3.3.

1 BUSINESS OBJECTIVES AND STRATEGY

SWOT, PESTLE, Ansoff matrix, Porter strategic matrix, Boston matrix, Porters 5 forces

Business objectives are what a business hopes to achieve

Business strategy how a business tries to achieve these objectives

1 CORPORATE OBJECTIVES

a) DEVELOPMENT OF CORPORATE OBJECTIVES FROM MISSION STATEMENT/CORPORATE

AIMS

- corporate objectives short term targets which are set to help achieve overall goals.

These should be SMART

- mission statement: a formal summary of the overall aims, values + main purpose of b
to provide stakeholders a sens e of direction

Stakeholder is anyone who has interest in a b

(customers, potential investors, government,
employees). Shareholder is people who have shares in
ab

Elements:

1. Purpose 2. Values 3. Standards and behavior 4. Strategy

Including:

- Markets

- Commercial obj, cooperate aims, corporate objective

- Ethics

a formal summary of the aims and values of a company, organisation, or individual.

 - corporate aims: what the business wants to achieve in the long-term.

b) Critical appraisal of mission statements.

uses and limitations:

More:

Serves as a type of advertising

Opportunity cost (time)

People know its for PR: not actually

To develop answer:

MOPS (market, objective, product, situation)

It depens on:

How smart mission statement is; how well communicated th ms is

Size/resources of b (if they can afford it)

What the mission statement compared to competitors

Type of b, c, market (dynamic -ms may not be fleixible to change

 3.3.1 BUSINESS OBJECTIVES AND STRATEGY
2 THEORIES OF CORPORATE STRATEGY

a) Development of corporate strategy:

Corporate strategy= the way a b seeks to achieve its long term aims.

Eg: advertise (existing; long b life cycle)

Release new p

Partnerships

Why does a business need a “strategy”?

↪ Sense of direction

↪ To measure success (has the strategy worked?)

↪ For employees to work towards

↪ So the business can grow

↪ To reassure shareholders

 Ansoff’s Matrix

(identify growth)

= a decision-making model that can be used to help businesses analyze its strategic
options/ opportunities for growth.
Usefulness:

Ansoff is a clear, graphical representation of a corporate strategy and can help to

show/assess risk and potential reward for a given strategy.

Understanding level of risk. Prepare backup plan

 MARKET PENETRATION PRODUCT DEVELOPMENTS

B:

Safe option

Increase Brand loyalty

Encourage c to use p

D:

If cashcows, star products. Need products.

MARKET DEVELOPMENT DIVERSIFICATION

B:For Dynamic markets B:

D:

Damage b name. Not expertise

If is strong Brand, has funds.

 3.3.1 BUSINESS OBJECTIVES AND STRATEGY
 Porter’s Strategic Matrix.

Identify ways to achieve comp advantages

= method used in the development of corporate strategies, helping to identify the

sources of comp advantages that a b might achieve in a market

Cost leadership Differentiation Focus

- Operating in a mass market - Targeting a narrow range
- Lowest cost provider in mass with a unique position of c
market. - B offers level of diff from (similar to niche)
comp - For small/ specific b
1. Charge low prices; Quality
comp; Design 1. Cost focus:
Brand Cost minimization
2. Higher prices C service within focus
(afford Eg: apple, redbull, emirates
sponsorship) 2. Differentiation focus:
within a niche
- broad vs narrow (mass niche)

- cost vs differentiation

- p orientation vs market orientation

Primark; low cost; low prices; comp adv

Zara; low cost; higher prices for fast fashion; higher revenue; higher profit margins; reinvest in
weekly collections.

Useful:

growth

Limitations:

Ignores external factors

Only 1 tool (boston matrix, Ansoff…)

Dynamic markets and changes

Generic + rigid

Ignores profitability,

Assess (12)
Strategy.
Eg: cost leadership

Usefulness porter strategic matrix

 3.3.1 BUSINESS OBJECTIVES AND STRATEGY
b) Aim of portfolio analysis.

= method of categorizing all p of a b (portfolio) in order to see where each one fits
within the strategic plans.

Explain 1 aim of portfolio analysis for Kellogg’s (4)

Categories products into cash cow, dog, star,

question mark

benefits

- Identify market growth;

Life cycle of p.

High; growing; worth continuing

Help analyze future strategies

- Identify market share;

Dog? Worth keeping

- Identify p which need to be withdrawn

- Identify new p areas to target

- visual representation of situation, associated problems or

opportunities.
 Can be more helpful than just relying on figures (especially for
some shareholders)

- potential? No potential? Launch? Withdraw? Helps with planning

- 8% building brand; 1600 food products

Drawback

- Skills and experience; interpretations

- Too simplistic

- M. share and growth is just 1 way of measuring performance of a

product. Ignores brand strength, competitive advantage or
customer loyalty may be more important for some products

3.3.1 BUSINESS OBJECTIVES AND STRATEGY

c) Effect of strategic and tactical decisions on human, physical, and financial resources.

Strategic Tactical

= long term to achieve overall goal
Eg. Mission statement, core values,
organizational culture, growth
= short term actions to help achieve
strategy
Eg. Marketing mix, location decision,
customer service, mot staff, improved
technology

Effects on…

Human Physical Financial

Impact on workforce Impact on land, machines, Impact on financial

tools, equipment, vehicles, resources such as raising
Recruitment shops, pc, factories, raw funds externally/
materials internally
Training
location
Redundancy
Invest in fixed
assets
 Depends on high/low skilled
workers.

Mot. or demot.

EG: Mcdonald’s new vegan burgers

Could be either diversification
Product development

Complex:
Where cooked? Cross contamination.
Mot on workers
Market testing 28 restaurants in Canada for 12 weeks.

Human:
Pay training, w demot (low skilled -not payed mored).

Physical:
New products. Storage, Grills.
Financial
No economies of scale (or less). Afford new equipment

One impact that physical resources may bring to McDonalds is that new machinery such as
grills will need to be purchased. This is due to the introduction of the plant-based products in
their menu, which should not be contaminated from their meet burgers while grilling. As a
result, there would be a decrease in space for cooking their regular meet burgers (if the
kitchen is not rearranged). As a result, this can decrease the rate at which their common
burger is made. So, this might cause McDonalds to have a longer waiting time for the fast food,
which might upset their loyal customers and so cause them to choose another fast-food
restaurant instead.

However, it might not impact their physical resources if they add a disclaimer that these
burgers will be grilled in the same grills and oils than the regular meet burgers – to avoid any
food lawsuits that could be made by vegans. This might mean that they don’t need new grills,
as a result, McDonalds can adapt to the food dynamic market that they operate in, which is
currently developing with ethical food. This would allow McDonalds to remain competitive
with other fast food chain restaurants, like burger king, as it already sells plant-based meet,
which is popular within its niche. As a result, physical resources would not affect McDonald.

3.3.1 BUSINESS OBJECTIVES AND STRATEGY

3 SWOT analysis

a) SWOT analysis

 internal considerations: strengths and weaknesses

 external considerations: opportunities and threats.

Usefulness of a SWOT analysis

By identifying its strengths a business will know which areas to further develop ;

Use strengths to overcome weakness

Areas of weakness can be identified therefore addressed and improved

Potential opportunities can be explored and developed

Possible threats can be identified and planned for

Limitations of a SWOT analysis

Time consuming

Must be actioned to be of use. Also use Ansoff to help identify strategy

Doesn´t priorities actions or actually make a decision

Can generate LOTS of ideas/information – hard to decipher

Dynamic markets
 Weakness Solution/ response
Outdated technology Acquire comp with leading technology
Skills gap Training/ recruiting
Overdependence on a single product Develop new p
Poor quality Better raw materials. Train/ new staff
High fixed costs Increase prices
Poor treatment of workers New HR strategies

3.3.1 BUSINESS OBJECTIVES AND STRATEGY

4 Impact of external influences

a) PESTLE (political, economic, social, technological, legal and environmental).

External factors (threats of swoT).

Helps apply: based on current situations

POLITICS ECONOMIC SOCIAL

· Gov spendings: Government Interest rates Demographics

subsidy (g pays part of cost)
Business cycle (boom, recession, ) Pressure groups
 · Brexit C spendings + income C tatses, trends, fashion

· Comp policy: Exchange rates Lifestyle change

Economic growth (GDP)

TECHNOLOGICAL LEGAL ENVIRONMENTAL

Disruptive technologies Employment Law Sustainability

Adoption of mobile technology Minimum / Living Wage Tax practices

(online): E-commerce
Health & Safety Laws Pollution & CO2 emissions
New production processes
Environmental legislation
Big data and dynamic pricing

Evaluate the extend to which changes in external economic influences will impact on growth of
Dr martens in UK (20)
changes external economic: yes impact growth
yes impact growth
however
changes legal
changes social
b) The changing competitive environment.

c) Porter’s five forces.

= guide to help analyse the nature of comp within an

industry.

1. Threats of new entrants

2. Bargaining power of suppliers

3. Bargaining power of c
 4. Threats of substitute

5. Rivalry/ competition

Do not confuse it with porter’s matrix

Helps identify risk.

Assess the usefulness of Porter’s 5 Forces (12)

Helps identify risk

To know if they have control over market/ supplier/

If supplier have control: increase prices
Adapt materials
Not useful:
Just analyze. No solutions. Just identify features
Complex: time, skill, money, resources
Can use other tools

· Analyze threats business might face; identify risk

plan strategic changes to protect against these

· Decision making model.

· Identify if it’s a good market to enter

low c power (b can control market), low comp (. Avoid poor decisions

· Assess position of b: strength and weakness.

Take advantage/ maximize of strength:
Control over market ()/
Customers (b can increase prices)/
suppliers ()/
 comp

not useful:

· only a management tool - relies on the skills of the person being able to analyse
the competitive environment

· Depends on the skills and knowledge of the person carrying out the analysis (put
this in a conclusion)

· businesses may not have access to market data or be able to apply the model to
such a unique product

· businesses may face little competition on the market so they do not need to use
this model to analyse the rivalry amongst existing competitors

· Porter’s five force model is a management and decision-making tool which must
be used in conjunction with other decision-making tools such as PESTLE or a SWOT
analysis to increase its effectiveness

Bramwell Brown is a small business started by 2 brothers. So, a usefulness of Porters’s 5

forces models is that is help them analyze the business’ position within its niche market of
weather clocks. This is especially useful for them as they only started in 2015 and so may
not be very experienced, and by identifying the 5 forces Bramwell Brown, it can definitely
help them by providing a clear guidance to focus on their strengths, like low bargain power
of customers as there is a low level of competition as it has such a niche, luxury product -
that there is even a waiting list due to the popularity. Therefore, they can maximize this
USP of these special clocks, and the business can identify that is can potentially increase
the prices of its products (as customers have no power to bargain and will not be able to
obtain a substitutive clock). As a result, this can help the business continue to grow and
continue to increase its profit.
However, the Porter’s 5 forces analysis requires skills of a person to be able to analyze the
competing market. But rob and Sarah may lack these as they are new. So this might mean
that they will have to recruit an external assessor to carry out this analysis. This can cause
a cost opportunity of cost. Which might increase the costs, and so limit the capital
available to develop the limited editions of their clocks. As a result, they could lose some of
its differentiation strategies.

To conclusion, the Porter’s 5 forces can be useful as it can also help Bramwell Brown to
identify potential risks like for example with its suppliers which are very specific (eg: the
quartz supplied from Germany or the frames from Yorkshire), this might help the business
to anticipate any problems it could have in the future and so find substate suppliers as a
backup. However, it depends on the reliability and relation it has with its suppliers and the
capital the business to invest in its raw materials.

Lack skill. Knowledge

APPLICATION: MARKET: mass, niche, new comp, grow. OBJ: grow, survive. PRODUCT: PED.
SITUATION: PESTLE, Profit.