A-Level Business 3.1 UNFINISHED (COMVBINE WITH ANSOFF AND STRATEGIC MATRIX CARDS!!!)

What is a Mission Statement?

The overall aim and purpose of a business:

• Not the objectives or how they will meet it

What are the Hierarchy of Objectives?

The order of importance for objectives within a firm:

• As you go up, they become increasingly strategic

• As you go down, they become increasingly detailed

Who does a Mission Statement target? (4 things)

1. Staff

2. Customers

3. Investors

4. Society

What 3 things make a good Mission Statement?

1. Clear and motivates

2. Easy to understand/remember (for all stakeholders)

3. Differentiated from rivals

What are some Cons of Mission Statements?

• Can be vague and general

• State the obvious - no differentiation

• Everyone must be on board with it to be effective

• Business actions may not fit it

What are Objectives?

Specific Statements to achieve the aims of a firm

What are Corporate Objectives?

Objectives that relate to the firm as a whole

Why does a firm have Corporate Objectives?

• Gives Strategic focus

• Measures whole firm performance

• Informs decision making

• Helps to create detailed functional objectives

What are Functional Objectives?

The detailed instructions to meet the Corporate Objectives

E.g. release 5 products in one year

What are SMART Objectives?

Objectives that are:

Specific

Measurable

Achievable

Relevant

Time-bound

What is SWOT Analysis?

A way for a firm to assess its competitive strength and nature of its external environment

What does SWOT mean?

Internal to Firm:

Strengths

Weaknesses

External to Firm:

Opportunities

Threats

How can we assess Strengths and Weaknesses using SWOT?

• See Competitive advantages (Market share, brand image, efficiency etc.)

• Benchmark w/rivals

• Use Key Performance Indicators (KPIs)

How can we assess Opportunities and Threats using SWOT?

• Take advantage of opportunities

• See to protect against threats

• Use Risk management and contingency planning

What are the Pros of SWOT Analysis?

• Logical Structure

• Focuses on strategic issues

• Encourages external environment analysis

What are the Cons of SWOT Analysis?

• Lacks focus

• Bias

• Can quickly become out of date

What is PESTLE Analysis?

A way to analyse the external environment

What does PESTLE mean?

Political (policy, govt. spending etc.)

Economic (interest, GDP)

Social (tastes change, pressure groups)

Technology (new, dynamic in market)

Legal (Law, health and safety)

Ethical/Environmental (Sustainability, ethical source)

What are Porter’s Five Forces?

The framework for analysing the nature of competition within a market:

1. New Entrant Threats

2. Bargaining power of Suppliers

3. Bargaining power of Customers

4. Threat of Substitute Products

5. Intensity of Rivalry

How can a firm be affected by New Market Entrants in Porter’s 5 Forces?

• New Entrants gain market share and rivalry increases

  • So firms make barriers to entry like EoC, Brand loyalty and Good Supplier Relations

How can a firm be affected by Bargaining Power of Suppliers in Porter’s 5 Forces?

Suppliers will exercise their power:

• Sell at higher price (profit reduces)

• Know that they’re one of few that can supply

• Resources are scarce, so will take advantage of it

How can a firm be affected by Bargaining Power of Customers in Porter’s 5 Forces?

Powerful customers pressure to lower prices (Pressure groups

How can a firm be affected by the Threat of Substitute Products in Porter’s 5 Forces?

• Customers have choice, and so may choose the cheapest alternative

• Customer loyalty can limit the threat

How can a firm be affected by Intensity of Rivalry in Porter’s 5 Forces?

• Firms must compete and differentiate constantly

• Must constantly MR and R&D to compete effectively

• Promote heavily to expose brand further