Contents
The Firm.................................................................................................................................................2
The Business Environment.................................................................................................................2
Vision and Mission Statements..........................................................................................................3
Product Life Cycle..............................................................................................................................4
BCG Matrix.........................................................................................................................................4
Portfolio Analysis...............................................................................................................................5
Porter’s 5 Forces................................................................................................................................6
Porter’s 3 Generic Strategies.............................................................................................................7
Learning/Experience Curve................................................................................................................9
Marketing............................................................................................................................................10
Customer or Consumer....................................................................................................................10
5Ps of the Marketing Mix.................................................................................................................10
Order Winning / Qualifying Criteria (USPs)......................................................................................12
Market Pioneer/Follower................................................................................................................12
Next Bench Syndrome.....................................................................................................................13
Life Cycle Costing.............................................................................................................................14
Market and Industry............................................................................................................................15
Structure-Conduct-Performance (SCP) Analysis..............................................................................15
Concentration Ratio, Markets and Industries..................................................................................16
Types of Competition.......................................................................................................................16
Types of Competition in a Market/Industry.................................................................................17
Maximising and Assessing Profitability (ROTA)................................................................................19
Economic Efficiencies.......................................................................................................................20
Elasticity (PED).................................................................................................................................20
Non-Price Competition (kinked demand curves, game theory).......................................................22
Legal Forms of Business...................................................................................................................22
External Analysis..................................................................................................................................23
PEST Analysis and application to identifying Opportunities and Threats for the Company.............23
Reviewing Strategies............................................................................................................................23
Use of Analytical Tools for developing Company Strategy...............................................................23
Strategic Management and what is involved in setting a Strategy..................................................24
SWOT and GAP Analyses..................................................................................................................25
Strategic Alternatives and Strategic Fit............................................................................................25
Accounting and Costing.......................................................................................................................25
, Costing.............................................................................................................................................25
Variable/Fixed/Semi-Variable Costs.............................................................................................25
Direct Labour and Direct Material...............................................................................................25
FIFO/Average/Standard Costing..................................................................................................25
Cost-Allocation- Absorption (Full) Costing.......................................................................................26
Cost-Volume-Profit (CVP) Analysis...................................................................................................26
Break-Even Analysis.........................................................................................................................27
Marginal Costing, Variance Analysis................................................................................................27
Budgeting Setting.............................................................................................................................27
Zero-Based...................................................................................................................................27
Incremental and Activity Based Budgeting..................................................................................27
The Firm
The Business Environment
3 Levels: The Internal Environment, Micro-Environment, Macro-Environment
1. The Internal Environment (Marketing, Production, Finance, Personnel, R&D)
o Internally, the structure and politics of an organisation affect the manner in which
the organisation responds to environmental change
o It can be difficult to change cultural attitudes when the nature of an organisation’s
business environment has changed
2. The Micro-Environment (Customers, Competitors, Suppliers, Intermediaries, Other
Stakeholders such as Government, Financial Institutions and Local Communities)
o Comprises all those organisations and individuals who directly or indirectly affect the
activities of a company
3. The Macro-Environment:
o Comprises general forces and trends, rather than specific organisations.
Macro-Economic Environment
Political Environment
Social and Cultural Environment
Demographic Environment
Technological and Ecological Environment
The business environment presents both opportunities and threats. All have recognised and
exploited changes in the economic, social, political and technological environments.
Value of Supply Chains:
Members of the environmental set who currently add value to the end customer
Value is added during transformation processes
May be multiple firms in a value chain
Firms should question
o Who should be in their value chain?
o Who has the most power?
, Vision and Mission Statements
Vision – Where do we want to get to?
One-line inspirational aspiration
Mission – What business are we in?
Brief paragraph outlining the company, its direction, values and policies
A good mission statement:
o Provides a credible definition of the competitive scope of the business
o Gives a customer-oriented perspective
o Has a long timescale
o Focuses on a manageable number of key goals
o Inspires and motivates employees
o Is realistic
Values – How do we do business?
Objectives – Translate the vision, mission and values into operational terms
Open – Cannot be measured e.g. to be world class in manufacturing
Closed – Can be measured e.g. to invest £3m into a new manufacturing facility
o SMART:
Stretching
Measurable
Achievable
Relevant
Time-Limited
o Shareholders:
Open: To increase shareholder value
Closed: To increase share price by 10% in the next 12 months
o Customers:
Open: To improve customer satisfaction
The Firm.................................................................................................................................................2
The Business Environment.................................................................................................................2
Vision and Mission Statements..........................................................................................................3
Product Life Cycle..............................................................................................................................4
BCG Matrix.........................................................................................................................................4
Portfolio Analysis...............................................................................................................................5
Porter’s 5 Forces................................................................................................................................6
Porter’s 3 Generic Strategies.............................................................................................................7
Learning/Experience Curve................................................................................................................9
Marketing............................................................................................................................................10
Customer or Consumer....................................................................................................................10
5Ps of the Marketing Mix.................................................................................................................10
Order Winning / Qualifying Criteria (USPs)......................................................................................12
Market Pioneer/Follower................................................................................................................12
Next Bench Syndrome.....................................................................................................................13
Life Cycle Costing.............................................................................................................................14
Market and Industry............................................................................................................................15
Structure-Conduct-Performance (SCP) Analysis..............................................................................15
Concentration Ratio, Markets and Industries..................................................................................16
Types of Competition.......................................................................................................................16
Types of Competition in a Market/Industry.................................................................................17
Maximising and Assessing Profitability (ROTA)................................................................................19
Economic Efficiencies.......................................................................................................................20
Elasticity (PED).................................................................................................................................20
Non-Price Competition (kinked demand curves, game theory).......................................................22
Legal Forms of Business...................................................................................................................22
External Analysis..................................................................................................................................23
PEST Analysis and application to identifying Opportunities and Threats for the Company.............23
Reviewing Strategies............................................................................................................................23
Use of Analytical Tools for developing Company Strategy...............................................................23
Strategic Management and what is involved in setting a Strategy..................................................24
SWOT and GAP Analyses..................................................................................................................25
Strategic Alternatives and Strategic Fit............................................................................................25
Accounting and Costing.......................................................................................................................25
, Costing.............................................................................................................................................25
Variable/Fixed/Semi-Variable Costs.............................................................................................25
Direct Labour and Direct Material...............................................................................................25
FIFO/Average/Standard Costing..................................................................................................25
Cost-Allocation- Absorption (Full) Costing.......................................................................................26
Cost-Volume-Profit (CVP) Analysis...................................................................................................26
Break-Even Analysis.........................................................................................................................27
Marginal Costing, Variance Analysis................................................................................................27
Budgeting Setting.............................................................................................................................27
Zero-Based...................................................................................................................................27
Incremental and Activity Based Budgeting..................................................................................27
The Firm
The Business Environment
3 Levels: The Internal Environment, Micro-Environment, Macro-Environment
1. The Internal Environment (Marketing, Production, Finance, Personnel, R&D)
o Internally, the structure and politics of an organisation affect the manner in which
the organisation responds to environmental change
o It can be difficult to change cultural attitudes when the nature of an organisation’s
business environment has changed
2. The Micro-Environment (Customers, Competitors, Suppliers, Intermediaries, Other
Stakeholders such as Government, Financial Institutions and Local Communities)
o Comprises all those organisations and individuals who directly or indirectly affect the
activities of a company
3. The Macro-Environment:
o Comprises general forces and trends, rather than specific organisations.
Macro-Economic Environment
Political Environment
Social and Cultural Environment
Demographic Environment
Technological and Ecological Environment
The business environment presents both opportunities and threats. All have recognised and
exploited changes in the economic, social, political and technological environments.
Value of Supply Chains:
Members of the environmental set who currently add value to the end customer
Value is added during transformation processes
May be multiple firms in a value chain
Firms should question
o Who should be in their value chain?
o Who has the most power?
, Vision and Mission Statements
Vision – Where do we want to get to?
One-line inspirational aspiration
Mission – What business are we in?
Brief paragraph outlining the company, its direction, values and policies
A good mission statement:
o Provides a credible definition of the competitive scope of the business
o Gives a customer-oriented perspective
o Has a long timescale
o Focuses on a manageable number of key goals
o Inspires and motivates employees
o Is realistic
Values – How do we do business?
Objectives – Translate the vision, mission and values into operational terms
Open – Cannot be measured e.g. to be world class in manufacturing
Closed – Can be measured e.g. to invest £3m into a new manufacturing facility
o SMART:
Stretching
Measurable
Achievable
Relevant
Time-Limited
o Shareholders:
Open: To increase shareholder value
Closed: To increase share price by 10% in the next 12 months
o Customers:
Open: To improve customer satisfaction
