100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Previously searched by you
Previously searched by you
logo
Summary Edexcel A-level Business Theme 3: Business decisions and strategy $5.84
Add to cart
Quickly navigate to
Preview
  2.  
  3. PEARSON (PEARSON)
  4.  
  5. Business Studies
  6.  
  7. Theme 3: Business decisions and strategy

Summary

Summary Edexcel A-level Business Theme 3: Business decisions and strategy

5 reviews
 6 purchases
  • Course
  • Theme 3: Business decisions and strategy
  • Institution
  • PEARSON (PEARSON)

Pearson Edexcel A-level Business studies notes that cover the whole of Theme 3 (Managing business activities) and are structured using the Edexcel specification.

Preview 2 out of 13  pages

Document information

  • September 6, 2022
  • 13
  • 2021/2022
  • Summary

Subjects

  • a level
  • as level
  • business
  • edexcel
  • business notes
  • business a level notes

Written for

  • A/AS Level
  • PEARSON (PEARSON)
  • Business studies
  • Theme 3: Business decisions and strategy
All documents for this subject (2)

5  reviews

review-writer-avatar

By: bayleeheath90 • 10 months ago

review-writer-avatar

By: rossiduncanson • 10 months ago

review-writer-avatar

By: charliecheekster • 10 months ago

review-writer-avatar

By: gavanguhunia • 1 year ago

review-writer-avatar

By: juliancalis • 2 year ago

Seller

avatar-seller
renataa

Reviews received

Content preview

SECTION 3.1 Tactical decisions: short-term plans that a business will use to achieve its overall strategy
Corporate aims: the long-term targets or goals of a business
+ Helps to turn strategies into actions that ultimately support a company or team in reaching its goals
Mission statement: a written description of the overall purpose of a business and reasons for its existence + Encourages improved performance, as employees and team members will have actionable steps to reach goals
+ Allows departments to prioritise their work and ensures that each task ties into the overall strategy
+ Helps to motivate employees + Promotes organisation-wide involvement and can boost employee engagement
- It takes time to create a tactical plan and can result in spending more time planning than actually doing
+ Can help in decision-making by enabling options to be compared against the mission statement
- It can cause a company's operations to slow down if the tactical plan is extensive
+ Gives employees a sense of shared purpose and encourages them to work towards common goals
- It requires everyone to do their part to ensure a team or company's goals are met, if one employee or team member
+ It serves as a basis for the firm's organisational objectives and targets
does not complete their task on time, it can slow the entire process down
+ Customers may agree with its values and consequently prefer to shop there rather than at competitors
- Business’s reputation will be damaged if consumers find that its actions don’t reflect its stated values Strategic and tactical decisions can impact different resources in a business such as:
- Its use is limited as it doesn't go into detail about how the mission will be achieved
- Drawing up a mission statement may be time consuming and may delay taking business decisions and result in the firm ❏ Physical - a business might need to invest in new or updated physical resources
missing out on opportunities such as being first to exploit a new market ❏ Financial - a business would need to consider how to fund its decisions
❏ Human - a business might need to consider whether its staff are skilled enough to carry out the work needed for the new
Mission statements come from: strategies or tactics

● Values of the founders Corporate strategy: the medium to long term plan that a business has chosen to follow in order to achieve its corporate objectives
● Culture of the business
Theories of corporate strategy:
● Industry it operates in
● Society’s views ❏ Ansoff’s matrix
❏ Porter’s strategic matrix
Corporate objectives: a goal that a business strives to achieve in order to meet its long term aim e.g. sales growth, survival, profit ❏ Boston matrix
maximisation, profit satisficing, market share ❏ Distinctive capabilities model

+ Helps to motivate employees Development of corporate strategy:
+ Gives employees a sense of shared purpose and encourages them to work towards common goals
+ Clear direction empowers employees to complete their work and make decisions without needing managerial input Ansoff’s matrix: a marketing planning model that helps a business determine its product and market growth strategy
+ Managers and subordinates know what is expected of them and so there’s no confusion leading to increased
+ It forces management to think about the expected risks of moving in a certain direction
productivity and morale
+ Assessment of alternatives, it shows management opportunity cost
- If the management becomes too focused on a goal, they may not make changes when they become necessary
+ It lays out possible strategies for growth
- Employees may feel too much pressure to complete their goals, especially if the goals are beyond the employee's
+ Sets out aims and objectives
capabilities - Only a theoretical model
- Does not take into account the activities of competitors
Functional objectives: objectives set for each department designed to ensure that the corporate objectives are achieved - Accurate predictions are difficult due to unforeseen events
- Fails to show that market development and diversification strategies require a change to every day running of the
+ Provides clarity throughout the chain of command business
+ Allows employees to focus on their specialisation
+ Gives employees a sense of shared purpose and encourages them to work towards common goals Strategic growth strategies:
+ Increased morale and work ethic, as there is more job security as there’s a clear path of growth for employees which
provides motivation Diversification: launching new products into new markets
- Can create competition and thus conflict within the chain of command
+ Increased sales and revenue
- If employees and management are only loyal to their departments, there will be a lack of teamwork and communication
+ Business can spread risk over different markets - if one product fails the business will be able to survive
- Lack of teamwork amongst departments can lead to a rigid structure where changes, innovations, and flexibility can be
+ Business can meet the needs of different market segments and appeal to more customers
difficult to implement
+ A range of products increases the awareness of the brand as a whole
- Extremely high risk as it involves moving into markets that the business may have no experience of
To be effective, an objective should be:
- No reputation or expertise in new market
- High costs involved in researching and developing new products
❏ Specific
- High marketing costs are incurred to promote new products
❏ Measurable
❏ Attainable Product development: developing new products in existing markets
❏ Realistic
❏ Time based + Familiar with customer needs
+ Can increase businesses' customer base
Factors that can affect corporate objectives: + Allows businesses to capture new customers in existing markets
+ If successful, this strategy can lead to increased market share and revenue
● Internal factors + Responds to customer needs - provides maximum possible satisfaction to the customers
● Legislation + It works best for businesses that already have a strong competitive advantage and established brand image
● Economic conditions - Could be expensive as market research needs to be undertaken
● Social/technological change - Moderate risk involved as developing new products requires finance and can be time consuming
● Competition
Market penetration: the process of trying to boost market share for existing products in their existing market

Strategic decisions: medium-long term plan of action developed to achieve a business’s corporate objectives ❏ Increasing sales promotions
❏ increasing advertising to build brand image
+ Forces management to think and so encourages creativity and innovative ideas ❏ Increasing customer loyalty
+ Provides the framework within which staff can make day-to-day operational decisions that are aligned with the ❏ Adapting pricing strategies
achievement of the organisation’s goals
+ Helps to create a sense of purpose and to define the direction in which an organisation must travel, and aids in + Limited investment needed
establishing realistic objectives and goals that are in line with the vision and mission + Low risk as the business utilises current products and markets
+ With a clear plan and direction in place, resources could be channelled and monitored more effectively to ensure that + Encourages customers to trial a product or switch brands
effectiveness is enhanced and wastage is reduced + Increases brand awareness
+ Helps to assess potential internal and external shocks, and prepare the business to be more effective in adapting - Vulnerable if not innovative
- If the future does not unfold as anticipated, then the strategy will be unvalidated - Difficult if the market is saturated therefore limited growth potential
- May damage brand image and reputation

, Market development: the process of attempting to increase sales by launching existing products into new markets Boston Matrix: a model which helps businesses analyse their product portfolio by measuring their market share against market growth

+ Simple and easy to understand
Repositioning: when a business focuses on a different segment of the market
+ Can be used to determine how finance can be used in order to maximise a company's profitability and future growth
+ Useful tool for analysing product portfolio decisions
❏ New promotions which target a different audience
+ Helps a business assess its current position of a firm’s products in the market in order to plan what to do next
❏ Using new channels of distribution
- It’s only a snapshot of the current position
❏ Expanding into new geographical markets to exploit the same market segment
- Expensive to conduct
- Focus on market share + market growth ignores issues such as developing a sustainable competitive advantage
+ Increases brand awareness
- A theoretical model only so does not guarantee success - too simplistic and does not reflect economic reality
+ Potential for considerable growth in new large markets
- Dynamic markets are very volatile so making decisions based on the predicted cash flows for each product can be risky
+ No need for expensive product developments
- Gathering data doesn't guarantee success, a manager has to interpret the information correctly and make the right
- Limited understanding of new customer needs
decision
- Competing against established businesses
- Business needs to research the target market segment and work out how it can adapt its product or promotion to suit the
Building: involves investment in promotion + distribution to boost sales - used with question mark products
needs of a different set of consumers.
Holding: involves marketing spending to maintain sales - used with rising star products
Porter's strategic matrix: shows the strategy a business is best placed to use based on its competitive advantage and its market scope

+ Helps to identify a business that hasn't got a clear focus and so is at risk of failure Harvesting/Milking: taking whatever profits you can without much more new investment - used with dog + question mark products
+ Helps to plan and choose corporate strategies to gain competitive advantage
- Oversimplifies the market structure Divesting: involves selling off the product - used with dogs question mark product
- Only tells a business where it currently sits in the matrix and doesn't give any information on how to improve
Distinctive capabilities: the collective knowledge and skills held within a workforce that can create added value and give a business
Competitive advantage: a sustainable edge that gives one business a long-term advantage over its rivals competitive advantage over the rest of the market

Corporate strategies to gain competitive advantage: ❏ Architecture describes the relationships a business has with its main stakeholders
❏ Reputation - added value, competitive advantage
Differentiation strategy: the act of distinguishing a product/service from competitors to make it more attractive to a particular target ❏ Innovation - added value, unique selling point
market
Added value: the difference between the price of the finished product/service and the cost of the inputs involved in making it
❏ Added value e.g. quality, unique selling point
Ways of adding value:
❏ Strong branding
❏ High quality ❏ Strong brand image
❏ Innovative ❏ Excellent customer service
❏ High quality
+ Helps build brand image
❏ Efficiency delivery
+ Helps gain a competitive advantage
❏ USP
+ Increased brand loyalty and retention
+ Improving quality by using high value materials made by hand by highly trained and skilled staff = added value
+ Word of mouth recommendations helps build a strong brand and reputation
= customers may be prepared to pay a premium price may help boost revenues
+ Satisfied customers are likely to be more loyal to the brand
+ Building a brand or reputation, which might be achieved through the promotion should increase sales
+ Product stands out from rivals = competitive advantage = repeat purchases
- Other businesses may be able to copy the strategy
+ Better design, more convenient = customers less price sensitive = charge higher prices
- Consumer tastes may change
+ Larger profit per unit = lower breakeven output so higher margin of safety = lower risk
- Higher costs due to increased marketing expenses and product development costs
+ Increases market share
- Product may not be attractive to the mass population if too differentiated
- Increased costs
- Minimises profit per unit sold
Focus strategy: a marketing method of developing, marketing and selling products to niche markets
Competitive advantage: a sustainable edge that gives one business a long-term advantage over its rivals
Segmentation: focusing on a specific group of customers
❏ Product innovation - improve product design, feature, quality
+ Easier to target a narrow segment = better meet customer need = higher levels of customer satisfaction = brand loyalty ❏ Product differentiation - USP
+ Increased customer satisfaction = increased brand loyalty and repeat purchases ❏ Good customer service - polite, knowledgeable staff = repeat purchases + charge a higher price = good reputation
+ Reduces price sensitivity therefore the business can charge higher prices = higher profit margins ❏ Convenience - offer product/service in a more convenient location e.g. next day delivery
+ Small scale production can be flexible and follow trends ❏ Marketing - strong brand image = brand awareness
+ Builds up specialist skill and knowledge leading to higher quality ❏ Reduce costs - lower price = increased sales
- It may limit the initial demand of a product or service ❏ Reliability and quality - more reliable and better quality = good reputation
- Increased costs due to a lack of economies of scale
- Vulnerable to market changes - demand may not be constant Unique selling point (USP): a feature that sets a product apart from its competitors making it unique
- Wider product range therefore the business is less able to exploit economies of scale
+ Gain competitive advantage
Cost leadership strategy: aiming for the lowest cost of production for a given level of quality + Build brand image
+ Increased brand loyalty and retention
+ Achieving lower costs than competitors due to purchasing economies of scale = competitive advantage + Add value through differentiation
+ In a price war, the firm can maintain profitability while the competition suffers losses + Ability to charge a higher price
+ If prices decline, the firm can stay profitable because of its low costs - Higher costs - increased marketing
+ Increased profit margins if prices are maintained - Product may not be attractive to the mass population if too differentiated
+ Companies with large and efficient production facilities can benefit from economies of scale = can lower prices to gain
Capabilities need to be sustainable and appropriable:
market share
- Most businesses don't compete directly on cost Sustainable: once a business has achieved one of the three capabilities, it needs to maintain this competitive advantage over time
- Reduces product innovation
- Reduces the importance of consumer feedback Appropriable: one business is not able to copy the distinct capability that another business has achieved, new ideas and inventions
- Encourages a lower quality product to be offered to the market can be protected through trademarks and patents and advertising, slogans and logos can be protected through taking out a copyright

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller renataa. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $5.84. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

67479 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 15 years now

Start selling
$5.84  6x  sold
  • (5)
Add to cart
Added