Summary Chapter 1 - Business decisions and strategy: A level edexcel business studies revision summaries
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Course
Business economics
Institution
Bachillerato
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Contents
BUSINESS DECISIONS AND STRATEGY (1)....................................................................................................1
CORPORATE OBJECTIVES (1)....................................................................................................................1
MISSION STATEMENTS........................................................................................................................1
THEORIES OF CORPORATE STRATEGY (2).................................................................................................2
ANSOFF’S MATRIX................................................................................................................................2
PORTER’S STRATEGIC MATRIX.............................................................................................................3
SWOT ANALYSIS (3)..................................................................................................................................5
IMPACT OF EXTERNAL INFLUENCES (4)....................................................................................................6
PESTLE ANALYSIS.................................................................................................................................6
CORPORATE OBJECTIVES (1)
Corporate objectives1 are those that relate to the whole business organization as a whole.
BUSINESS AIMS
Aims are things the business wants to achieve in the long term and are generally expressed as vague and
unquantifiable statements. In contrast, objectives are short-term targets, that allow business achieve
aims.
A business will often communicate its aims through a mission statement.
MISSION STATEMENTS
A mission statement is a brief statement that describes the company’s core activities and states the
business’s main purpose, reflecting its goals and values. Main elements of a mission statement:
Purpose: outlines why the business exists.
Values: states the corporate values that they emotionally invest in. These are likely to influence
its own culture.
Standards and behavior: communicate a business’s commitment to high standards.
Strategy: outlines how the business will try to achieve its main objectives
1
Specific goal a corporation hopes to achieve
, Business A-level Borja Jimenez
DEVELOPMENT OF CORPORATE OBJECTIVES
Corporate objectives are objectives set by senior managers and directors of a company. They should be
specific to the company, its particular history and vision of the future, and fit well with the mission
statement. Corporate objectives must follow the SMART criteria:
Specific: must clearly state what the business is aiming to achieve. It should refer to a particular
aspect or function of the business.
Measurable: involves evidence to demonstrate whether or not the objectives have actually been
achieved. It makes it easier to measure success.
Agreed: everyone responsible for achieving the objective is happy and understands its purpose.
If not, motivation and general commitment will suffer.
Realistic: ensures that the objective can be met given the resources available and the current
market conditions.
Time-specific: gives the stated time frame required to achieve the objectives.
DEPARTMENTAL AND FUNCTIONAL OBJECTIVES
Departmental and functional objectives are daily goals of specific business
areas and departments. These all refer back up the hierarchy to the
corporate objectives and mission statement.
THEORIES OF CORPORATE STRATEGY (2) Objectives hierarchy
Businesses have aims that they hope to achieve through their stated objectives,
which requires a lot of planning - strategy. Businesses must use analytical tools to understand the
current position of the business in the market. The corporate strategy 2 derived from this process is the
long-term plan to achieve the aims of the entire business.
ANSOFF’S MATRIX
The Ansoff matrix is a strategic planning tool that provides a framework to help businesses devise
strategies for future growth. It allows businesses to consider a number of factors that will determine its
corporate strategy:
Levels of investment in existing and new products
The exploitation of different markets
The growth strategy of the business
The level of risk the business is willing to accept
Market penetration: Its purpose is to achieve growth in existing markets with existing products.
A business might adopt this strategy if they have a successful product and believe that they can
2
The plans and policies developed to meet a company’s objectives. It is concerned with the range of activities that
the business must undertake to achieve goals.
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