3.7 – Analysing the Strategic Position of a Business
Corporate Objectives, Strategy and Tactics
Influences on corporate objectives:
Internal: External:
Ownership type PESTLE-C
Ability to raise finance
Skill of workforce
Strategy – How the business achieves its objectives
Relatively long-term
Tactics – How the business achieves its strategies
Relatively short-term (sometimes day-to-day)
Strategic decision – A decision to help the business achieve its objectives
Functional decision – Decisions in each department
Short-termism – When a business prioritises short-term results over long-term results.
1
,3.7 – Analysing the Strategic Position of a Business
SWOT Analysis
SWOT analysis – A way for a business to analyse its current position
Strengths and weaknesses are internal to the business
Opportunities and threats are external to the business
Strengths – What does the business do better than competition?
Weaknesses – What does competition do better than the business?
Opportunities and Threats – What external factors could affect the business?
Identifying these allows businesses to devise strategies to help / reduce risk
2
, 3.7 – Analysing the Strategic Position of a Business
Profit and Loss Statement / Income Statement 1
Income statement – A financial document showing the income and expenditure over a
given time period.
Value / £
Revenue
Cost of sales ()
Gross profit
Expenses ()
Operating profit
Interest ()
Corporation tax ()
Net profit
Income statements are evaluated using profitability and efficiency ratios:
Profitability ratios:
Return on Capital Employed (ROCE)
ROCE – The operating profit as a % of the money tied up in the business
o per at i ng pr o f i t
ca pit ale m plo y e d
¿
100
Operating profit – Profit before interest and tax
Capital employed – An OK measure of the total resources a business has
To interpret ROCE, compare with:
Previous years
Competitors
3
Corporate Objectives, Strategy and Tactics
Influences on corporate objectives:
Internal: External:
Ownership type PESTLE-C
Ability to raise finance
Skill of workforce
Strategy – How the business achieves its objectives
Relatively long-term
Tactics – How the business achieves its strategies
Relatively short-term (sometimes day-to-day)
Strategic decision – A decision to help the business achieve its objectives
Functional decision – Decisions in each department
Short-termism – When a business prioritises short-term results over long-term results.
1
,3.7 – Analysing the Strategic Position of a Business
SWOT Analysis
SWOT analysis – A way for a business to analyse its current position
Strengths and weaknesses are internal to the business
Opportunities and threats are external to the business
Strengths – What does the business do better than competition?
Weaknesses – What does competition do better than the business?
Opportunities and Threats – What external factors could affect the business?
Identifying these allows businesses to devise strategies to help / reduce risk
2
, 3.7 – Analysing the Strategic Position of a Business
Profit and Loss Statement / Income Statement 1
Income statement – A financial document showing the income and expenditure over a
given time period.
Value / £
Revenue
Cost of sales ()
Gross profit
Expenses ()
Operating profit
Interest ()
Corporation tax ()
Net profit
Income statements are evaluated using profitability and efficiency ratios:
Profitability ratios:
Return on Capital Employed (ROCE)
ROCE – The operating profit as a % of the money tied up in the business
o per at i ng pr o f i t
ca pit ale m plo y e d
¿
100
Operating profit – Profit before interest and tax
Capital employed – An OK measure of the total resources a business has
To interpret ROCE, compare with:
Previous years
Competitors
3
