1.3, 1.4, 1.5

Question 1

Mission Statement

Answer 1

Outlines the objectives of the business and how they aim to achieve them. It’s more focused and specific than the vision statement.

Question 2

Vision Statement

Answer 2

Philosophy, vision or set of principles which steers the direction and behaviour of an organisation. Focuses on the long term aims of the business.

Question 3

Aims

Answer 3

Business long term goals

Question 4

Objectives

Answer 4

Medium-to-short term goals that clarify how the business will achieve its aims and reach its vision.
There are 3 types of objectives:
Strategic
Tactical
Operational

Question 5

Strategic decisions

Answer 5

• Long term decisions +5 years
• Overall direction and objectives of the business
• Made by owners, chief executive, board of directors
• Outcome may be uncertain
• Are not detailed
• E.g expand, be socially responsible

Question 6

Tactical decisions

Answer 6

• Medium to short term decisions
• Used to implement strategic decisions
• Made by senior/middle management
• Outcome more predictable
• E.g launch new products, open new store

Question 7

Operational decisions

Answer 7

• Day to day objectives
• Affect the day to day running of the business
• Made by supervisors and junior managers
• Less risk involved
• Outcome is predictable
• E.g decisions on staff working hours for next week

Question 8

SMART objectives

Answer 8

Specific: goals are focused and identify a tangible outcome, resources needed are taken to account
Measurable: clear definition of success, evaluates achievements and progress.
Attainable: goal should be challenging but realistic, reveals any potential challenges
Relevant: ensuring that the goal is worthwile, determines if its aligned with to your values and if its your pirority
Time-bound: target date, realistic time frame, motivates you to apply the focus and discipline needed to achieve the goal

Question 9

Business strategy

Answer 9

Plan to achieve a strategic objective in order to work towards the aims of a business.

Question 10

Changes in Internal Environment

Answer 10

Product: permformance of product in marketplace may need changes in the product
Finance: if number of sources of finance increase/decrease
Operations: a move towards environmentally friendly production or a elocation of a factory

Question 11

Changes in External Environment (STEEPLE)

Answer 11

Social Factors:
-> demographic changes: ageing population, average age of first mothers increasing
-> socio-cultural changes: women working, increased leisure time, changes in fashion
Technological factors: rapid technology increase, Nokia not being able to keep up with Apple
Economic factors: incflation, exchange rates and interest rates, recession
Ethical factors: values of society changing ledading to sustainable businesses, diversity in the hiring process
Political factors: changes to the political system or political party
Legal factors: changes in laws, health and safety or minimun wage
Environmental factors: growing environmental awareness, change in packaging and greater focus on ecological disasters like oil spills

Question 12

Ethical objectives vs Corporate Social Responsibility (CSR)

Answer 12

Ethical objectives are specific goals that a business sets itself based in established codes of behaviour.
CSR is the concept that a business has an obligation to operate in a way that will have a positive impact on society.

Question 13

SWOT analysis

Answer 13

Tool that management can use to help with planning and setting objectives, first stage in planning process:
Strengths: internal areas the business performs well
Opportunities: external areas that the business could take advantage of in the future
Weaknesses: internal areas the business performs poorly
Threats: external threats to production, productivity, sales, profit that may occur in the future

Question 14

Ansoff Matrix

Answer 14

Tool used to analyse and plan growth strategies for businesses:
Market penetration: selling more existing products in existing markets, safest option
Market development: selling existing products in new markets, riskier than market penetration as the business may not understand the market, Walmart in Peru
Product development: create new products in existing markets, extending product range
Diversification: new product in new market, risky as lacks familiarity/experience in the new market

Question 15

Stakeholders

Answer 15

Individuals or groups that have a direct interest in a business because the actions of the business will affect them directly

Question 16

Internal Stakeholders

Answer 16

Have direct monetary stake in the business
Employees
Managers
Owners

Question 17

External Stakeholders

Answer 17

Groups outside a business who have less direct stake in the business but have an interest in what the business does:
Suppliers
Society
Government
Creditors
Shareholders
Customers

Question 18

Stakeholder analysis

Answer 18

Determine how close each stakeholder is to decision making in the business.

Question 19

Recession

Answer 19

A significant decline in economic activity spread across the economy, lasting more than a few months; visible in production employment.
Leads to unemployment
People have less money to spend

Question 20

Boom period

Answer 20

Rapid economic expansion resulting in higher GDP, lower unemployment, higher inflation rate and rising asset prices.

Question 21

Inflation

Answer 21

General increase in prices of goods and services in an economy. Wages do not increase in line with inflation.

Question 22

Ethical trade

Answer 22

Taking into consideration the impact of your actions on stakeholders involved in your business.

Question 23

Fair Trade

Answer 23

Aims to ensure better prices, decent working conditions and improved terms of trade for farmers in developing countries:
- Half owned by the producers of raw materials who are involved in setting and agreeing Fair Trade standards
- Provide producers with access to credit and long-term trading relationships
- Fair trade products include tea, coffee, bananas and flowers

Question 24

Corporation tax

Answer 24

A tax paid to the government based on the net profit generated by a business at the end of a financial year.