Business 7
Analysing the strategic position of a business
Mission statement - outlines fundamental purpose and reason for an organisations existence
Vision statement - sets out a business’s ambition, or the position it hopes to achieve in the future
Influences on mission
– Value of the owners and founders
– Industry characteristics
– Societal views and expectations
– Values of employees and other internal stakeholders
– Corporate objectives and long term strategy
– Legal form
– Regulation, technology and global issues
Corporate objectives - long term goals set by senior management that flow from the mission
Influences on corporate objective and decision
– Pressures for short termism: pressure to hit profit targets
– Business ownership
– External environment
– Internal environment
Functional objectives - department level targets that support corporate objectives
Strategy - medium to long term plan of action that shows how the business will meet its corporate
objectives
Tactical decisions - short term, day to day choices that put the strategy into practice
These ^ are linked for:
– Alignment and focus
– Clarity and accountability
– Flexibility
Relationship between mission, objectives, strategy and tactical decisions
– Mission states why business exists and who it serves. Corporate objectives translate that
purpose into specific, measurable targets for the whole organisation
– Corporate strategy outlines how the firm will active those targets, allocating resources and
choosing markets or products. Balances risks, costs, and expected benefits
– Each department sets its own objectives to deliver the strategy. These are shorter term and
, –
more detailed than corporate goals.
– Managers and supervisors decide daily/weekly actions that push functional objectives
forward. High specified and easily adjusted.
Strategy
-> long term
-> organisation wide plan
-> sets out what and why business will do
-> created by senior management
-> broad, hard to change
Tactics
-> short term
-> specific actions that show how each department will deliver the strategy
-> middle and frontline managers
-> narrow, easily adjusted
Strategic decisions
-> long term
-> set overall direction of an entire business
-> senior management
-> timescale of 3-5 years+
-> focus on whole organisation and position in market
-> eg. Entering a new country
Functional decisions
-> day to day/medium term choices
-> single department
-> middle managers/department heads
-> timescale of months
-> focus on one area of business
-> eg. Setting a promotional campaign
Internal influences on functional objectives and decisions
– Values of owners and founders
– Industry characteristics
– Societal views and expectations
– Values of employees and other internal stakeholders
– Corporate object is and long term strategy
– Legal form
– Regulation, technology and global issues
External influences on functional objectives and decisions
– Economic conditions
– Competitor actions
, – Technological change
– Legal environment
SWAT Analysis
-> internal strengths and weaknesses
-> external opportunities and threats
-> help senior managers understand the current business position and future changes that may
occur so that appropriate strategic decision can be made
Factors affecting the usefulnesses of SWOT
– Quality and relevance of data used
– Objectivity and bias
– Depth of analysis
– Stakeholder investment
– Dynamic nature of the business environment
Factors considered ina SWOT analysis
– Strengths: what business is goods t
– Weaknesses: what business does poorly
– Opportunities: options a business may exploit to enjoy further success
– Threats: hazards that have the potential to damage business performance
Assessing the internal position of a business
Income statement - tracks a business’s revenue, expenses, profit or loss during set period of time
Stakeholder interest in income statement
– Shareholders
-> interested in sales revenue and net profits, growth and dividends
– Employees
-> interested in profits earned and potential for wage increase and job stability
– Mangers and directors
-> interested in key performance data eg increase in profit or costs
– Suppliers
-> interested in continued success of company
– Government
-> used to determine how much tax is payable
– Local community
-> interested in stability of business and what it mat mean for jobs in community
, Profit quality - measures how reliable and sustained a company’s reported profit really is
High quality profit
– Recurrent, cash backed revenue eg, subscriptions
– Core operations strength
– Healthy profit margins
Poor quality profit
– One off gains
– Accounting adjustments
– Non cash or volatile items
Analysing the strategic position of a business
Mission statement - outlines fundamental purpose and reason for an organisations existence
Vision statement - sets out a business’s ambition, or the position it hopes to achieve in the future
Influences on mission
– Value of the owners and founders
– Industry characteristics
– Societal views and expectations
– Values of employees and other internal stakeholders
– Corporate objectives and long term strategy
– Legal form
– Regulation, technology and global issues
Corporate objectives - long term goals set by senior management that flow from the mission
Influences on corporate objective and decision
– Pressures for short termism: pressure to hit profit targets
– Business ownership
– External environment
– Internal environment
Functional objectives - department level targets that support corporate objectives
Strategy - medium to long term plan of action that shows how the business will meet its corporate
objectives
Tactical decisions - short term, day to day choices that put the strategy into practice
These ^ are linked for:
– Alignment and focus
– Clarity and accountability
– Flexibility
Relationship between mission, objectives, strategy and tactical decisions
– Mission states why business exists and who it serves. Corporate objectives translate that
purpose into specific, measurable targets for the whole organisation
– Corporate strategy outlines how the firm will active those targets, allocating resources and
choosing markets or products. Balances risks, costs, and expected benefits
– Each department sets its own objectives to deliver the strategy. These are shorter term and
, –
more detailed than corporate goals.
– Managers and supervisors decide daily/weekly actions that push functional objectives
forward. High specified and easily adjusted.
Strategy
-> long term
-> organisation wide plan
-> sets out what and why business will do
-> created by senior management
-> broad, hard to change
Tactics
-> short term
-> specific actions that show how each department will deliver the strategy
-> middle and frontline managers
-> narrow, easily adjusted
Strategic decisions
-> long term
-> set overall direction of an entire business
-> senior management
-> timescale of 3-5 years+
-> focus on whole organisation and position in market
-> eg. Entering a new country
Functional decisions
-> day to day/medium term choices
-> single department
-> middle managers/department heads
-> timescale of months
-> focus on one area of business
-> eg. Setting a promotional campaign
Internal influences on functional objectives and decisions
– Values of owners and founders
– Industry characteristics
– Societal views and expectations
– Values of employees and other internal stakeholders
– Corporate object is and long term strategy
– Legal form
– Regulation, technology and global issues
External influences on functional objectives and decisions
– Economic conditions
– Competitor actions
, – Technological change
– Legal environment
SWAT Analysis
-> internal strengths and weaknesses
-> external opportunities and threats
-> help senior managers understand the current business position and future changes that may
occur so that appropriate strategic decision can be made
Factors affecting the usefulnesses of SWOT
– Quality and relevance of data used
– Objectivity and bias
– Depth of analysis
– Stakeholder investment
– Dynamic nature of the business environment
Factors considered ina SWOT analysis
– Strengths: what business is goods t
– Weaknesses: what business does poorly
– Opportunities: options a business may exploit to enjoy further success
– Threats: hazards that have the potential to damage business performance
Assessing the internal position of a business
Income statement - tracks a business’s revenue, expenses, profit or loss during set period of time
Stakeholder interest in income statement
– Shareholders
-> interested in sales revenue and net profits, growth and dividends
– Employees
-> interested in profits earned and potential for wage increase and job stability
– Mangers and directors
-> interested in key performance data eg increase in profit or costs
– Suppliers
-> interested in continued success of company
– Government
-> used to determine how much tax is payable
– Local community
-> interested in stability of business and what it mat mean for jobs in community
, Profit quality - measures how reliable and sustained a company’s reported profit really is
High quality profit
– Recurrent, cash backed revenue eg, subscriptions
– Core operations strength
– Healthy profit margins
Poor quality profit
– One off gains
– Accounting adjustments
– Non cash or volatile items
