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Business Studies > (2)Business Objectives And Strategy > Flashcards

(2)Business Objectives And Strategy Flashcards

1
Q

What is a mission statement?

A

Overall purpose of the business

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2
Q

What is a business aim?

A

What you are trying to achieve over time

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3
Q

What is a business objective?

A

More specific and short term

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4
Q

What are the point of objectives,aims and mission statements?

A
  • remind people why the business exists
  • to motivate staff
  • makes businesses look good
  • Unique selling point for the business
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5
Q

Example of a business aim?

A

Maintain long term sustainable growth

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6
Q

What is a strategic objective?

A

Slightly longer term - “to reduce costs by 10%”

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7
Q

What is a tactical objective?

A

Very short term and very specific - “to sell 100 units this month” concerned with the day to day running of the business

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8
Q

What are SMART targets?

A 
Specific
Measurable 
Achievable 
Realistic 
Timed
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9
Q

What are PIGSS targets?

A

Profit
Increase market share
Growth
Survival

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10
Q

What is a co-operative?

A
  • owned by its members
  • seek to provide a service that its members need
  • members seek to keep prices affordable
  • availability is high
  • members get a % of the profit
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11
Q

What are the four factors of production?

A
  • Land
  • Labour
  • capital
  • enterprise
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12
Q

What is an external audit?

A

Looks at the opportunities open to the business and the threats which it faces in its external environment

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13
Q

What is the primary sector?

A

Land based , production and extraction of raw materials.

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14
Q

What is the secondary sector?

A

Capital based , Manufacturing the raw materials into products

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15
Q

What kids the tertiary sector?

A

Service based selling the products that the secondary sector produces

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16
Q

What is a social enterprise?

A

Often called the “third sector”

- it is a business that exists to help people

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17
Q

What are the benefits of CSR?

A

Forces innovation

Efficiency

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18
Q

What is a corporate social objective (CSR)?

A
  • being seen as a business that cares

- environment and the community.

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19
Q

Why do businesses set CSR?

A
  • many customers expect it
  • moral thing to do
  • media expects this
  • long term reduces costs
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20
Q

What are the disadvantages of being CSR?

A

Costs a lot
Time consuming
It is relevant?
Need more staff

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21
Q

What is a business plan?

A

Is a plan of action. It tells you exactly what you are going to do over the next 12 months

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22
Q

What are the benefits of business planning?

A
  • helps guide you through the first year of a business
  • helps control costs
  • helps in applying for a bank loan
  • helps you think carefully about whether there is a market for your product
  • helps achieve aims and objectives
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23
Q

What are the drawbacks of a business plan?

A
  • doesn’t guarantee success
  • plan may be too rigid
  • high expectations may cause over spending
  • may exaggerate goals
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24
Q

What is a quantifiable risk?

A

Risks that can be measured (financial)

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25
Q

What is a non-quantifiable risk?

A

Cannot be measured (emotional)

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26
Q

What is porters 5 forces model?

A

Is a tool for analysing competition of a business

It examines five forces that determine the competitive intensity of an industry in terms of profitability.

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27
Q

What are the five forces in porters model?

A
  • threat of new entrants
  • threat of substitutes
  • bartering power of buyers
  • bargaining power of suppliers
  • degree of rivalry
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28
Q

What is an opportunity cost?

A

The cost of the next best alternative that is given up.

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29
Q

What is contingency planning?

A

A plan devised for if there os an outcome other than what is in the usual (expected) plan

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30
Q

What is forecasting?

A

Using existing data to predict future trends

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31
Q

What is qualitative forecasting?

A

Opinion based - Delph technique (expert opinion)

  • Brainstorming
  • consumer tastes and opinions
  • leading academic opinions
  • staff opinions
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32
Q

What is time series analysis?

A

Calculates the average over a time period

E.g. seasonal changes

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33
Q

What are the limitations of forecasts?

A
  • doesn’t guarantee future success
  • doesn’t take into account changes in business objectives
  • cant assume past trends will continue
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34
Q

What is a decision tree?

A

Mathematical model used too help managers make decisions.
It uses estimates and probabilities to calculate likely outcomes
Helps to decide whether the net gain from a decision is worthwhile

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35
Q

What are the benefits of using decision trees?

A
  • Potential options and choices are considered at the same time
  • the “risk” of the options can be addressed
  • easy to understand results
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36
Q

What are the disadvantages of decision trees?

A
  • probabilities are just estimates
  • uses quantitative data and ignores qualitative
  • doesn’t actually reduce the risk
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37
Q

Examples of some decision making tools?

A
  • SWOT
  • PEST
  • Ansoffs matrix
  • Market research
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38
Q

What does SWOT stand for?

A

Strengths, weaknesses, opportunities and threats

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39
Q

Is a new product is entering an existing market then what is it called in Ansoffs matrix?

A

Product development strategy

Existing market and existing product - market penetration strategy
New market new product - diversification strategy
New market existing product - market development strategy

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40
Q

What is another word for business functions?

A

Departments

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41
Q

What are different business functions?

A 
Marketing 
Production and operations
Accounting and finance 
HR
Customer service
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42
Q

What are the benefits of international trade?

A
  • larger target market
  • Economies of scale
  • international trade
  • business growth
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43
Q

What are the disadvantages of the EU?

A
  • No global trade
  • increases costs (minimum wage)
  • problems with free movement of people
  • too much red tape
  • membership fees
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44
Q

What are the benefits of the EU?

A
  • removal of trade barriers
  • reduction of business costs
  • greater business efficiency
  • elimination of anti-competitive practices
  • extended growth
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45
Q

What are the problems with exporting abroad?

A
  • legal restraints
  • transportation
  • payment methods
  • language barriers
  • different cultures
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46
Q

What factors effect globalisation?

A
  • technological change
  • cost of transportation
  • deregulation of business (privatisation)
  • Liberalisation of trade
  • consumer tastes
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47
Q

What are the disadvantages of globalisation?

A
  • weakens cultures
  • inequality
  • inflation
  • trade imbalances
  • unemployment
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48
Q

What is a joint venture?

A

Where two or more businesses pool their resources and expertise to achieve a particular goal. The risks and rewards of the enterprise are also shared

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49
Q

What are the disadvantages of joint ventures?

A
  • expensive to turn the idea into reality
  • often better if you did it alone
  • bad PR is the alliance fails or breaks down
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50
Q

What is a strategic alliance?

A

An arrangement between two companies that have decided to share resources to undertake a specific, mutually beneficial project and less permanent than a joint venture

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51
Q

What are the advantages of Ansoffs matrix?

A
  • focused approach
  • growth potential
  • presentable to stakeholders
  • sets aims and objectives
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52
Q

What are the disadvantages of Ansoffs matrix?

A
  • isolationist approach
  • simplistic and overly optimistic theory
  • paralysis from analysis
  • doesn’t take into account competitors and market conditions
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53
Q

What does the operations department do?

A

They plan and organise production manufacturing .

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54
Q

What might be an operations objective?

A

To break even

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55
Q

What factors may affect operations objectives?

A
  • size of the business
  • the economy
  • the performance of the competition
56
Q

What is adding value?

A

An improvement or addition to something that makes it worth more

57
Q

What is job production?

What are the advantages and disadvantages of Job?

A

Making a unique and specific product to the customers order

Advantages - giving a unique service, meets individual requirements

Disadvantages - takes time, expensive, need to train staff

58
Q

What is batch production?

What are the advantages and disadvantages of batch?

A

Making a specific quantity of a product

Advantages - no storage, quicker than job production, economies of scale

Disadvantages - down time between batches, timings have to be correct

59
Q

What is mass/flow production?

What are its disadvantages and advantages?

A

Making very large quantities of the same product on the one machines

Disadvantages - expensive machinery
Staff needs to be retrained
Limited product choice

Advantages - economies of scale, more output, more efficient and reduces labour costs

60
Q

What is specialisation?

A

Where a firm or country focuses on the production of a small range of products

61
Q

What is the division of labour?

A

Where production is split up into sections and an individual worker would undertake that particular section in production

62
Q

What are the Advantages and disadvantages of division of labour?

A

Advantages - more efficient, higher output, higher quality

Disadvantages - staff need training, a bad person effects everyone, lack of replacements, lack of creativity

63
Q

Why is good customer service good?

A
  • increased sales
  • customer retention
  • enhanced public image
64
Q

What are the problems in providing good customer service?

A
  • It may be taken as standard (not Usp)
  • costs money
  • need extra staff
  • gives customers a sense of entitlement
65
Q

What is contingency planning?

A

A plan B in case something goes wrong

66
Q

What is critical path analysis?

A

Measures the most efficient way of completing a project

67
Q

What are the advantages and disadvantages of critical path analysis?

A

Advantages - reduces the risks and costs
Encourages careful assessment of the project, helps identify which activities have float

Disadvantages - relatability of CPA is based on estimates, does not guarantee the success of the project.

68
Q

What is PERT?

A

Program
Evaluation
Review
Technique

69
Q

How is the estimated duration of a project calculated?

A

(Optimistic time + 4) x (likely time) + (pessimistic time)/6

70
Q

How could productivity be increased?

A
  • make the workplace more efficient through ergonomics
  • reduce the number of distractions
  • offer support and set realistic goals
  • have the right equipment for the job
71
Q

Examples of internal economies of scale?

A
  • purchasing
  • marketing
  • managerial
  • financial
  • risk
72
Q

Example of external economies of scale?

A
  • transport

- relocation of suppliers

73
Q

What are diseconomies of scale?

A

When a very large business activity makes your average costs go up

74
Q

How do you work out break even?

A

Fixed costs + variable costs

75
Q

What is margin fo safety?

A

How many products are you above the breakeven point

76
Q

What is quality control?

A

Checking the quality once the product has been made - sampling

77
Q

What is quality assurance?

A

Putting systems in place in advance to guarantee the quality whilst the product is being made

78
Q

What is lean production?

A

Being as efficient as possible with minimum wastage time, money, stock. Helps ensure efficiency and minimum cost

79
Q

What is JIT production?

A

Involves keeping stock to a minimum and the raw materials ordered when they are needed. It means only buying supplies when you need them

80
Q

What is total quality management (TQM)?

A

Everybody is involved in checking quality when they work. The product will move down the line when it heads been through checks

81
Q

Advantages and disadvantages of TQM?

A

Advantages

  • lowers costs
  • reduces problems with customers
  • increased customer satisfaction

Disadvantages

  • increases time
  • increases labour costs
  • machinery may be expensive
82
Q

How do you calculate the average level of stock?

A

Max level + min level of stock/2

83
Q

What are examples of external standards?

A

BS,EN and ISO

BSI - ensures the quality of the product
EN - made within the EU
ISO - so the consumer knows its gone under quality checks

84
Q

What is bench marking?

A

Comparing a business with that of a competition that is usually the market leader, in order to improve its own practices. It involves setting standards for the performance of the business.

85
Q

How do you work out wastage rate?

A

Rejects/total number of products x 100

86
Q

What is zero defects?

A

Where the system is so efficient, there is a guarantee of zero mistakes

87
Q

What are quality circles ?

A

Team of workers review last weeks performance and suggest Improvements.

88
Q

What is capacity utilisation?

A

What % of potential output is the business currently using

89
Q

How do you work out capacity utilisation?

A

Actual output/potential output x 100

90
Q

How do you work out productivity?

A

Number of goods produced/average number of employees x 100

91
Q

What are the advantages of being at full capacity?

A
  • production costs may fall
  • prevents wastage
  • increases the profitability of the business
92
Q

What are the disadvantages of being at full capacity?

A
  • customers may have been turned away
  • communication problems
  • no flexibility for extra demand
93
Q

What is logistics?

A

Controls the effective flow and storage of goods between the point of origin and the point of consumption

94
Q

What is procurement?

A

The process of selecting suppliers whom you can buy from, establishing the payment terms and negotiating the contracts and actual purchasing goods

95
Q

What is outsourcing and subcontracting?

A

Outsourcing - paying a factory to do the work

Subcontracting - employing a firm or person outside the company to do the work

96
Q

What is off-shoring and re-shoring

A

Off-shoring - some of the companies processes move abroad

Re-shoring - moving the business back to the country of origin

97
Q

What are operational objectives?

A

Specific production targets set by an organisation to ensure that its company’s goals are achieved.

98
Q

What are cost and volume targets?

A

Productivity and efficiency, unit costs per item.

99
Q

What are quality targets?

A

scrap/defect rates

100
Q

What is ergonomics?

A

The process of designing or arranging workplaces and systems so that they fit the workers who use them

101
Q

What is waste management?

A

Actions required too manage waste from its inception to its final disposal

102
Q

What is hazardous waste?

A

Waste with potential threats to public health or the environment.

103
Q

What are problems with waste management?

A

Costs of green technology
Situations are long in the future
Waste management costs are high
Waste management is “a business” as well and need paying

105
Q

When might you use porters five forces model?

A

When a business is thinking of moving into a new sector.

106
Q

What is management by objectives?

A

System where managers and employees define and agree a series of objectives for the business

107
Q

What are the advantages of Management by objectives?

A
  • improve motivation of the employee
  • involves management and employees in communication about the targets and increases interaction and involvement for both groups
108
Q

What is internal audit?

A
  • allows the business to assess its strengths and weaknesses in relation to its competitors across the whole of the business.
109
Q

Why is setting objectives good?

A
  • it provides a greater sense of direction for the business
  • provides a possible motivational force for al employees
  • provides an aide to controlling existing and future operations in the business
110
Q

What is an objective?

A

Set for a business to reach a particular goal.

111
Q

What is a strategy?

A

Is an action plan that the business puts in place to reach its objectives.

112
Q

What does PEST stand for?

A

Political
Economic
Social
Technological

113
Q

What is a business plan?

A

A formal written document that explains in detail how a business is going to achieve its objectives.

114
Q

What are the benefits of a strategic review?

A
  • enables analysis of the key performance indicators from all of the four functional areas in the firm
  • enables a consensus among senior managers
  • identification of “good practice”
115
Q

Why is a plan important for the business’s stakeholders?

A

It allows them to see the direction and future plans of the business.

116
Q

What are the advantages of a business plan?

A
  • gives the business a sense of direction
  • forces an evaluation of current strategic and tactical objectives
  • forces senior managers to explicitly consider the constraints faced by the business in reaching its objectives
  • encourages communication
117
Q

What are the disadvantages of a business plan?

A
  • opportunity cost
  • time consuming
  • may not allow flexibility
118
Q

What is an opportunity cost?

A

The cost of the next alternative foregone. The opportunity cost of planning is that the time spent on it could have been spent on some other activity

119
Q

What is a plan do review process?

A

A method used to achieve key departmental tasks which should mean that the business reaches its strategic objectives

120
Q

What are the advantages of plan do review process?

A
  • the approach is methodical
  • more focused on achieving results
  • means deviations from the plan can be identities and corrected
  • encourages continuous improvement to the business
121
Q

What are the disadvantages of plan do review process?

A
  • lengthy process
  • opportunity cost
  • inflexible
  • Some employees may dislike the ongoing review process of their work
122
Q

What is contingency planning?

A
  • planning for “what will happen if things go wrong?” This means that an agreed course of action is in place and is ready to be used if necessary.
123
Q

What is “firefighting”

A

Where a manager spends time and other resources trying to fix unforeseen problems and “emergencies.” With appropriate contingency planning this sort of situation can be avoided

124
Q

What are some solutions of a crisis?

A
  • ensuring that insurance policies are up to date
  • keeping spare cash
  • private health care for key employee
125
Q

What are the three elements in an effective response to a crisis?

A

Operational response
Management response
Communications response

126
Q

What is uncertainty?

A

The inability to calculate the costs and benefits of a decision precisely.

127
Q

What is risk and what is reward?

A

Risk - the chance or possibility to an adverse occurrence

Reward - the possible return that a particular activity may make

128
Q

What is a quantifiable and unquantifiable risk?

A

Quantifiable - Likelihood of a predictable rise occurring. It is possible to put a value on this sort of risk
Unquantifiable - the risk of an event that is unexpected. Sometimes referred to as “the unknown unknowns” it is not possible to put a value on this sort of risk.

129
Q

What are some examples of qualitative forecasting?

A
  • Delphi technique (expert from information)

- brainstorming

130
Q

What are the 4 different outcomes in Ansoffs matrix?

A

Market penetration
Market development
Product development
Diversification

131
Q

What are the limitations of forecasts?

A
  • any forecast will only be as reliable as the data that is used to formulate it
  • past performance is only an indicator
  • not 100% accurate
  • doesn’t take into account any changes in the objectives of businesses
132
Q

What is a decision tree?

A

Technique used to aid the decision making process

133
Q

What are the two aspects of a decision tree?

A
  • the probability of a particular outcome

- estimates monetary reward for the chosen choice

134
Q

What is an advantage of decision trees?

A
  • technique is usually drawn making it a visual presentation.
135
Q

What do squares and circles represent in decision trees?

A

square - represents a decision

Circle - represents the possible outcomes once an option is selected

136
Q

What are the benefits of using decision trees?

A
  • it is simplistic and a visual method
  • relatively quick and therefore cost effective
  • takes into account the level of risk
137
Q

What are the limitations of using decision trees?

A
  • probabilities may be wrong (not 100% accurate)
  • when picking probabilities management may favour one more than another
  • EMV (estimated monetary value) may be difficult to estimate as other variables come into play.
138
Q

In decision trees how do you calculate the “expected values”?

A

Estimated monetary value x probability

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