Business Studies
Revision Booklet
Theme 3
,Stakeholder = a person with an interest or concern in something, especially a business.
Mission Statements = statement written by the business – gives vison to the stakeholders – gives customers a promise on what they should
expect – employees believe in it creating a strong corporate culture. They are also constantly assessed ensuring they have continued
relevance.
Critical Re-assessments involve looking at:
Purpose
Audience
Realistic? Achievable? Fits with aims/objectives?
Mission Statement Uses = +
Focus = Internally creating high focus level and involvement from those within whilst assisting in the reinforcement if direction of
business.
Profitability = Having strong corporate values which are reflected in the mission statement creates profitability and employees will
be more motivated, efficient as they are aware of what they are doing has more significant purpose beyond just the general task
Identity = Externally, it can create a sense of identity for the organisation – can help in establishing position in the marketplace the
organisation will fit.
Mission Statement Limitations = -
Can be unrealistic and over optimistic.
Can be a waste of management, time, and resources.
Can lead to conflicts and inconsistencies when not properly written.
Can be ambiguous
Can become obsolete as the business develops but the mission statement remains the same (perhaps due to a merger or change of
product – e.g. iPod à iPhone)
Business Aim = what a business intends to do in the long term
Aim Examples =
Maximise profits
Maximise growth
Benefit the local community
Maximise shareholder value – dividends
Maximise employee benefits
Survival
Business Objectives = how a business will achieve its aims – short term
,Aim/Objectives are important during start up – provide employees with common purpose and sense of direction – aid motivation and
teamwork.
All business objectives need to be SMART:
Specific = clear definition – including a number.
Measurable = achievement can be checked – (see growth – show journey – profits increasing by 10%).
Achievable = needs to be achievable target – may need to stretch yourself.
Realistic = target needs to be sensible so its achievable.
Time Scaled = Date set for achievement/review.
Objectives can be:
Short term objectives – up to 1 year
Medium term objectives – 1-5 years
Long-term objectives – Longer than 5 years
Objectives in the public sector may be focusing on the good of everyone rather than a more profit based approach like in the private sector.
Objectives are set at various levels in a business:
Corporate Objectives = targets whole business is trying to achieve – related to owner’s ambitions (survival/growth/profits) - any
areas of the business.
Departmental/Functional Objectives = objectives for specific functions in the business – needs to be consistent with corporate
objectives – e.g. objectives for marketing department to achieve.
There are differences between small and large business objectives –
Marketing – small=locally / large=national
Development = small=survival / large = growth
Financial = small=less required for general operations / large = more required for general operations.
Orientation = small=market orientated / large=product orientated
Stakeholders and Strategies -
Strategies determine aims/objectives – lead to decisions to try to achieve them – actions impinge on those interactions with the
business – may lead to conflict – business has responsibility to stakeholders and how they are affected.
Stakeholder Conflicts –
Conflicts can arise due to business behaviour – should consider differing views of stakeholders – resolving conflicts can present
problems – corporate strategies, aim and objectives address conflicts and how stakeholder interests are addressed. Mission
statement and values try and balance these differing views.
Stakeholders and their conflicts example – SAINSBURYS:
Customers (cheap prices and good quality) vs Shareholders (max prices)
Employees (higher wages, benefits (hols) and good working conditions) vs Hierarchy (lower wage – max output, no training no desire
to improve working conditions).
Local community vs owners - impact on the surroundings of the business.
Pressure Groups – make a business more ethical – climate change à charities.
, Marketing Department Role = promote the business in a positive manner in an attempt to boost sales.
Operations Department = production/manufacturing - packaging = key!
Theories and Objectives
Strategy = all businesses have ais and objectives they wish to achieve but this takes planning known as a strategy.
Creating a strategy involves: - from this the corporate strategy is devised – gives competitive edge and fulfils stakeholders’ expectations.
Market position at that moment
Aspiring market position
Takes time and research
Theories which help achieve this strategy:
Ansoff Matrix:
Identifies GROWTH STRATEGIES – based on analysis of products and their markets.
Suggests: business attempts to grow depend on where it markets new/existing products in a new/existing market.
Output from matrix = suggested growth strategies – sets the direction for the business strategy.
+ = identify how the business wants to grow, compare, and find most suitable strategy and save time/money.
- = only shows part of the picture, very simplistic, large PLCs need a lot more analysis than a simple matrix and there may be thousands of sub
options for strategies which can make it difficult.
Market Penetration = Selling business’ existing products in existing
markets – product & customers remain same – (+) low risk – business knows
the market and customers know the product BUT (-) less potential for growth.
Market Development = Selling business’ existing products in new markets – may decide to export to new country/region – (-) riskier
as the business doesn’t know the new market as well – business has to do market research to understand new target market.
Product Development = Sell new products in existing markets – business has to carry out research and development in order to
come up with products – (-) risky as unsure if new product will succeed & new products could take market share from existing
products.
Diversification = selling new products in new markets – (-) riskiest strategy BUT (+) offers potential for greatest reward – business
needs combination of new product development and market research of the target market.
Useful decision-making tool as:
Level of investment in new/existing products.
Exploitation of different markets.
Growth strategy for the business.
Level of risk business is willing to accept.
Consider future options fi expansion (opportunities, associated costs, benefits, and risks).
Porters Generic Strategic Matrix =
Identifies sources of COMPETITIVE ADVANTAGE that a business might achieve in a market.
Porter believes if you don’t adopt one of these generic strategies your ‘STUCK IN THE MIDDLE’ and unlikely to succeed.
Revision Booklet
Theme 3
,Stakeholder = a person with an interest or concern in something, especially a business.
Mission Statements = statement written by the business – gives vison to the stakeholders – gives customers a promise on what they should
expect – employees believe in it creating a strong corporate culture. They are also constantly assessed ensuring they have continued
relevance.
Critical Re-assessments involve looking at:
Purpose
Audience
Realistic? Achievable? Fits with aims/objectives?
Mission Statement Uses = +
Focus = Internally creating high focus level and involvement from those within whilst assisting in the reinforcement if direction of
business.
Profitability = Having strong corporate values which are reflected in the mission statement creates profitability and employees will
be more motivated, efficient as they are aware of what they are doing has more significant purpose beyond just the general task
Identity = Externally, it can create a sense of identity for the organisation – can help in establishing position in the marketplace the
organisation will fit.
Mission Statement Limitations = -
Can be unrealistic and over optimistic.
Can be a waste of management, time, and resources.
Can lead to conflicts and inconsistencies when not properly written.
Can be ambiguous
Can become obsolete as the business develops but the mission statement remains the same (perhaps due to a merger or change of
product – e.g. iPod à iPhone)
Business Aim = what a business intends to do in the long term
Aim Examples =
Maximise profits
Maximise growth
Benefit the local community
Maximise shareholder value – dividends
Maximise employee benefits
Survival
Business Objectives = how a business will achieve its aims – short term
,Aim/Objectives are important during start up – provide employees with common purpose and sense of direction – aid motivation and
teamwork.
All business objectives need to be SMART:
Specific = clear definition – including a number.
Measurable = achievement can be checked – (see growth – show journey – profits increasing by 10%).
Achievable = needs to be achievable target – may need to stretch yourself.
Realistic = target needs to be sensible so its achievable.
Time Scaled = Date set for achievement/review.
Objectives can be:
Short term objectives – up to 1 year
Medium term objectives – 1-5 years
Long-term objectives – Longer than 5 years
Objectives in the public sector may be focusing on the good of everyone rather than a more profit based approach like in the private sector.
Objectives are set at various levels in a business:
Corporate Objectives = targets whole business is trying to achieve – related to owner’s ambitions (survival/growth/profits) - any
areas of the business.
Departmental/Functional Objectives = objectives for specific functions in the business – needs to be consistent with corporate
objectives – e.g. objectives for marketing department to achieve.
There are differences between small and large business objectives –
Marketing – small=locally / large=national
Development = small=survival / large = growth
Financial = small=less required for general operations / large = more required for general operations.
Orientation = small=market orientated / large=product orientated
Stakeholders and Strategies -
Strategies determine aims/objectives – lead to decisions to try to achieve them – actions impinge on those interactions with the
business – may lead to conflict – business has responsibility to stakeholders and how they are affected.
Stakeholder Conflicts –
Conflicts can arise due to business behaviour – should consider differing views of stakeholders – resolving conflicts can present
problems – corporate strategies, aim and objectives address conflicts and how stakeholder interests are addressed. Mission
statement and values try and balance these differing views.
Stakeholders and their conflicts example – SAINSBURYS:
Customers (cheap prices and good quality) vs Shareholders (max prices)
Employees (higher wages, benefits (hols) and good working conditions) vs Hierarchy (lower wage – max output, no training no desire
to improve working conditions).
Local community vs owners - impact on the surroundings of the business.
Pressure Groups – make a business more ethical – climate change à charities.
, Marketing Department Role = promote the business in a positive manner in an attempt to boost sales.
Operations Department = production/manufacturing - packaging = key!
Theories and Objectives
Strategy = all businesses have ais and objectives they wish to achieve but this takes planning known as a strategy.
Creating a strategy involves: - from this the corporate strategy is devised – gives competitive edge and fulfils stakeholders’ expectations.
Market position at that moment
Aspiring market position
Takes time and research
Theories which help achieve this strategy:
Ansoff Matrix:
Identifies GROWTH STRATEGIES – based on analysis of products and their markets.
Suggests: business attempts to grow depend on where it markets new/existing products in a new/existing market.
Output from matrix = suggested growth strategies – sets the direction for the business strategy.
+ = identify how the business wants to grow, compare, and find most suitable strategy and save time/money.
- = only shows part of the picture, very simplistic, large PLCs need a lot more analysis than a simple matrix and there may be thousands of sub
options for strategies which can make it difficult.
Market Penetration = Selling business’ existing products in existing
markets – product & customers remain same – (+) low risk – business knows
the market and customers know the product BUT (-) less potential for growth.
Market Development = Selling business’ existing products in new markets – may decide to export to new country/region – (-) riskier
as the business doesn’t know the new market as well – business has to do market research to understand new target market.
Product Development = Sell new products in existing markets – business has to carry out research and development in order to
come up with products – (-) risky as unsure if new product will succeed & new products could take market share from existing
products.
Diversification = selling new products in new markets – (-) riskiest strategy BUT (+) offers potential for greatest reward – business
needs combination of new product development and market research of the target market.
Useful decision-making tool as:
Level of investment in new/existing products.
Exploitation of different markets.
Growth strategy for the business.
Level of risk business is willing to accept.
Consider future options fi expansion (opportunities, associated costs, benefits, and risks).
Porters Generic Strategic Matrix =
Identifies sources of COMPETITIVE ADVANTAGE that a business might achieve in a market.
Porter believes if you don’t adopt one of these generic strategies your ‘STUCK IN THE MIDDLE’ and unlikely to succeed.
