business objectives and strategy

• what are corporate objectives


  targets set for the whole firm to reach in a given time period
• what are corporate aims


  an aim provides a general sense of what is to be achieved. the key benefit to having a clear aim is the sense of purpose and drive it can bring to day-to-day tasks.

  typical corporate aims

  • growth
  • maximising profit
  • entering new markets
  • surviving the first two years of being in business
  • improving the communities in which they operate

  focusing on any of these would help employees to understand what factors should be prioritised when making decisions. this should allow decisions to be made quickly, without the need for lengthy consultation with senior management.
• mission statements


  • mission is the underpinning purpose behind the existence of a business
  • a mission statement is a catchy summary of the reason why a business exists.

  if employees can be convinced to 'buy into' a business's mission, they are likely to find sufficient motivation from trying to achieve this purpose, without the need for extra motivational techniques. a mission can be thought as why the business exists so it can give staff a genuine sense of purpose, explaining, without the need for extra management input, why they are doing their job.
• influences on business mission


  • purpose - why the business exists
  • values - what it believes in doing
  • standards and behaviours - the way the people in the business actually act
• limitation of mission statements


  the power of a missions statement is to encapsulate the sense of purpose, a collection of words will not create that purpose for employees
• corporate strategy 


  • a medium to long term plan for achieving the corporate objectives

  strategic decisions are large scale and hard to reverse, so a corporate strategy will address major issues for a firm for the medium to long term, most significantly what to sell and who to sell to.
• porter's (generic) strategy matrix


  provides advice to any business on potential routes to choosing a successful corporate strategy. porter sees this as a crucial element in achieving a long-term competitive advantage. the matrix shows the four major strategic choices that porter suggests can lead to long term success. the key issue to consider when analysing a company's strategy are whether its selling to mass or niche market and how it tries to achieve product differentiation.
• product differentiation


  describes a business's attempts to make its product stand out from those of rivals, perhaps through marketing, design or quality.
• porter's low cost strategy 


  • being sufficiently efficient in your operations allows a business to be able to undercut rivals on price and still make profit
  • the key is in operational advantage, such as better economies of scale that rivals or higher productivity in factories that anyone else can manage.
  • to be effective in the long term, the low cost strategy must be based on an advantage that rivals cannot easily copy.
• porter's differentiation strategy


  differentiation works. the challenge is to find a way to differentiate the product which is:

  • cost effective: adding features that cost more to add than a customer is willing to pay is not profitable
  • sustainable: a method of differentiation that lasts is the key: doing something to a product that rivals can quickly copy will not provide long-term success.

  not just branding and image - building marketing are successful. also great design and customer service
• porter's focused low cost


  a strategy that focuses on a niche market and succeeds in being the lowest cost provider within that niche can also bring success. here, the key is less likely to be cost reduction through economies of scale and more likely to be based on operational efficiencies and high productivity levels.
• porter's focused differentiation


  successful differentiation within a niche market can also lead to long-term success, generally with a very high-margin, relatively low-volume business model.
• competitive advantage through distinctive capabilities


  a business that is clear on its core strengths has the beginning of a successful route to long term strategic advantage. if core strengths,such as an innovative research and development department, hugely committed staff or creative marketing department can be used to provide a competitive edge over rivals, then these can be the basis of long term success.
• strategic direction and ansoffs matrix


  strategic matrix shows the major choices open to a business considering its strategic direction, and to highlight the level of risk involved in each choice.
• ansoffs matrix - market penetration


  the commonest and lowest risk strategy involves boosting market share through selling more of the same product to the same target market. methods for doing this include:

  • finding new customers within the target market
  • taking new customers from competitors
  • increasing usage of product among existing customers

  risk is low as the company is still operating on familiar ground with tried and tested products.
• ansoffs matrix - market development 


  • while selling existing products, the business now aims the products at new markets
  • this can be done most obviously by looking for new geographical markets, often breaking into foreign markets, or by repositioning the product to aim at a different type of customer
  • the major risk is that the company may not understand consumer behaviours in the new market they are entering.
  • although market research can help this risk is unlikely to equip a firm with the depth of understanding required
• ansoffs matrix - product development


  • the new is the product and to existing markets, so likely to have an understanding of customers' needs, wants and preferences.
  • however, developing new products successfully is tough; there are so many reasons why new product launches can fail, from design problems to manufacturing issues, to most commonly meeting customer needs.
  • new products can either be making changes to an existing product or developing and launching brand new products - changes to existing: lower risk, but can still backfire. brand new products: more hurdles thus greater risk
• ansoffs matrix - diversification


  • means selling new products to new markets
  • faces the problems of product development and market development combined
  • selling new products to customers whose tastes you have no experience is likely to be very tough to do successfully
  • however, it can bring exceptionally high rewards
• SWOT analysis 


  identifies a business's strengths and weaknesses along with the opportunities and threats it faces. sets out to gain a full understanding of what a business does well and badly and major issues it must address in the future. a framework to help begin the process of strategic planning.
• top down SWOT analysis approach

  external management consultants working directly with the boss of the business. + detachment from company culture may allow aspects of the business to be seen in a new light - managers may fail to share all information in an attempt to present their area in a more favourable light
• consultative SWOT analysis approach

  a boss who takes the opportunity to travel around the business can conduct a more thorough analysis about what works well and less well within the business. they can do this by engaging in conversation with those who understand each aspect the best. + greater insight from wider range of contributors, chance for boss to gain first hand understanding of the whole business. - staff may be less willing to point out problems if they feel this will reflect badly on the leadership of the person they are talking to
• key performance indicators (KPIs) - internal considerations (strengths + weaknesses)

  are quantifiable measures of aspects of the business's performance that the business considers to be the main determinants of its commercial success.

  examples : like-for-like sales, market share, capacity utilisation, unit cost, brand recognition, staff turnover.
• external considerations : opportunities and threats

  • demography - changes in population - aging, immigration
  • new laws and regulations
  • technological factors
  • competition
  • commodity (basic goods, traded internationally, unprocessed raw materials) prices
  • economic factors - inflation, growth, exchange rates, unemployment, interest rates, government taxation and spending.
• lobbying


  describes the process of directly trying to influence key political decision makers to act in the best interests of a business
• impact of external influences

  Political

  Economic

  Social

  Technological

  Legal

  Environmental
• impact of external influences - political factors

  government policies encouraging investment in infrastructure or exports can represent significant opportunities to some firms. The most important - the decision to leave the EU effects - harder to access EU markets, harder to fill lower-paid job vacancies, more expensive imported materials due to reduction in value of the pound, less investment from foreign multinationals, a weaker pound may make it easier to compete on price with more expensive foreign imports due to exchange rate shift.
• impact of external influences - economic factors

  the link between economic growth and average incomes does tend to have an impact on sales of most products, dependant upon their income elasticity. the exchange rate: impacts exporters and business who sell imported products or use imported materials. the rate of inflation : as it rises this tends to cause uncertainty and lead to reductions in investment and decisions to expand. the rate of unemployment: easier to recruit staff without needing to offer higher wages.
• impacts of external influences: social factors

  changes in social attitudes and behaviour frequently relate to lifestyle. trends such as: greater consciousness to eating healthily, changed attitudes to smoking, ageing population, increased desire for convenience and speed of service.
• impact of external factors: technological factors

  technological changes can allow new ways of making existing products, lowering costs, improving quality, reliability, durability or recyclability. can allow for development of brand new products.
• impact of external factors: legal factors

  can force businesses to change the way they make products or the materials they use, or even banning certain products. firms directly affected will face a strategic challenge as to how to turn what appears to be a threat into an opportunity.
• impact of external factors: environmental factors


  ensure businesses do not have a harmful effect on the environment. are generally a threat, mostly businesses are encouraged to change their methods of operating.
• porters 5 forces

  a structure for conducting analysis of a business's competitive environment. the matrix identifies 5 key aspects of the competitive environment that affect a firm's likelihood of long term success. rivalry among existing competitors, bargaining power of suppliers, threat of new entrants, bargaining power of buyers, threat of substitute.
• porters 5 forces - rivalry among existing competitors

  at the heart of porters 5 forces, profitability is more likely when rivalry is less intense. where the intensity of rivalry is high, pressure to maintain low price and thus keep costs low to still make a profit is great. where rivalry is less intense, non-price competition on marketing, branding or innovation is more likely. low - few companies dominate market, high barriers to entry, no direct competition from abroad. high - many undifferentiated products, slow market growth, low capacity utilisation, low barriers to entry
• barriers to entry


  factors in a market that can make it hard for new companies to break into the market
• porters 5 forces - threat of new entrants

  the danger of new companies entering the market, thus creating extra competition, is largely dependent on the existence of barriers of entry. e.g strong brand identity and customer loyalty, technical knowhow of staff, high cost to customer of switching supplier, sustainable network infrastructure. if threat of new entrants is low companies may be able to keep prices relatively high, enjoying strong margins, without the need to worry about new rivals entering the market and undercutting them.
• porters 5 forces - changes in the buying power of customers

  when the power in any bargaining between a business and its customers shifts in the customers' direction, this can be unfavourable to the business. a company that sells its product to many individual customers is likely to find this force favourable. however, for businesses that sell their product to just a few large customers, a threat from one of them to stop buying unless they are offered a discount may be to grave to ignore.
• porters 5 forces - changes in the selling power of suppliers

  if the power shifts towards suppliers, this is bad news for the business and its future profitability. factors affecting supplier power - number of alternative suppliers available, uniqueness of suppliers product or service, reliance of the business on tequnical support from supplier.
• porters 5 forces - threat of substitutes

  considers the chances that a product or service in another market may become seen by customers as a viable substitute for our product.