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Business Unit 3 - Coggle Diagram
Internal Criteria
Attitude to risk - whether the business owners are willing to take high levels of risk to try to obtain high rewards or whether they are risk averse and prefer a safe course of action, The decision made should fall within the business owners risk threshold.
Organisational Objectives - what the business is trying to achieve. The decision should move the business towards achieving its objectives, or at least not have a negative impact on business decisions.
Impact of internal stakeholders: When making decisions, directors and managers should consider the impact of the decision upon the internal stakeholders i.e. staff.
Financial Considerations: The constraints/limitations of the finance available for a project, resources or workforce etc.
Core Competencies of A business - the skills a business is good at. The decisions made should exploit the particular strengths or expertise of a business to gain advantage over a business
Time - time to plan, the time to implement, the time to reap rewards, all needs to be taken into consideration, an urgent problem will require an urgent solution
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Market Penetration
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This means increasing revenue by for example promoting the product re-advertising the brand - the product is not altered
Can be achieved by: increasing frequency or quantity purchased amongst existing customers. Therefore requires: sound knowledge of customers competitors
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Market Development
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This means increasing revenue by for example promoting the product re-advertising the brand - the product is not altered
Can be achieved by: Targeting new segments in new geographical markets. Therefore requires: in depth research, extensive competitors analysis and thouroh customer profiling
Product development
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High risk, high research and development cost New does not mean brand new it may evolve
Changing material, ingredients, colour
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Businesses Descions
Tactical
- Affects several functional areas, turns strategy into solutions - Medium Term impact. Examples include Development of a new marketing campaign, what type of market research to undertake. Made by senior and middle managers
Operational
- Affects one specific area of the business, routine - short term impact. examples include Where to source raw materials, staffing rotas, when to service machinery. Made by all staff
Strategic
- Affect the direction of the entire business - Long term impact, Examples include Development of a new marketing campaign, what type of market research to undertake. Made by directors, senior management and CEO
External Criteria
Level & nature or risk - the size & type of risk. Risk comes in many forms including financial risk, impact on reputation, likelihood of success/failure, lack of previous experience, lack of familiarity & lack of competence/expertise
Impacts on external stakeholders - making decisions that do not fit with external stakeholders objectives may lead to increased conflict for the business.
E.G closing down bank branches, introducing self service tills etc.
Degree of uncertainty - the greater the degree of uncertainty the more difficult it will be to reach a decision, business needs to consider carefully any areas of uncertainty
Changes in the market - businesses need to make decisions which meet the needs of the constantly changing market.
Changes in the external environment - present and future changes in a businesses external environment all need to be considered. Some changes can have a very large impact on a business
for example, changes in the exchange rates, interest rates, technology and legislation
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Qualative & Quantatve
Qualitative information: means information based on people's opinions, attitudes and feelings. It provides depth of understanding but is difficult and time consuming to analyse
Quantitative Information: means numerical data. It provides quantifiable data that can be mathematically analysed. However it does not allow for further probing and relies on the skill of the researcher.