Theme 3

1) Is a qualitative statement of organizations aims to achieve
2) SMART

1) Help focus and involve employees, help motivates, help create identity
2) Unrealistic, waste of resources, lead to conflict, ambiguous, change constantly

1) Overall scope and direction way various business operations work together to achieve goal

1) identify current products and consider future options, potential new markets or strategies
2) only show part of pic, oversimplifed, only one angle

1) identify its internal strengths and weaknesses, as well as its external opportunities and threats

help form strategy of growth
tool to complete and define
improve and attack new markets
useful as tool to identify

1) any factor outside of business on impact on normal trading
2) tool to look at external factors which might impact
3) Political, Economic, Social, Tech, Legal, Environmental,

1) Political, Economic, Social, Tech, Legal, Environmental,

1) limit power of suppliers by looking new suppliers vertical merge or takeover supplier

Make it too expensive for a
customer to switch
• Forward vertically integrate

Create barriers to entry to prevent
new entrants
Heavily advertise to build strong
brands

Continuously invest in R&D and
develop patents
Buy up patents of rivals and shelve
to prevent product production
New Entrants

Business growth is the point at which a business needs to expand and
seeks options to generate more profits

To achieve economies of scale (internal and external)
Increased market power over customers and suppliers
Increased market share and brand recognition
Increased profitability

As businesses grow they need to
order larger quantities of
production inputs.
As the order value increases, a
business obtains more
bargaining power with suppliers.
It may be able to obtain
discounts and lower prices for
the raw materials

Businesses with large-scale production can use more advanced machinery (or use existing machinery more efficiently).

As a business grows larger they
will need to take on specialist
staff for some of the more
technical roles

Larger firms find it easier to find potential lenders and to raise money at lower interest rates in comparison to smaller firms as they have a good track record.

As a business gets larger, it is able
to spread the cost of marketing
over a wider range of products and
sales – cutting the average
marketing cost per unit.

Bigger companies can spread
their risk by investing in more
products and more markets

1) reduce the power of suppliers
and customers, increase market share, increased profitability,

1) diseconomies of scale ,internal communication ,overtrading

1) legal deal to bring two businesses together under one board of directors
2) one larger business purchases a smaller one

1) Attempt to ensure increased
market share Access to technology, staff or intellectual property

1) Access to new markets
Improved distribution networks Improved brand awareness

Businesses operating in the same sector (e.g. tertiary) merge or
takeover another business in the same sector

1) one business in one sector takes over or mergers
with a business in another sector or part of the supply chain

1) Original purchase cost
• Cost of change into a new business
• Redundancies of duplicate staff e.g. two marketing managers
• Cost if it all goes wrong

1) Increased revenue
• Economies of scale

1) Staff can't keep up
shortage of cash to meet expansion costs.Staff turnover may increase

1) Clash of cultures
• Possible communication problems
• Possible move away from core competencies of original business may cause issues of
control
• Unreliable merger partners
• Diseconomies of scale
• Lack of understanding of local markets leading
to wrong promotional message
• 75% of all mergers fail

1) when a business grown internally through buying another factory or increasing premises and staff
2) business grows externally through a merger or acquisition

1) process of business growth which comes from within the business, as opposed to mergers and takeovers

1) product launches
Opening new stores or branches
Expanding into foreign markets
Expansion of the workforce

1) Cheaper than merging
• Retains the company culture
• Can be planned for unlike a
takeover
• Higher production means EOS and
lower average costs
• More influence comes with more
market share, can start setting
prices for the industry

1) high risk strategy, lots of stores and taking on thousands of new staff is very capital intensive
• Long period between investment
and return on investment
• Growth may be limited and is
dependent on reliability of sales
forecasts
• New markets and countries can be
dangerous to enter into without
buying a business already
operating in that country

1)Any business with fewer than 250 employees.

Creates value(quality),Know customers personally(customer loyalty)
No perceived substitute(Unique),Customer service

1)Carrying out research into opinions, looking at customers websites​
Gaining feedback; forums, polls, users groups, online communities​
Track social media discussions about the products​
Collect data on customer transactions​
Collaborate with customers to produce new products or services​

1)statistical technique which uses data to make predictions about the future
“time series analysis”​- uses historical data, smoothed out, to make better predictions for the future​

1)Organise production​,Organise resources in the business e.g. employees, premises, raw materials​
Organise marketing to back up the sales predictions​

1)Add up all quaters in year and divide by how many there are

1)Past performance is no guarantee of the future​
Businesses need to appreciate the SWOT and PESTLE factors that may affect future predictions
time-consuming and complex and is only as reliable as the data put in​
dynamic markets change happens rapidly and products have a short product life cycle

1)Investment appraisal attempts to determine the value of capital expenditure projects. It enables the business and its investors to compare projects so that the business can expand and meet their objectives

1)cost of project takeaway money from years untill reach zero the amount of times tell you how many years
if go over: amount you need/total that year X 12

1)very simple, only looks at speed of payback and dopes not look at profitability​

1)WIll pay back and does take into account rate of return​
2)Cash flow total from years - orignal project cost= (X)=
X /Amount of years =(Y) = Y/cost of project X100

1)Does not take into account the effects of time on the value of money​

1)takes into account that money in the future is not worth what it is today
– so it adds in a discount table to make it more realistic​

Multiply each cash inflow by the discount, this gives the present value column​

NPV is all the NPV values added together then minus the initial cost​

1)Very complex, not used by small business, also results dependent on rate of discount used,
the higher the rate the more likely it is that the project will be rejected as unprofitable​

1)Can’t afford to follow every option so it may use a decision tree to analyse the probability of a success in a choice of strategies
2)traces an alternative outcome of a decision, the results can be compared and the business can decide which option would be the most profitable​

1) chance rate x outcome + chance2 x outcome2 =Answer
If know cost of project takeaway this from Answer

1)based on predicted data of the potential impact of a decision​
does not take into account unforeseen costs and circumstances ​
Probabilities and net outcomes are all estimates​
might fit with the culture exhibited by the business but this is likely to be overridden by the need to act quickly, which would suggest the decision trees are not that useful in some situations​
Large degree of uncertainty about any situation that a decision tree might be used for, so the benefits of adding numbers to uncertainty might not be correct​

1)helps a business to identify how long a project will take and what the critical tasks in that project are​

Stakeholders will be able to see the total time frame for the project to be completed​
Parallel activities can be scheduled ​= This will save time on the project​
Very useful for businesses in the FMCG (Fast Moving Consumer Goods) markets where speed is important​
Useful to know when to deliver resources or arrange for labour to arrive e.g. can’t put a carpet in while painters are still working​

1)Data in the network diagram is based on estimates and can quickly become inaccurate
The drawing up on a diagram is time consuming it may be quicker to get on with the project​
The project may be simple and not require a diagram​

1)completed on time for the project to fully complete on time. ​ These are indicated with // two lines. ​

1)Float = LFT – duration – EST​
When nodes are the same top and bottom there is no spare time so these tasks are critical​
If these tasks are delayed they will delay the whole project​
So we need to know where there is some free time or “float”​

1)refers to strategy and the expectation of when a return will be achieved​

1)only interested in a quick financial reward​

1) whole business approach:
Incorporates CSR​
Considers ethical behaviour of the business in decision making​
Research and development have long term goals​
Staff development is seen a long term objective of the business, to retain and develop staff​
Long-term technology investments secure data for the future​

1)Decisions are made using evidence from multiple sources to increase the probability of a favourable outcome​

1)Ask – translate a problem into a question​
Acquire the evidence​
Appraise the evidence​
Apply the evidence to the problem​
Assess the outcome of the decision​

1)based on personal feelings and opinions

1)Company culture is the norms and values of a business​

1)good communication,focus on core values​,best fitted postions

1) demotivated workforce​,inconsistent customer service​, poorly managed​
very bureaucratic and lack flexibility

1)Power culture​
Role culture​
Task culture​
Person culture​

1)very strong owner or manger at the heart of the business​-few rules and procedures​
There is a competitive attitude amongst employees to gain power-

1)power to make decisions in a role culture comes from the job title
well established rules and procedures​

1)focus is a project that needs to be completed​,nvolves teamwork on a project, a team of experts working together​ e.g. car designers

1)similar skilled people to share expertise and knowledge​
a client by client basis rather than on a project by project basis such as in task culture​

1)Artefacts (uniform)​,Company song​,Heroes / founders​,Rituals​

Strong cultures are hard to change, because a culture consists of interlocking (each component reinforces the other):
Set of goals​.Roles​
Processes​,Values​
Communications practices​
Attitudes​,Assumptions​

1)document shows if the business has made a profit or a loss during the year​
2)Revenue​,Gross profit​,Expenses​,Operating profit​

1)This document shows what the business owns and owes on one day of the year.​
t is often described as a snapshot of the business.​
assets = liabilities plus capital​
In other words - What did the money in the business get spent on?​
The two sides must balance – hence the term balance sheet​

1)Current assets​,Non-current assets​
Current liabilities​,Long-term liabilities​

1)Debtors – those that owe the business money, such as customers who will pay within 1 year​
2)Solvency; The degree to which the current assets of a business exceed the current liabilities​

1)Non current liablilites /Capital Employed​ X100
2) business is highly geared, most of the money comes from loans, this is very risky for a potential investor​
3)business is low geared and most of the money comes from the owners, a better risk for an investment​

1)Operating Profit​/Capital Employed​ X 100
2)If more than saving account(5%) higher the ROCE figure the better​

1)non-presence of an employee at his or her job. Possible causes of absenteeism include job dissatisfaction,
ongoing personal issues and medical problems. Regardless of cause, a worker with a pattern of being absent may put their reputation at risk, and may lose their job. ​

1)output per worker in a time period​
2)Total output /Number of workers

Number of Employees Leaving​/Average Number of Employees​ X 100​

Number of work days lost through absence​/Total possible days worked​ X 100​

flexible working practices​,jobs are interesting and challenging​
improving working conditions relations between employers and employees​
attendance bonuses as an incentive

1)Commission – sales jobs e.g. car sales​
Overtime on a weekly wage​
Bonus on a salaried wage​
Piece rate – paid by results e.g. per garment knitted​
Fees – one off payment for work completed, for example editing a book​

Changes in organisational size​ (e.g. internationally), Poor business performance​, New ownership​
Transformational leadership​, The market and other external factors (PESTLE)​

Competitiveness, Productivity​, Financial performance​, Stakeholders​

Change management means planning and implementation of change in a way that is mindful of those who will be affected by the changes.
If a business attempts to force changes on the workforce – problems will arise. Changes must be; realistic, achievable and measureable

Planned change and Emergant change

Refers to change which is planned by the top management of a business​
This could be: ​Board of Directors​, The Owners​, Senior leadership team​

This is change that happens at any level in the organisation and is the result of an event or need​.
E.g. Computer back-up system has failed so a new IT system must be installed which will require training for all staff​

Successful change is based on redefining those existing norms and values and getting commitment from workers towards new ones ​
E.g. introducing a uniform​

As a business grows there will be inevitable changes within the organisation​
For example as a business grows from ltd to plc so that they can raise more finance by floating share on the stock market this will mean huge changes for the business​

Changes that happen too quickly will mean that employees may experience stress ​

“I didn’t know it would happen so fast”​, “I can’t keep up with the all the changes”​
“ I haven’t had time to adjust to all the improvements the business has made”​

Slow continuous improvement, potentially every day. Good quality data to make decisions from.

1) Create a sense of urgency. 2) Build a guiding coalition. 3) Form a strategic decision & initiatives. 4) Enlist a volunteer army.
5) Enable action by removing barriers. 6) Generate short-term wins. 7) Sustain acceleration. 8) Institute change.

Behaviour which is intended to protect an individual from the affects real or imagined of change.
Resistance by employees may just be a defence mechanism caused by frustration and anxiety about the changes​.
Resistance can be managed by working with employees, listening to their concerns and trying to understand them​

Deliver training programs​, Focus on the positive aspects​, Design flexibility into the change – this will give employees time to adapt​.
Involve employees effected in the planning of change, adding their ideas​

Scenario planning is the process of anticipating possible changes in a business’s situation and devising ways of dealing with them. It incorporates the features of contingency planning.​

Scenario planning is the process of looking at potential future situations and planning for those events​
The idea is that if we look creatively at what the future could look like, the implications that a business can create a series of strategies to handle those situations​

Natural disasters, I.T Failiure, loss of key staff

Risk acceptance​, Risk avoidance​, Risk limitation​, Risk transference (insurance)

1. Business continuity​
2. Succession planning​

Business Continuity (BC) is defined as the capability of the business to continue delivery of products or services at acceptable levels following a disruptive incident
it is about devising plans and strategies that will enable the business to continue operations and enable it to recover quickly and effectively.

Succession planning is defined as a process for identifying and developing potential future leaders or senior managers.
As well as individuals to fill other business-critical positions, either in the short- or the long-term​.

It is a 3x3 grid analysing potential new leaders based upon their performance and potential from low to high.