Strategy and implementation Flashcards
What is a strategy
Th way a business operates in order to achieve its aims and objectives
What are the 2 parts of strategy
1 formulation
2 implementation
What is formulation of a strategy
What is implementing the strategy
Same as constructing a business plan
Putting the plan into practice
Why is the setting and achieving of objectives described as hierarchical in a large business
It starts at the top with the setting of corporate strategy an is put into action by business functions that design strategies to fulfill objective
Corporate strategy
Strategic direction
Divisional strategy
Functional level strategy
Describe corporate strategy
Corporate level strategy is concerned with strategic decisions made that effects the whole business
It is concerned with setting objectives for overall financial performance , proposed mergers, acquisitions, long term human resource planning and allocating resources to different divisions
What is strategic direction
The actions that lead to the achievement of the stated goals of the corporate strategy
What is divisional strategy
It is directing the divisions in the company and communicating the strategy
What is the functional strategy
A single operation e marketing or production and the activities within each operation
What are tactical decisions
Medium or long term decisions made by middle managers - hey follow from a strategic decision and aim to meet objectives of a plan
What is a corporate plan
A statement of organisational goals to be achieved in the medium or long term based on the managements assessments of market opportunities economic situation and resources available
What is a SWOT analysis
Tool to identify a businesses strengths and weaknesses, opportunities and threats
Why use a swot analysis
1 to develop a strategic plan which considers many internal and external factors and maximises strengths and opportunities whilst minimising impact of threats and weaknesses
Why use a swot analysis
1 it considers many different internal and external factors and maximises potential straengths and opportunities whilst minimising impact of weaknesses and threats
2 It gives an overall picture of all potential influences on future business success and then adapt business strategy to reflect them
What are the 4 stages to prepare and use a SWOT
1 internal analysis - examine the capabilities of the business by analysing its strengths and weaknesses
2 external analysis - gathering data on market and competitor activities, economic outlook and environmental impact on the business and decide does the data reveal external threat or opportunities
3 prepare a swot table - enter the information collected onto a swot table
4 use the swot to develop a business strategic pan
Describe the 4 components of a swot
1 strengths - positive features of the sines identified at stage 1
2 weaknesses - negative features of the business identified at stage 1 occurs when a business performs poorly in an important area of operation or fails to take advantage of an existing strength
3 opportunities - prospects identified at stage 2 an opportunity exists if an external condition could positively impact of the businesses performance and improve competitive advantage if action is taken in time
4 threats - dangers identified at stage 2 , an external condition that could have a negative impact on businesses performance and reduce competitive advantages
What will an effective swot allow a business to do
1 build on strengths
2 resolve weaknesses
3 exploit opportunities
4 avoid threats
Who is Dr Michael Porter and what does he say
He is a professor at Harvard Business School and he believes under certai circumstances a business can exert an influence on the markets - they can be active not passive
What did Dr Porter propose
A model of the business environment that stated industries and businesses were being influenced by 5 external forces and the interaction and influence of these forces determine the behaviour of business and the likely levels of profitability for the business
How can manages use this model of potters 5 forces
1 to better understand the business in which they operate
2 properly consider external influences on business behaviour
3 understand how to set realistic objectives
What are Porters 5 forces
1 barriers to entry - factors that prevent new competition entering the market
2 user power- power of customers to determine the price
3 supplier power - the ability of suppliers to set prices
4 substitutes - threat or risk of alternative products or services
5 competition - how much competition exists in the market
What are barriers to entry
Factors that prevent new competition entering the market
2 if they are high monopoly profits can occur
2 when they are low normal profits can be earned
4 if new businesses can enter market easily then existing businesses will have a challenge to keep their profits high
5 new businesses will be attracted to the market if profits are high but barriers or entry exist or existing businesses attempt to create barriers stopping or reducing new businesses entering the market
Give examples of barriers to entry
1 cost advantages of existing businesses
2 access to factors of production
3 high capital/investment requirements
4 strong brand identity of existing business’s products and high levels of advertising
5 access to distributing networks
6 predictable behaviours of existing businesses
7 access to technologies used in the industry
What is supplier power
1 if supplier has high levels of power they are able to push up prices of raw materials and components so lowering profit margin
2 with lower levels of supplier power buyer can force prices paid for components and raw materials down resulting in higher profits for the business
Give examples of factors that determine supplier power
1 number of alternative suppliers
2 importance of volume of orders to supplier
3 if inputs make up a large proportion of costs
4 if inputs help create differentiation of products made
5 the cost of switching to a new supplier
6 availability of alternative inputs
If backward vertical intergration exists
