3.1: Business Objective and Strategy

What are strategies within a business

they are short to medium term plans made by a business to help meets its coroprate objectives

what is the development chain of corporate objectives

1. mission statement

2. corporate aims

3. corporate objectives

4. corporate strategy

what is a mission

the overall reason for the existence of the business

what is a mission statement

a written statement that states the purpose of an organisation

what is critical appraisal

it considers the S&W of mission statements and corporate aims

what is corporate strategy

the course or route that a business has chosen to follow in order to achieve its corporate objectives

how is a corporate strategy influenced

• corporate objectives

• distinctive capabilities

• competitive environment

• leader’s attitude to risk

• local, national, and global economic environment

what is Ansoff’s Matrix

4 potential strategies to increase growth

what were ansoff’s 4 potential strategies

1. market penetration

2. market development

3. new product development

4. diversification

what is market penetration

trying to sell more of an existing product to the existing market. low risk but limited potential reward

what is market development

attracting new customers to buy existing products

what is new product development

selling new and better products to existing customers and markets

what is diversification

selling new products to new markets

what were Kay’s three distinctive capabilities

architecture, innovation, reputation

what is architecture (KDC)

relationships with employees, suppliers, customers

what is reputation (KDC)

through the customer experience

what is innovation (KDC)

bringing inventions to market

what is Porter’s strategic matrix

a matrix that categorises the marketing strategies a business can adopt to try and achieve a competitive advantage

what are the four strategies of Porter’s matrix

1. cost leadership (lowest cost + mass market)

2. focused cost leadership (lowest cost + niche market)

3. differentiation (highest differentiation + mass market)

4. focused differentiation (highest differentiation + niche market)

what is cost leadership (PSM)

means being able to offer your good or service at the lowest cost possible

what is differentiation (PSM)

means being able to offer a G/S that stands out from the competition

what is ‘focused …’ (PSM)

the product or service will serve a small specific niche, high costs are passed onto customers, no close substitutes

what is Porter’s 5 forces model

helps businesses assess their competitive strength and position within their industry and identify their external sources

what are the 5 forces in P5FM

1. barriers to entry (prevent new comp from entering a market)

2. threat of substitutes

3. buyer power (ease for customers to affect/determine the price they pay)

4. supplier power (no. of capable suppliers, cost of switching, brand power of suppliers)

5. degree of competitive rivalry (determined by the balance of the other 4 forces, plus no. of sellers, degree of differentiation, market size, and the growth potential)

what is product portfolio analysis

looks at the range of products and brands a business has under its control and this can help identify where every single one of its products is positioned in the market

what does product portfolio analysis aim to do

• reach a wider audience through product & market development

• spread risk

• objective of growth

• identify and fill gaps in the market

• economies of scale

what is SWOT analysis

a diagnostic tool used to identify the internal strengths and weaknesses and the external opportunities and threats to a business

Why is SWOT used

it helps inform decision making

What does PESTLE stand for

political, economic, social, technological, legal, ethical/environmental

what is regulation

the creation of rules and sections within an industry to modify the economic behaviour of firms

what is deregulation

the opening up of markets to new competition through the removal of rules and regulations creating barriers to entry