Theme 3

Business A level

What is the aim of a business?

The long-term objective that includes the overriding goal of the business and the reason why it exists.

What is a mission statement?

A relatively brief outline of the business that includes a broad number of topics, such as its purpose and goals.

Give an example of a mission statement from Google.

To organize the world's information and make it universally accessible and useful.

What are corporate objectives?

Objectives that relate to the business as a whole, set by senior management, often aimed at satisfying shareholders.

Provide an example of a corporate objective from Microsoft.

Achieve carbon negative operations by 2030.

What are department functional objectives?

Detailed specifics on how corporate aims will be met, flowing from corporate objectives.

What does SMART stand for in the context of objectives?

Specific, Measurable, Achievable, Realistic, Timed.

What does 'Specific' mean in SMART objectives?

The objectives set need to be clear about what they plan to do.

Why is it important for objectives to be Measurable?

So the business can track progress and see how it is doing in relation to its objectives.

What does 'Achievable' imply in SMART objectives?

Objectives need to be attainable but should also stretch the business to work hard to achieve them.

What does 'Realistic' mean in the context of SMART objectives?

Objectives should be sensible, allowing the business to achieve them.

What is meant by 'Timed' in SMART objectives?

The business needs to set a date for when the objective should be achieved.

What is the purpose of corporate objectives?

To set out the overall aim of the business and its long-term objectives.

Who is the intended audience for corporate objectives?

Stakeholders of the business.

How should corporate strategy relate to corporate objectives?

The corporate strategy should flow from the mission statement and outline the business's objectives.

What is one use of mission statements and corporate objectives?

To track progress and ensure the business is heading in its intended direction.

What is a limitation of corporate objectives?

They are not always supported by business actions, which can make them less beneficial.

What can corporate objectives be viewed as, according to critics?

Attempts to enhance public relations rather than being useful tools for the business.

Name an internal influence on corporate objectives.

Business ownership, attitude and profit, ethical stance, strategic position and resources, or stakeholder influence.

What is a key external influence on corporate objectives?

Economic environment, political/legal environment, competitors, or social and technological change.

What is the difference between strategy and tactics in business?

Strategy is how the business intends to achieve its long-term objectives, while tactics support the achievement of specific targets and are usually short-term.

What is Ansoff's Matrix used for?

It is a market planning tool that helps businesses determine their product and market growth strategy.

What does market penetration involve?

Selling existing products in an existing market to maintain or increase market share.

What is an example of market penetration?

Apple selling their iPhone.

What is diversification in Ansoff's Matrix?

Selling a new product to a new market, which spreads risk but involves high risk due to lack of experience.

What is an example of diversification?

BP entering the energy market with electric vehicle charging.

What does market development entail?

Using an existing product to sell in a new market, requiring market research to ensure success.

What is product development?

Introducing new products to existing markets, which is less risky than market development.

What is Porter's Strategic Matrix used for?

It is a tool to find a sustainable competitive advantage.

What is cost leadership?

Becoming the lowest cost producer in the market to increase sales or profit margins.

What is differentiation leadership?

Achieving competitive advantage by differentiating goods/services through quality, branding, or promotion.

What does cost focus mean?

Achieving a cost advantage in a relatively small market.

What is differentiation focus?

Differentiating a product from competitors in a niche market.

What is the Boston Matrix?

A portfolio analysis tool categorizing products based on market growth rate and relative market share.

What does a 'Question Mark' represent in the Boston Matrix?

A product with low market share but high market growth, which should be invested in to become a star.

What is a 'Star' in the Boston Matrix?

A product with high market share and high market growth, which should continue to be invested in.

What does a 'Dog' represent in the Boston Matrix?

A product with low market share and low market growth that a business should stop selling.

What is a 'Cash Cow' in the Boston Matrix?

A product with high market share but low market growth that may eventually turn into a dog.

What are the benefits of the Boston Matrix?

It aids in portfolio decision making and provides a measure of product profitability.

What is a drawback of the Boston Matrix?

It only provides a snapshot of the current product portfolio without predictive elements.

What are Kay's distinctive capabilities?

Architecture, reputation, and innovation that help a business gain competitive advantage.

What does 'architecture' refer to in Kay's capabilities?

Relational contacts within or around the organization that enhance coordination and market responsiveness.

How does 'reputation' contribute to competitive advantage?

It is built through customer experience and quality service, leading to customer loyalty.

What does 'innovation' mean in the context of Kay's capabilities?

Creating new goods and inventions that differentiate a business, though often short-lived.

What is the difference between strategy and tactics?

Strategy is a long-term proactive plan, while tactics are short-term reactive plans to achieve strategic goals.

How can strategic decisions affect human resources?

A strategy may aim for profit, but tactics like making redundancies may be necessary during a recession.

How can strategic decisions impact physical resources?

A strategy may involve a good reputation, requiring investment in machinery to meet increased demand.

How can financial resources be affected by strategic decisions?

A growth strategy may necessitate borrowing money through shares rather than loans if interest rates are high.

SWOT analysis

A tool that provides a business an outline of what advantages over competitors that they may have and what might be their vulnerabilities.

Strengths

Capabilities that the business has (things the business is good at or the positivity of the business).

Weaknesses

What areas a business may be weak in.

Opportunities

A chance for the business to seize to develop their business and make a choice for the greater of the business.

Threats

Changes that may harm the business and the business will need to have a plan to respond to it.

Tactical decisions

SWOT is used to make tactical and strategic decisions.

Strategic decisions

SWOT is used to make tactical and strategic decisions.

Business expansion

If there is an opportunity to the business to expand then the business may do this analysis causing a change in their original strategy.