Strategy And Implementation

Question 1

What is planning and what is there that needs to consideration?

Answer 1

Important tool in ensuring the future success of a business. It needs to consider: new products, changes in the market, cash flow and investment decisions in order to stay competitive.
Planning helps to minimise risks.

Question 2

What are objectives?

Answer 2

Set in an attempt to reach a goal.

Question 3

What are strategies?

Answer 3

Action plans to reach objectives.

Question 4

What are tactics?

Answer 4

Steps taken to achieve strategy.

Question 5

What is internal audit in developing a strategy?

Answer 5

• looks at strengths and weaknesses of business compared to competitors.
• provides information about each business department.
• can include: productivity, labour turnover, stock control, sales.

Question 6

What is external audit when developing a strategy?

Answer 6

• looks at opportunities and threats in the changing business environment.
• can include: competition, law, technology change, environmental issues.
• factors in external audit are included in a PEST analysis.

Question 7

What is the PEST analysis?

Answer 7

Political - legislation on employment, health and safety, taxation.
Economic - inflation, interest rates, unemployment, economic cycle.
Social - spending habits, demographics.
Technology - new technology and processes.

Question 8

What is the SWOT analysis?

Answer 8

• audits are summarised into this format.
• use with market research, ratio analysis, sales figures etc.
• usefulness of SWOT depends on quality of data collected.

Question 9

What are Porters 5 forces?

Answer 9

Used to see the situation clearly when moving into new sector.

1. Threats of new entrants:
   - new firm will take share of the market.
   - greater barriers of entry, the less the threat.
2. Bargaining power of supplies:
   - strong suppliers can force up price.
   - decrease profit of business.
3. Bargaining power of consumers:
   - strong consumers can force price down.
   - decrease profit of business.
4. Threat of substitutes:
   - need to keep up to date with better, similar products.
   - otherwise loss of market share.
5. Degree of existing rivalry:
   - high competition means price wars, innovation and higher spending on promotion.
   - all reduce the profit of the business.

Question 10

What are Porters generic strategies?

Answer 10

Shows how a company can achieve a competitive advantage.

1. Cost leadership:
   - aim to be lowest cost producer in the market.
   - can be done through economies of scale and reducing production costs.
2. Differentiation:
   - producing goods that are different.
3. Focus or niche:
   - producing for a certain section of the market.
4. ‘Stuck in the middle’:
   - if company tries to do all 3, they are likely to have no success.

Question 11

What is management by objectives?

Answer 11

Where managers and employees define and agree on a series of objectives for the business. It involves measuring employees performance against the standard set.

Question 12

What are the advantages and disadvantages of management by objectives?

Answer 12

Advantages:
- improves employee motivation.
- everyone working toward one goal.
- increases interaction of managers and employees.
- if employees are involved in setting goals, they’re more likely to achieve them.

Disadvantages:
- goals can become more important than having an achievable plan.
- meeting targets could decrease products quality.