11 Flashcards
What is a joint venture
A business arrangement where 2 or more parties agree to pool their resources for the purpose of achieving a specific task
Is a joint venture legally binding?
Yes, and is written in law
Key points about joint ventures
- The business’s remain separate in legal terms
- Firms have to benefit from collaborative work
- Share fixed costs
Evaluation points of joint ventures
- Difficulty agreeing on a strategy
- Mutual benefit is minimal
- Have to decide on the amount of resources each firm provides for it
- Legal problems eg who owns what
What is meant by a strategic alliance
An arrangement between 2 parties that have decided to share resources to undertake a specific, mutually beneficial project
Less involved and less permanent than joint ventures
What is meant by a business strategy
The action plan the business puts together to achieve its objectives
What needs to be done to put together a strategy
An audit
What is looked at in an internal audit
Strengths and weaknesses of the business
What is looked at in an external audit
Opportunities and threats from outside
What does SWOT analysis stand for
Strengths
Weaknesses
Opportunities
Threats
What is meant by a business strategy
The method a business will use to achieve objectives/aims
What is meant by direct investment
Purchase of capital goods that are used directly in production
What is meant by indirect investment
Purchase of capital goods that are not used directly in production
Example of indirect investment
Filing cabinet
What different types of risk are there
To each functional area of a business
Eg financial, marketing
How can risk be managed
- Studying the internal and external risks first
- Contingency planning from this
- Conservative forecasts/projections
What are examples of financial rewards of enterprise
- Profits
- Dividends
- Capital growth
What are examples of non-financial rewards of enterprise
- Satisfaction
- Control
- Contribution to society
What is meant by quantifiable risks
Those which can be measured eg costs
What is meant by non-quantifiable risks
Those which are intangible eg reputation, mental health
What are some reasons that starts ups are high risk
- Require large capital investment
- Have no customer loyalty
- Barriers to entry
- No investor confidence
What are some examples of external uncertainty
- Economic uncertainty
- Governmental uncertainty
- Competitors
- Consumer trends
What internal factors can cause uncertainty in a leadership
- Poor management
- Financial uncertainty
- Employee uncertainty
- Shareholder uncertainty
What is the relationship between risk and reward
The higher the risk, the higher the possible reward
What is the difference between risk and uncertainty
A risk can be predicted, the uncertainty is what is used to predict the risk
What is meant by uncertainty
The lack of sureness of an event
What is one impact of uncertainty
Reduced investment
What is meant by opportunity cost
The loss of alternatives when a decision is made
What is meant by crisis management
The process by which a business deals with a disruptive and unexpected event that threatens to harm the business or its stakeholders
What is an example of a crisis and therefore crisis management
KFC ran out of chicken
