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36 Cards in this Set
- Front
- Back
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SMART objectives |
Specific Measurable Agreed Realistic Time specific |
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Objectives hierarchy |
Mission statement Aims Corporate objectives Functional objectives (finance, marketing, operations, people) |
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Mission statement |
A brief statement, written by the business, describing its purpose and objectives, designed to encapsulate its present operations |
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Theories of corporate strategy: Ansoffs matrix |
Existing product, Existing market - market penetration Existing market, new product - product development New market, existing market - market development New market, new product - diversification |
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Ansoff’s matrix explained |
Back (Definition) |
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Five forces that determine industry profitability |
Bargaining power of suppliers Threat of new entrants Bargaining power of buyers Threat of substitute products or services |
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Internal economies of scale Really Fun Mums Try Making Pies |
Risk bearing Financial Managerial Technological Market Purchasing |
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External EoS |
Labour Ancillary + Commercial services Co-operation Disintegration |
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Diseconomies of scale |
Communication Coordination Motivation Technical Overtrading |
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Methods of growing organically |
New customers New products New markets New business model Franchising |
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Advantages of organic growth |
Less risk Cheaper Retain control Financial stability Lower chances of diseconomies of scale |
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Disadvantages of organic growth |
Slow growth Prevent tapping into other firms resources May get left behind in the market Economies of scale Not suitable in certain situations (eg rapid market growth) |
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Reasons for staying small |
Personal service Owners preferences Flexibility and Efficiency Lower costs Low barriers to entry Small firms can be monopolirt (supply service that no one else does in a community) |
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Ways small firms can survive |
Product differentiation + USPS Customer service Flexibility in responding to customer needs E-commerce Online shops |
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Quantitative sales forecasting |
Statistical technique which uses data to make predictions about the possible sales level in the future |
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Extrapolation |
Involved the use of past sales data to forecast future sales - draw line of best fit on data - extend line to predict future sales |
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Extrapolation advantages |
- based on data already collected = Cheap to do - Allows a business to make decisions based on data - Smooths out fluctuations to reveal patterns - helps set targets |
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Extrapolation disadvantages |
- based on past experience and may not consider unforeseen changes in circumstances - relies on accuracy of data previously collected -may not consider season cyclical variations |
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Limitations of quantitative sales forecasting |
The further into the future the less accurate Unforeseen changes in external environment Only possible with previous sales data Need to be based on both quantitative and qualitative |
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Pros of ARR |
Focuses on profitability Focuses on lifetime of project Compare profitability to other projects |
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Cons of ARR |
Ignores the timing of predicted cash flows Focuses on long term and projects that lead to higher short term are more attractive to investors Rely on accuracy of forecasts/data |
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Pros of NPV |
- takes the opportunity cost of keeping money in a bank into account Considers both the timing and profitably of a project Can be used to consider different scenarios |
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Cons of NPV |
- uncertainty about the discount rate to use, interest rates and inflation change over time - time consuming to calculate if businesses are estimating discount factors |
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Pros of decision trees |
- Encourages logical thinking - Allows structured discussions and comparisons - Takes into account risk - Quantifies the outcome of each decision - Highlights the likelihood of each outcome |
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Cons of decision trees |
- Relies heavily on estimate - Doesn’t take into account qualitative factors - Estimates may be bias - May not consider external influences - non dynamic, may be out of date before a decision - evidence, what is data based on |
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Benefits of CPA |
Identifiers all stages Estimates the duration Identifies the activities that are crucial to be on time Identifies the activities that delayed won’t affect the project Can meet deadlines Plan resources Improved cash flow, materials only ordered when needed Can see impact of delays |
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Cost of CPA |
Complex projects difficult to break down Time consuming Unforeseen circumstances not considered Inaccurate estimates |
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Corporate culture examples |
Power culture - central source of power responsible for decision making Role culture - Decisions are made through well-established rules and procedures power associated with a role. Task culture - Power is given to those who can accomplish tasks power lies with those with expertise. Person culture - where there are a number of individuals in the business who have expertise but don’t work together closely. |
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Causes of change |
Changes in organisational size Poor business performance Change to the market and PESTLE Changes in ownership Transformational leadership |
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Effects of change |
Competitiveness Productivity Financial performance Stakeholders |
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Key factors in change |
Firm culture Size of firm Speed of change |
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Strategies to increase productivity, retention and reduce turnover, absenteeism |
Financial rewards - piece rates Employee share ownership - employees rewarded with share in business Job empowerment strategies Consultation strategies - involved in decision making Pseudo - management makes a decision and informs employees Classical - through representatives e.g unions Integrative - democratic method e.g quality circles |
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Risk mitigation |
Plans assess and prioritise tasks to deal with the impact of these risks to he operation of the business |
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Risk assessment |
Involves examining what might cause harm to people and identifying the precautions that might be taken to protect them from harm. |
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Business continuity |
When an incident occurs a business will want to minimise disruption and get the business up and running as normal as quick as possible |
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Succession planning |
Identifying and developing current employees who have the potential to occupy key roles in the future. |
