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Business, Technology and Finance > 1. Business objectives and functions > Flashcards

1. Business objectives and functions Flashcards

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1
Q

Define organisation

A

A social arrangement for the controlled performance of collective goals, which has a boundary separating it from its environment

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2
Q

Define business

A

An organisation that is oriented towards making a profit for its owners so as to maximise their wealth and that can be regarded as an entity separate from its owners

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3
Q

Define stakeholder

A

A person or group of persons who have a stake in the organisation. This means they have an interest to protect in respect of what the organisation does and how it performs

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4
Q

Name a primary stakeholder

Name a secondary stakeholder

A

Shareholders

Directors 
Customers
Suppliers
Lenders
Government 
Local community
Natural environment
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5
Q

What do shareholders have at stake?

What do shareholders typically expect of the business?

A

Money invested

A return on their investment so that their wealth increases

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6
Q

What do directors have at stake?

What do directors typically expect of the business?

A

Livelihoods, careers and reputations

Fair and growing remuneration, career progression, training, pension

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7
Q

What do customers have at stake?

What do customers typically expect of the business?

A

Their custom

Products of good value, fair terms of trade

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8
Q

What do suppliers have at stake?

What do suppliers typically expect of the business?

A

The items they supply

Fair terms of trade, prompt payment, continuity of custom

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9
Q

What do lenders have at stake?

What do lenders typically expect of the business?

A

Money lent

A return on their investment

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10
Q

What does government have at stake?

What does government typically expect of the business?

A

Natural infrastructure used by business, welfare of employees, tax revenue

Reasonable business practices, steady stream of tax revenue

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11
Q

What do local communities have at stake?

What do local communities typically expect of the business?

A

Welfare of employees

Reasonable employment and other business practices

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12
Q

What does the environment have at stake?

What does the environment typically expect of the business?

A

The environment shared by all

Reasonable environmental and other business practices

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13
Q

Define natural capital

A

The world’s stock of natural assets

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14
Q

Define sustainability

A

The ability to ‘meet the needs of the present without compromising the ability of future generations to meet their own needs’

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15
Q

Define business sustainability

A

How far a business can operate in a sustainable way, and how it should interact with individuals and governments in doing so

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16
Q

Define corporate responsibility

A

The actions, activities and obligations of business in achieving sustainability

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17
Q

The primary objective of profit maximisation is to what?

A

Increase shareholder wealth

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18
Q

Give four secondary business objectives

A
  1. Market position improvement
  2. Product development
  3. Technology improvement
  4. Employee and management environment improvement
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19
Q

What eight areas does Peter Drucker say managers should focus on?

A
  1. Market standing
  2. Innovation
  3. Productivity
  4. Physical and financial resources
  5. Profitability
  6. Manager performance and development
  7. Worker performance and attitude
  8. Social responsibility
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20
Q

What is constraints theory?

A

Some business area decisions are taken without reference to the wealth objective at all since constraints such as ethical issues apply

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21
Q

What is agency theory?

A

The theory that the people who run the business may pursue other objectives due to their separation from the owners of the business

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22
Q

Define mission

A

The business’s basic function in society’ is expressed in terms of how it satisfies its stakeholders

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23
Q

What are the four elements of a mission

A

Purpose
Strategy
Policies and standards of behaviour
Values

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24
Q

Define goals

A

The intentions behind decision or actions

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25
Q

Define the two types of goals

A
  1. Qualitative goals- these are non, operational non-numerical
  2. Quantitative goals- these are operational objectives
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26
Q

Give the five characteristics of operational goals

A
  1. Specific
  2. Measurable
  3. Achievable
  4. Relevant
  5. Time-bound
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27
Q

What three standards are to be met for a desired level of performance?

A
  1. Physical standards
  2. Cost standards
  3. Quality standards
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28
Q

What six types of power are listed in the BPP workbook?

A
  1. Coercive power
  2. Reward power
  3. Legitimate power
  4. Expert power
  5. Referent power (based on force of personality)
  6. Negative power (to disrupt)
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29
Q

Define authority

A

The right to do something

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30
Q

Define responsibility

A

The obligation a person has to fulfil a task which they have been given

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31
Q

Define accountability

A

A person’s liability to be called to account for the fulfilment of tasks they have been given by persons with a legitimate interest in the matter

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32
Q

Define delegation

A

Giving a subordinate power, responsibility and authority to carry out a given task, while the manager retains overall accountability

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33
Q

Define the four types of manager

A
  1. Line manager- authority over a subordinate
  2. Staff manager- authority in giving specialist manager to another manager or department
  3. Functional manager- functional authority
  4. Project manager- authority over project team members in respect of the project in progress
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34
Q

What three key roles do managers do?

A
  1. Informational role (checking data received and passing it in to relevant people)
  2. Interpersonal role (acting as leader for their own team, and linking with the managers of other teams)
  3. Decisions role (allocating resources, negotiating, problem solving etc.)
35
Q

What three factors will impact the effectiveness of a leadership style?

A
  1. Authority
  2. Autonomy (giving subordinates freedom to carry out their roles)
  3. Leadership (exercising power in such a way as to win a willing and positive response from subordinates)
36
Q

Give four characteristics of effective managers, as stated in the BPP workbook

A
  1. Employee-centred rather than work centred
  2. Setting high standards but being flexible in how to achieve these
  3. Natural delegators with high levels of trust
  4. Encourage participative management
37
Q

Define culture

A

The common assumptions, values and beliefs that people share

38
Q

Define organisational behaviour

A

The study and understanding of individual and group behaviour in an organisational setting in order to help improve organisational performance and effectiveness

39
Q

What three basic assumptions does Taylor make about human behaviour at work?

A
  1. People are rational economic animals concerned with maximising their economic gain
  2. People respond as individuals, not groups
  3. People can be treated in standardised fashion, like machines
40
Q

What are Taylor’s five principles of scientific management?

A
  1. Determine the one best way of doing a particular task
  2. Select the best person to do this task on the basis of their mental and physical capabilities
  3. Train the worker to follow the set procedure very precisely
  4. Give financial incentives to ensure the work is done in the prescribed way
  5. Give all the responsibility to plan and organise work to the manager, not the worker
41
Q

What is theory X, per McGregor?

What is theory Y, per McGregor?

A

Theory X: individuals dislike work and avoid it where possible, meaning coercion, control and punishment are therefore needed. Individuals desire security

Theory Y: physical and mental effort in work is as natural as rest or play, commitment to the objective is driven by rewards. People learn to like responsibility

42
Q

Define motivation

A

The degree to which a person wants certain behaviours and chooses to engage in them

43
Q

Per Maslow’s Motivation and Personality 1954, what is the hierarchy of needs (from top to bottom)?

A 
Top: self-actualisation needs
Status/ego needs
Social needs
Security needs
Bottom: basic/physiological needs
44
Q

In Herzberg’s content theory, what are the hygiene and motivating factors?

A

Hygiene factors are concerned with the context of the job rather than its content. If absent they will demotivate. They are expected.

Motivating factors are concerned with the content of people’s jobs and need to be addressed to ensure motivation

45
Q

What are the four stages of group formulation per Tuckman?

A
  1. Forming
  2. Storming (arguing)
  3. Norming (results of argument converted into set of rules)
  4. Performing
46
Q

What are the eight roles that Belbin observed people adopt when put into a group context?

A
  1. Leader
  2. Shaper
  3. Plant (thoughtful)
  4. Evaluator
  5. Resource investigator (picking up others ideas and adding to them)
  6. Company worker (turning general ideas into specifics)
  7. Team worker (concerned with relationships within team)
  8. Finisher
47
Q

Define Human Resource Management (HRM)

A

The creation, development and maintenance of an effective workforce, matching the requirements of the business and responding to the environment

48
Q

What is the difference between the hard and soft approach to HRM?

A

Hard: emphasises the resources element of HRM

Soft: emphasises the human element of HRM

49
Q

What are the four C’s of the Harvard model of HRM?

A
  1. Commitment
  2. Competence
  3. Congruence
  4. Cost-effectiveness
50
Q

What does the ICAEW’s ‘Managing IT in the SME’ state about the importance of monitoring?

A

IT developments are rapid, and businesses need to keep abreast of relevant innovations

51
Q

What does the ICAEW’s ‘Managing IT in the SME’ state about the importance of planning?

A

Effective change management is required to ensure operations run smoothly without disruption

52
Q

What does the ICAEW’s ‘Managing IT in the SME’ state about the importance of structure?

A

IT management tasks need to be prioritised and documented, combining a mix of ‘business as usual’ change and ‘forward change’ activities

53
Q

What does the ICAEW’s ‘Managing IT in the SME’ state about the importance of staffing and skills?

A

The right people and skills need to be recruited and retained

54
Q

What four IT service delivery responsibilities are stated in the BPP workbook?

A
  1. IT service operations (e.g. data extraction)
  2. Capacity monitoring and management
  3. Customer billing and budgeting
  4. Service continuity
55
Q

Name a IT service support responsibility

A
  1. Maintaining appropriate configuration of IT service components/infrastructure
  2. Physical and logical integrity of the infrastructure
  3. Security and access control
  4. Prevention, investigation and resolution of operational events and problems
56
Q

What three things will help ensure IT investments produce maximum returns?

A
  1. External support
  2. Outsourcing
  3. Innovation
57
Q

Define a marketing orientated business

A

One which accepts the needs of potential customers as the basis for its operations

58
Q

Define a sales orientated business

A

One in which the main purpose is just to sell more of the product/services they have available

59
Q

What does FMCG stand for? Give an example

A

Fast moving consumer goods, e.g. baked beans

60
Q

What are consumer durables? Give an example

A

Items of low volume but high value, e.g. fridges

61
Q

Define market segmentation

A

The division of the market into homogenous groups of potential customers who may be treated similarly for marketing purposes

62
Q

Define marketing mix

A

The set of controllable marketing variables that a firm blends to produce the response it wants in the target market

63
Q

What are the three elements of a product? Give an example

A

Basic product- car
Actual product- Ford Focus
Augmented product- Ford Focus with 0% Finance or extended warranty

64
Q

Give an example of promotion type

A
  1. Sales promotion
  2. Advertising
  3. Public relations
  4. Personal selling
65
Q

What are the two types of promotion techniques? Define them

A

Push: ensuring products are available to consumers by encouraging intermediaries to stock items

Pull: persuading the ultimate consumers to buy

66
Q

Operations management is concerned with balancing which five key variables?

A
  1. Demand for goods and services
  2. Resources
  3. Capacity
  4. Inventory levels
  5. Performance of the process which creates the good or services
67
Q

Define procurement

A

The acquisition of goods and services at the best possible total cost of ownership, in the right quantity and quality, at the right time, in the right place and from the right source for the direct benefit or use of the business

68
Q

What six building blocks does Mintzberg suggest all businesses can be analysed by?

A
  1. Operating core
  2. Middle line
  3. Strategic apex
  4. Support staff
  5. Technostructure
  6. Ideology
69
Q

What are the three main methods of communicating the structure of a business?

A
  1. Organisation chart (pictorial representation of the structure)
  2. Organisation manual
  3. Job description
70
Q

In a simple/entrepreneurial structure, the entrepreneur has _____ _____ over running of the business

A

Total control

71
Q

Advantages and disadvantages of simple structure?

A

Advantages: quick decisions can be made, entrepreneurs goals are pursued exclusively, flexible

Disadvantages: cannot expand beyond certain size, diversification struggles, lack of career structure for lower level employees, possibly too centralised

72
Q

How is a functional structure organised?

What are its advantages and disadvantages?

A

Jobs grouped by common feature and ranked in hierarchy

Advantages: good career opportunities, efficiency through knowledge of well-known tasks, exploits specialist functional skills

Disadvantages: rigid structure, tendency to be authoritative, decisions must pass along a line of authority, functional heads may build empires and interfunctional disputes may result

73
Q

Define divisionalisation

A

The division of a business into autonomous regions or product businesses, each with its own revenues, expenditures and capital asset purchase programmes, and therefore each with its own profit responsibility

74
Q

What five factors underly successful divisionalisation?

A
  1. Properly delegated authority
  2. Each division must be large enough to support the quantity and quality of management it needs
  3. Each division must not rely on head office for excessive management support
  4. Each division must have a potential for growth in its own area of operations
  5. If divisions deal with each other, it should be as ‘arm’s length’ transactions
75
Q

A matrix structure is most suitable for which industries?

What are its advantages and disadvantages?

A

Complex industries, educational establishments where there may be lecturers reporting to both subject and course heads, R&D departments

Advantages: reflects importance of project or customer, business coordinated with regard to technology, information etc.

Disadvantages: conflicting demands on staff time, conflicting demands over allocation of other resources, dilution of authority of functional heads

76
Q

What eight factors affect the amount of decentralisation in a business?

A
  1. Leadership style
  2. Size of organisation
  3. Extent of activity diversification
  4. Effectiveness of communication
  5. Ability of management
  6. Speed of technological advancement
  7. Geography of locations
  8. Extent of local knowledge needed
77
Q

What is Distributed Ledger Technology?

A

Data is shared across an organisation’a network so there is no concept of centralised data storage

78
Q

What is the span of control?

A

The number of people reporting to one person

79
Q

What is the difference between a tall and flat business?

A

Tall business: a large number of levels in its management hierarchy, normally because there are narrow spans of control

Flat business: a small number of hierarchical levels, normally because there are wide spans of control

80
Q

Define mechanistic structure

Define organic structure

A

Mechanistic: stable, efficient and suitable for slow-changing operating environments

Organic: flexible, adaptive and suitable for fast-changing or dynamic operating environments

81
Q

Define continuous organisation

A

Given people leave, the organisation will not disappear, as new people will fill their roles

82
Q

Define official functions

A

The business is divided into areas with specific duties. Authority to carry them out is given to the managers in charge

83
Q

What are the advantages and disadvantages of a bureaucracy?

A

Advantages: ideal for routine tasks, efficient in stable environments, rigid adherence to procedures may be necessary for fairness

Disadvantages: slow decision making, uniformity creating conformity, suppresses innovation, lack of feedback, slow to change, poor uptake of technology

Business, Technology and Finance (9 decks)

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