Topic 7: Strategic Position

• Mission Statement


  is the purpose of the business's existence
• Objective


  is a goal or target to be achieved in a given time period
• Corporate objectives


  are the goals of the business as a whole
• Functional objectives


  are specific goals or targets set within individual departments or functions of an organization
• Strategy


  is a medium to long term plan of action developed to achieve a business's objective
• Tactic


  are the short term actions or means of implementing and achieving those goals
• SWOT Analysis


  is a method of strategic analysis which considers the internal and external environment of a business
• Short-termism


  is when a business priorities short term profit over the long term performance
• Income Statement


  is a financial document that shows a company's profit or loss made throughout a specific period
• Balance Sheet


  is a financial statement that provides a snapshot of a company's financial condition of what they own and owe
• Profit Quality


  is a measure of whether profit is sustainable in the long run
• Working Capital


  total current assets-total current liabilities

  funds available to cover the business's day-to-day expenses
• Window dressing


  is the practice of manipulating the financial statements in a way that makes a company's performance appear better or worst than it actually is
• Financial Ratios


  is a method of evaluating a company's financial performance and stability by comparing different pieces of financial data to establish trends and patterns.
• Liquidity Ratio


  measures the extent to which a business is able to pay off its short term debts
• Profitability Ratios


  shows the company's ability to generate or make profit
• Efficiency Ratios


  shows how well the business is using its resources, assets and liabilities internally
• Gearing ratio


  shows what proportion of its finance is borrowed money or long term loans
• Core Competencies


  is the unique ability that the business possesses that provides it with a competitive advantage (something other business can not copy easily)
• Kaplan and Norton's Balanced Scorecard

  is a system that assess the business performance by looking at its financial and non financial elements from a variety of perspectives
• Elkington's Triple Bottom Line

  is used to measure a business's performance through three important areas: profit, people, planet.
• Competition Policy
• The Labour Market Policy
• Environmental Policy
• Competition and Markets Authority (CMA)


  people that prevent companies from breaking competition laws
• Monopoly


  is when a business has complete control and dominates the market
• Tariffs


  taxes imposed by the government on imports and exports goods
• Quotas


  the restriction of goods being imported and exported into another country
• Trade Embargo


  a government order that forbids trade with a specified country
• Sanctions


  a threatened penalty for disobeying a law or rule
• Gross Domestic Product (GDP)

  the total value of all goods and services produced by a country in a certain period
• The Trade Cycle


  fluctuations in economic activity over a period of time - measures in GDP and time
• Exchange Rates


  is the price of one currency expressed in terms of another
• Inflation


  is a rise in the price of goods and services we buy
• Monetary Policy


  central bank manage and control the money supply in the economy e.g. interest rate
• Fiscal Policy


  the use of government revenue collection (taxes) and expenditure (spending) to influence the economy
• Interest Rates
• Free Trade


  is when countries can exchange goods and services without any tariffs, quotas, or other restrictions.
• Protectionism


  is a policy where a country puts restrictions on trade with other countries to protect its own industries.
• Globalisation


  The growing integration (combination) of the world's economies