corporate,missions, ansoffs matrix

Mission statement

Brief qualatitaive statements that summarise purpose and core valises of business

All actions must align with statement- becomes a filter for business

Beinfits of mission statement

Gives clear direction-helps manager sand employees understand clear purpose-improves decision making because choices can be judged against overall aim- creating consistency in decisions across departments

Motivates employee-understand values- feel more involved and committed- high motivation and prosciutto city- reduce unit costs and increase profitability

Improves brand image- attract customers who agree with values - increase customer loyalty - repeat purchases- stronger long term revenue

Limitations of mission statement

Too vague-very general- give little practical guidance- interpret aims differently - reducing usefulness

Difficult to satisfy all stakeholders- try to includes customers,employees,shareholders and society but these groups often want different things- creating conflict

Corporate aims

Long terms goals of company

Influence strategic descions of the company

Provides guidance for corporate objectives

Corporate objectives

smart

Specific measurable goals that a business wants to achieve for its overall strategic direction

‘Increasing market share by 10% in next 12 months

Functional objectives

Different functions of business- marketing operational finance departments

Ansoffs matrix

Developed to analyse different strategies a business can use to help grow

Product+market

Existing+ exsisting= market penetration

Exstitimg market+ new= product development

New market +exstiing = market development

New + new= diversification

Market penetration

Existing market + existing product

Low risk

Increase level of sales or market share

They might cut prices , improve loyalty

Helps improve economies of scale and strengthens existing advantages but has a limited ceiling on sales- poses a limit on growth

Beinfits of market penetration

Low risk because the business already knows the market-understands preferences,competitors and pricing levels so descions become more accurate - reduces chance of failure

Existing customers already know the product-brand awareness is already established- less spending- lower marketing costs

Can increase sales quickly through promotion- encouragement for more frequent purchases - more sales- spread fixed costs over more units improving competitiveness

Limitations of market penetration

Market may already be saturated- limited room for further growth

Heavy promotion can be expensive- sales may not rise enough to cover costs- profit may fall

Price cuts may reduce profit margins- each contribution generates lower profit

Product development

New products in existing markets

Beinfits of product development

Keeps existing customers interested- new products help prevent customer bridesmaid and maintain loyalty- more likely to repeat purchases- giving sdtable revenue stream

Can respond to changing consumer tastes- meeting new trends helps business stay conmoetitve- may prevent customers switching to competitve protecting market share

Create a competitve advantage-successful new product can differentiate the business from rivals- allow higher prices

Limitations of product development

Research + development costs are high-dishing and testing products requires large investment- product fails- costs cant be recovered -damaging business profitability

New products may fail- unsold stocks may lead to waste and lower cash flow

Production change may increase costs-new machinery or staff training may be required - raising fixed costs- increase break-even costs- more sales are required before profit is made

Market development

Existing products in new markets

Beinfits of market develpment

New customer base increase sales potential-selling to more customers can raise revenue-larger sales crest economies of scale- lowing average costs

Helps spread risk across markets- another still may generate revenue- more stable

Uses products already developed- business avoids major producer development costs because its sells existing goods reducing risk compared with diversification

Limitations of market development

Expensive market research- business must understand customer behaviour in the new market- incorrect research can lead to poor decisions and wasted investment

Cultural differences may reduce success- consumer preferences may differ - products may not appeal in same way- low demand and weak sales

Distribution abroad may Difficult- new supply chains may increase transport costs and delay- reducing efficiency and customiser satisfaction

Diversification

New market and new product

Expands the portfolio creating new revenue streams and potential synergies

However it comes with high risk and costs

Beinfits of diversification

Highest growth potential- successful new market and product combination can create a comepltyl new source of revenue increasing long term profits

Reduces dependence on one market- if original market declines the business has another source of income- improving long term survival

Can open new profit opportunities- may find markets with less competition- allowing stronger profit margins

Limitation of diversification

Highest risk business may lack experience in both product and market -increasing uncertainty and marking failure more likely

Large investment needed-high spending on development- marketing and distribution can create financial pressure- cash flow problems