees define & agree a series of objectives for the business

Pete drucker (motivation)