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A2 Business Studies Objectives and Strategy Unit 6

A2 Business Studies Objectives and Strategy Unit 6. Decision-making to achieve objectives. Decision-making models. Models are used to assist firms in important decision-making at every level It varies from short-term and long-term, tactical and strategic decisions

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A2 Business Studies Objectives and Strategy Unit 6

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  1. A2 Business StudiesObjectives and Strategy Unit 6 Decision-making to achieve objectives

  2. Decision-making models • Models are used to assist firms in important decision-making at every level • It varies from short-term and long-term, tactical and strategic decisions • Decisions are constrained by internal and external factors • Often there is risk involved • There are a number of models we will look at: Scientific decision making and Ansoff’s Matrix

  3. 1. Set Objectives 5. Implement and review decision 2. Gather data 4. Select a strategy /make a decision 3. Analyse data Scientific Decision-making In line with what want to achieve within a given time-scale Has the outcome succeeded in achieving the objectives? Primary+secondary research Based on data analysis Using methods such as investment appraisal, cost-benefit analysis, critical path analysis, decision trees

  4. Scientific Decision-making Advantages: • A systematic process which removes ‘hunch’ decisions, bias and subjectivity • It ensures decision are well researched which reduces risk Disadvantages: • It can be a slow process and often reduces creativity • Does not guarantee the right decision is made

  5. Igor Ansoff Ansoff’s Matrix • Decision-making model/tool for corporate planning. • It provides companies with strategic choices (options) each with different degrees of risk.

  6. Enter a new market with an existing product in new geographic locations or market segments e.g. Johnson's baby shampoo targeting adults, Kellogg’s Cornflakes at different times of day, or a new band trying to make it in America New product in a new market e.g. 1990s Nokia moved from car tyres to mobile phones and is now market leader PRODUCTS EXISITING NEW M A R K E T S E X I S T I N G Modifications or additions to a product, which maintains differentiation e.g. Mars Ice cream,Cadbury’s CreamEgg bar N E W Ansoff’s Matrix MARKET PENETRATION CONSOLIDATION WITHDRAWAL DO NOTHING PRODUCT DEVELOPMENT Increasing risk MARKET DEVELOPMENT DIVERSIFICATION Increasing risk

  7. Existing product, Existing markets • Market penetration - Promote growth in same market and develop further brand loyalty • Consolidation - Concentrate on activities in which have a competitive advantage, maintain market share • Withdrawal - Pull out of market usually with very low demand • Do nothing - Continue with the same strategy only appropriate in short term

  8. Student Activity 2. Read the Hornby case study page 480 Which of the strategic options in Ansoff’s matrix have benefited Hornby? (20 minutes) 1. Complete the A-Z activity on Ansoff’s matrix Pictures sourced from www.ansoff.com, www.levongroup.net and www.hornby.com

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