BUSINESS ALEVEL EDEXEL

What’s mission statement? Coroporate aims? Objectives? Functional?

Mission

• A clear, overarching definition of the business's core purpose and reason for existing.

• It is used to motivate and guide decision-making.

• Why it's used: It ensures that all actions and objectives align with the fundamental purpose of the business.

2. Strategic Aims

• Long-term goals for the entire company.

• These are the key targets the business wants to achieve, which then influence the overall strategy.

• They provide guidance for setting more specific objectives and help determine what those objectives should be.

3. SMART Objectives

• Objectives should be Specific, Measurable, Achievable, Relevant, and Time-bound.

4. Hierarchy of Objectives

• Corporate Objectives:

  • Set by top management for the whole business.

  • Derived from the strategic aims.

  • goal that a business strives to achieve in order to meet its long term aim

• Functional/Departmental Objectives:

  • Set for each department (e.g., Finance, Marketing).

  • They are detailed and specific, designed to help achieve the corporate objectives.

WHATS DRAWBACKS OF MISSION STATEMENT?

PROBLEMS WITH MISSION STATEMENTS:

1. Too vague & meaningless

2. biased - from business’s point of view just for the sake of a good reputation

3. Costly to develop

4. Can become outdated

WHAT IS THE SMART OBJECTIVES?

• S = Specific

  • The objective must be clear and well-defined, stating exactly what needs to be accomplished.

• M = Measurable

  • Must be able to track progress and know when the objective has been achieved.

• A = ACHIEVEABLE The goal should be achievable, considering the resources, skills, and capabilities available to the business.

• R = RELEVANT The goal should be relevant to the business's overall strategy and objectives.

• T = Time-Specific (or Time-bound)

  • Every objective needs a target date or deadline. This creates urgency and provides a clear timeframe for planning.

WHAT IS THE BENEFIT OF SMART?

Benefits of SMART Directive:

1. Clarity & Focus: Everyone in the business knows exactly what they are working towards, which helps to align efforts.

2. Motivation: A clear target can be a powerful motivator for teams and individuals.

3. Effective Monitoring: Makes it easier for managers to track progress and assess if the business is on target.

WHAT ARE THE DRAWBACKS OF SMART?

Drawbacks of SMART Objectives:

1. Can Stifle Creativity: A focus on specific targets might cause employees to miss unexpected opportunities or better ideas.

2. Can Become Outdated: In a dynamic market, an objective can quickly become unrealistic or irrelevant due to new competition or actions.

3. Time-Consuming: Can take a lot of management time and effort to set and monitor.

DEFINE KEY ANSOFF MATRIX

Market penetration, market development, product, and diversification

Define market penetration

A low-risk growth strategy where a business aims to sell existing products into existing markets to increase market share.

How to achieve market penetration?

Competitive pricing
• Advertising & sales promotion
• Loyalty schemes
• Increasing product usage

Define market development

A strategy where a business seeks to sell its existing products into new markets.

How to achieve market development?

• New product dimensions or packaging
• Different distribution channels
• Targeting new customer segments

• New geographical areas

Define product development

A strategy where a business introduces new products into existing markets.

How to achieve product development?

Requires product differentiation
• Research & Development (R&D)
• Detailed customer insight
• Speed to market is critical

Define diversification

A high-risk growth strategy where a business markets new products in new markets.

How to achieve diversification?

• The business moves into markets where it has little or no experience.
• Can be related (similar industry) or unrelated (new industry).

What is the benefits of market penetration?

Advantages:

• Increased Brand Loyalty: Success can strengthen customer loyalty.

• Economies of Scale: Increased sales volume can lower the cost per unit.

• Better Use of Capacity: Higher sales lead to more efficient use of factory/production capacity.

• Low Risk: Uses familiar products and markets.

What is the disadvantages of market penetration?

Disadvantages:

• Limited Growth Potential: The market may be saturated.

• Risk of Price Wars: Aggressive competition can lead to price cuts, reducing profitability.

• Vulnerability: Over-specialization makes the business vulnerable to a drop in demand or a change in the market.

• Intense Competition: Requires heavy marketing spend to defend market share and stop customers switching.

What is benefits of product development?

Advantages:

• Builds on Brand Strength: A trusted brand name can help launch new products.

• Meet New Customer Needs: Can satisfy evolving needs within your existing market.

• Command Premium Prices: Innovative new products can often be sold at higher prices.

• Use Existing Distribution: Can often be sold through current sales and distribution channels.

What is the drawbacks of product development?

Disadvantages:

• High R&D Costs: Requires significant investment with no guarantee of success.

• Time-Consuming: Developing and launching a new product takes a long time.

• High Marketing Costs: Significant investment is needed to launch the product successfully.

• Risk of Cannibalization: The new product may simply take sales away from the business's existing products ("Can-Go" products).

What are the benefits of market development?

Extends product life cycle finds new customers for mature products. Maximising returns on initial investment spreads risk reduces their dependence on single market and increased economies of scale.

What is the drawbacks of market development?

High market entry course requires significant investment and new market. Research and cultural legal barriers products may need to adapt to meet local tastes regulations or standards.

What is the advantages of diversification?

Highest growth potential opens up entirely new revenue streams

What is the drawbacks of diversification?

Significant risk spreads over 50% of diversification fail completely shareholders. Don’t like diversification is profits for competitive disadvantage as they’re competing against established businesses