theme 2

• mission statement

  a statement written by the business describing its purpose and objectives which includes its present operations. It reflects the company's goals and values
• corporate objectives

  aims of a small to medium size that the business intends to achieve in both the long term and the short term. they should be SMART
• Tactics

  short term aims that the company undertakes to meet its strategy
• corporate strategy

  plans and policies developed to meet corporate objectives/ companies long term goals
• Ansoff's matrix


  decision making tool that helps a business decide on growing on the basis of products and markets
• Porter's strategic matrix

  identifies the source of competitive advantage that a business might achieve. if you don't adapt the model they likely to succeed
• portfolio analysis

  method of categorising all the products and services of the business to decide where each product fits in within the business plan. the products are then evaluated according to their competitive position, market share and market growth
• Distinctive capabilities


  a form of competitive advantage that is sustainable because it cannot be easily replicated by a competitor
• competitive advantage


  a set of unique features of a company and its products that are perceived by customers as significant and superior to its competitors
• SWOT

  strengths, weaknesses, opportunities, threats - analysis of the internal strength and weaknesses of the business and the external opportunities and threats it faces
• internal audit

  analysis of a business and how it operates - helps to identify strengths and weaknesses
• external audit

  analysis of the environment in which the business operates over which has no control - helps find out PESTLE
• PESTLE

  Political, Economic, Social, Technological, Legal, Environmental - helps business understand the environment they are operating in. allows the business to analyse the challenges, opportunities that it faces as a result of challenges in external factors
• competitive market

  low barriers to entry and exit, low price setting for firms
• porter's forces

  an attempt to analyse the competitive environment by helping businesses to achieve and sustain competitive advantages
• overtrading


  when a business expands too quickly and takes on more orders than working capital allows
• mergers

  when 2 or more businesses join together and operate as one companies
• takeover


  when one business buys another business
• horizontal integration

  when 2 firms merge/one takes over another in the same industry at the same level of integration
• vertical integration

  when 2 firms merge/one takes over another in the same industry at different levels of production
• conglomerate

  companies in different industries merge together/one takes over another in order to spread risk and diversification of product range
• organic growth (internal)


  business gradually grows using their own resources by selling more of its outputs
• Inorganic Growth (External)

  growing externally through mergers and acquisitions
• customer service

  service provided by firms before, during and after the sale of the product
• e - commerce


  trading online due to development of technology
• investment appraisal


  the evaluation of an investment project top determine whether or not it is likely to be worthwhile
• payback period

  the amount of time it takes to recover the cost of an investment project
• average rate of return

  method of investment appropriate that measures the net return per year as a % of initial spending. looks at the total accounting return for a project to see if it meets the target return
• net present value

  the monetary value now of the projects future cash flows
• decision trees


  a diagram which shows all possible outcomes of a decision together with the estimated probability and the expected monetary value of each of these outcomes
• critical path analysis


  technique that shows a sequence of activities that need to be completed in a minimum time required and the best way to avoid any delays
• Internal Influences

  corporate culture, stakeholder's perspective and business ethics
• external influences

  PESTLE
• short term corporate timescales

  want to maximise profits: usually big businesses. firms decisions aim to maximise profit rather than growth
• long term corporate timescales

  wants to maximise sales to increase growth in the business
• evidence - based decision making

  systematic and rational approach to analyse an available information before a conclusion is reached. this is usually based on facts and objectives in nature
• subjective decision making

  an approach to decision making where the opinions of the key decision maker influence the course of action chosen. based on value judgment/ gut feeling
• corporate culture


  the way we do things around hererefers to the set of assumptions/ values/ attitudes/ beliefs that are shared by people and groups within an organisation
• power culture


  one where decision making power is at the top of the hierarchy there is a competitive atmosphere amongst the employees as they have to compete to gain power
• role culture

  decisions are made through well-established rules and procedures/power is associated with a role, influence and control lies with the roles that an individual plays rather than individuals themselves