3.1 - Business Objectives & Strategy

Vocabulary flashcards reviewing business objectives, corporate strategy models, portfolio analysis, SWOT, and PESTLE analysis based on Edexcel A Level Business notes.

Aim

What the business is looking to achieve in the long term, often expressed as an overall vision and describing its reason for being.

Hierarchy of Objectives

A structure showing how overall aims link to a mission statement, corporate objectives, and functional objectives, cascading downwards.

Mission Statement

An expression of a business's overall aim as well as its core values and context, often expressed in inspirational terms.

Corporate Objectives

Specific performance goals set by senior management for the business to achieve over time, derived from the firm's overall aim and mission statement.

Functional Objectives

The day-to-day goals of specific functions or departments within a business, derived from corporate objectives.

SMART Objectives

Objectives that are Specific, Measurable, Agreed, Realistic, and Time-bound.

Ansoff Matrix

A strategic tool for businesses with a growth objective, used to identify growth strategies and associated risk based on markets and products.

Market Penetration

The least risky Ansoff growth strategy, involving selling more existing products to existing customers.

Market Development

An Ansoff growth strategy involving finding and exploiting new market opportunities for existing products.

Product Development

An Ansoff growth strategy involving selling new or improved products to existing customers.

Diversification

The most risky Ansoff growth strategy, involving targeting new customers with entirely new or redeveloped products.

Porter's Generic Strategic Matrix

A framework identifying competitive strategies based on source of competitive advantage (cost or differentiation) and market scope (mass or niche).

Cost Leadership

A mass-market strategy where a business exploits a significant cost advantage over competitors as much as possible.

Differentiation Strategy

A strategy adopted by mass-market businesses unable to compete on cost, focusing on standing out from rivals.

Focus Strategy

A strategy adopted by a business operating in a niche market to closely meet the needs of its specific customer group.

Cost Focus

A strategy involving being the lowest-cost competitor within a specific market niche.

Differentiation Focus

A strategy involving offering specialised products within a specific niche market.

Portfolio Analysis

A detailed evaluation carried out by a business on its full range of products to identify and pursue appropriate strategies.

Boston Matrix

A portfolio analysis tool that considers the relative market share of a firm's products and the growth rate of the market in which they are sold.

Stars (Boston Matrix)

Products sold in high-growth markets that have a high level of market share and require ongoing investment.

Cash Cows (Boston Matrix)

Products sold in lower-growth markets with a high market share that generate more cash than needed to maintain position.

Question Marks (Boston Matrix)

Products sold in high-growth markets with a relatively low market share, requiring significant investment to become stars.

Dogs (Boston Matrix)

Products sold in low-growth markets with a relatively low market share and little potential for future growth.

Distinctive Capability

A particular strength that a business possesses that is very difficult for competitors to copy.

Strategic Decision-making

Medium- to long-term planning to achieve corporate and functional objectives, establishing actions intended to reach goals.

Tactical Decision-making

Shorter-term decision-making made to support the overall strategy of a business.

SWOT Analysis

An analytical tool used by businesses to identify internal strengths and weaknesses as well as external opportunities and threats.

Strengths (SWOT)

Internal factors detailing what the business is good at, including unique qualities, assets, or skilled staff.

Weaknesses (SWOT)

Internal factors detailing what the business does poorly or ways in which it lags behind competitors.

Opportunities (SWOT)

External options a business may exploit to enjoy further success, such as positive market developments.

Threats (SWOT)

External hazards that have the potential to damage business performance, such as emerging rivals or legal changes.

PESTLE Analysis

An analytical framework examining external Political, Economic, Social, Technological, Legal, and Environmental factors.

Porter's Five Forces

A strategic model identifying five key competitive pressures on an industry that impact a firm's ability to compete.

Industry Rivalry

A competitive force in Porter's model reflecting the intensity of competition when many rivals sell similar products.

Buyer Power

A competitive force in Porter's model describing the power customers have to negotiate lower prices or demand specific terms.