2022 mocks Flashcards
1
Q
define liability
A
refers to the responsibility of the owners of the business for its potential debt and finance, that governed by its legal status.
2
Q
define limited liability
A
the business and the owner’s are seen as separate in the eye of the law meaning that the owner’s aren’t personality responsible for any debts of the business
3
Q
define unlimited liability
A
refers to when a business and the owner are seen as one under the law, meaning the owners are legally reasonable for any debts.
4
Q
evaluation of limited liability
A
+ avoid losing personal belonging when making risky business decisions
- some business may be better suited to staying small
- cost of becoming an limited liability business
5
Q
define a business plan
A
a document setting out a business ideas and showing how it is to be financed, marketed and put into practice
6
Q
what are the 9 elements of a business plan
A
- executive summary
- business ideas and opportunities
- aims and objectives
- markets research
- financial research
- sources of finance
- premises and equipment
- personnal
- buying and production
7
Q
strength of using a business plan
A
\+ useful for monitoring performance \+ help avoid risks \+ help gain a competitive advantage \+ beneficial for start up or small business - help gain finance \+ help to determine cashflow
8
Q
weakness of using a business plan
A
- expensive and time consuming to make
- doesn’t guarantee success - guessimates
- doesn’t take into account changes in economic and market factors.
9
Q
cash flow
A
the movement of money in and out the business
inflows - outflows = net cash flow
10
Q
what is a sale forecast
A
is a method of estimating future sales
11
Q
purpose and benefits of sale forecasts
A
enables the business to make decision about
- productive capacity
- stock needed
- staffing levels
- promotional activity
links to a business’s cash flow, revenue and profits
12
Q
factors affect sales forecasts
A
- consumer trends - short medium and long term
- economic variables
- actions of competitors
13
Q
difficulties /weaknesses of sales forecasting
A
- reduce risk but don’t guarantee success
- use the past to predict the future (new +old
business) - difficult to predict the long term in a dynamic market
14
Q
extrapolation
A
the most common form of sale forecasting
- predicting the future.
15
Q
define profitability
A
is the relationship between profit and revenue and is linked to the size of the business
16
Q
calculate gross profit
A
gross profit = revenue - cost of sales
17
Q
calculate operating profit
A
operating profit = gross profit - other operating expenses
18
Q
calculate profit for the year
A
profit of the year = operating profit + expenditures items - interest payables
19
Q
calculate gross profit margins
A
gross profit margins = gross profit / revenue x100
20
Q
calculate operational profit margin
A
operational profit margin = operational profit / revenue x100
21
Q
calculate the profit of the year margin
A
(total revenue - total expenses)/ total revenue = profit of the year margin ( net)
22
Q
Ansoff corporate strategy
A
growth strategy
product - existing/ new
market - existing/ new
market development
market penetration
product development
diversification
23
Q
market penetration- Ansoff
A
existing product + existing market
focuses on the marketing mix (4 p’s) to increase market shares
24
Q
market development - Ansoff
A
aim to increase sale of the current product portfolio
new - geographical market , product dimensions, distribution channels, pricing policies
relies on understanding local interests, habits, tastes and needs
25
product development - Ansoff
new product + existing market
significantly modifying a product in an existing market
- expensive research + developments costs + investment in promotions
approaches - developing related products or new model of an existing product
26
diversification - Ansoff
new product and market
most risky - business will have little to no experience in the market
related = similar product range (forward backward or horizontal integration)
unrelated product = completely different product range (conglomerate integration)
27
what does SWOT analysis stand for
```
S= strength - internal positive
W= weakness - internal negative
O= opportunities - external positive
T= threats - external negative
```
28
define SWOT analysis
is a method of analyzing a business, its resources and environment.
It focuses on internal strength and weakness of a business and on key external opportunities and threats.
- analytical technique to support strategic decision - should be devised around strengths and opportunities.
29
how to use SWOT analysis
match - strengths with opportunities
| convert - weaknesses to strengths
30
what does SWOT analysis aim to achieve
- to see what a business do better than competitors
- competitors do better
- where it is making the most of the opportunities available.
- how a business should respond to change in its external environment
31
what issue can arise from rapid growth
- diseconomies of scale
- overtrading
- problems with internal communications
32
define diseconomies of scale
the inefficiencies related to growing as a business that can lead to upwards pressure on cost per units.
- lack of control, flexibility and poor motivation
33
define overtrading
is when a business experiences cash flow problems as a result of expanding to quickly without sufficient cash in the bank.
- led to the business being unable to function as it will not be able to pay employees, buy stock etc.
34
what is a expected monetary value (EMV) - decision tree
This is the financial outcome based on the predicted profit or loss or net cashflow
35
what is net profit - decision tree
this is the expected monetary value minus the cost of the decision
36
how to complete a decision tree
1. multiply the expected probability of each decision by the expected profit/loss/net cashflow
2. add these values of each outcome together to get your EMV
3. deduct the cost of the decision, To get your net gain
4. compare the EMV or net gain of each outcome - the higher value choice should be chosen as it has the largest return. cross through the second option
37
what are the two types of corporate timescales
short-termism
| long-termism
38
define short-termism
where firms make decisions to increase financial performance over a short time periods, often at the expense of long term performance
39
define long-termism
when a firm concentrates on the overall performance of the business, rather than just its short term financial state.
40
short-termism methods
- reduce prices to entice costumers
- seek cheaper materials to widen profit margins
- freeze employees pay
- paying extra dividends to shareholders
41
long-termism methods
- differentiate their product
- build and develop a distinctive brand
- investment in technology and market research
- reinvest profit to expand capacity
42
define evidence based decision making
an approach to decision making that involves collecting information and using it systematically
43
define subjective decision making
an approach to decision making where the personal options of the key decision maker influences the course of action chosen.
44
define corporate culture
is the spirts, attitudes, behaviors and the other ethos of an organisation
45
define a strong corporate culture
a culture where the values, beliefs and ways of working are deeply embedded within the business and its employees
46
define a weak corporate culture
when the core values are not clearly defined, communicated or widely excepted by those working for the organisation
47
characteristics of a strong corporate culture
- staff stick together and work together during times of crisis
- productively
- staff retention / low labour turnover
48
characteristics of a weak corporate culture
- staff doubting the company's ethos and principles
- rigid procedures resented by staff
- high chances of conflict and clashes occurring
- high labour turnover
49
what are the four types of company culture
1. power
2. role
3. task
4. person
50
define and state characteristic of power culture
where a central source of power is districted between a few individuals.
+has an autocratic leadership and a political atmosphere, works well with an effective leader
- some employees may lack confidence in the manger as they have loss touch with the day to day of the business.
51
define and state characteristics of role culture
is a business that is dominated by rules and procedures that they expected the employees to follow.
+ allow the employee to have clarity on what is expect of them.
- employees don't have the change to be involved in decision making.
- issues with communication as there is a long chain of command
52
define and state characteristics of task culture
a focuses on using a teamwork and individual strengths to adapt quickly and problem solve.
+ work together so are able to understand the preceptive of all functioning areas
+ adapt to change well
- supervision is need as employees may get sidetracked.
-conflict between employees.
53
define and state characteristics of person culture
is an organisation where the employees are highly skilled and share their expertise to help other individuals.
+ highly motivated staff
- difficult to change - staff may be resistant
54
define labor turnover
the proportion of staff leaving the business over a period of time
(a business would want a low labour turnover)
55
how to calculate labor turnover
number of staff leaving over a period of time / average number of staff of a period of time x100
= labour turnover %
56
what can cause a labor turnover
- poor recruitment or selection procedures
- lack of training or promotion opportunities
- poor motivation or leadership
- low wages/ poor working conditions
- large demand of workers in a certain industry - workers can easily swap
57
drawback of high labor turnover
1. recruitment cost and time
2. training cost/ induction
3. poor reputation - struggle to employ workers
4. lower productivity - time for new employees to become efficient (6 months)
58
benefits of labor turnover
new ideas and experiences
| get rid of inefficient workers
59
what is employee share ownership
a HR strategy to improve employee performance,
where employees are paid in shares if the business reaches a important performance target such as growth in revenue, profit or share price
60
benefits of employee share ownership
decrease in labor turnover
| increased loyalty to business for promotion
61
disadvantages of employee share ownership
- long term strategy - takes up to 3 to 5 years to implicate
- may not improve the productivity of lazy employees as they rely on their colleges to the work
62
what motivational theorist would have liked employee share ownership
Taylor
63
what is the empowerment strategy
an HR strategy to improve employee performance - grants employees more authority
involves making better use of the knowledge, experience and creative talents of employees
working environment = positive, motivated and productive
- led to further delegation as employee can implement their ideas
64
benefits of the empowerment strategy
employees feel more valued - greater reasonability + provide opportunity for advancement -asset
increase the efficiency - as workers have control over their working ties
65
drawback of their empowerment strategy
training and development - may be required as employees may not have the skilled or knowledge
trust is the large part of the process - worker may need supervision
66
what to motivation strategy is linked to empowerment strategy
Maslow
| Herzberg - 2 factors = hygiene and motivators
67
define motivation
the desire, interest or drive to want to work
68
Taylor - theory of motivation
scientific management
money motivates
work should be organized:
- tasks in small and repetitive parts - a payment system that rewards worker
Taylors ideas are not liked by the workers as they feel like machinery and are denied opportunities
69
Mayo - theory of motivation
human relations theory
stemmed from on range of experiment into effectiveness
he found more factors affecting performer, than just money
important of interpersonal relations - workers gain satisfaction through freedom and control
- work more efficient as a team
70
Maslow's - theory of motivation
hierarchy of needs
self actualization- self esteem - social need - safety and security need- physical needs
human behavior in the terms of needs - one need to be meet to move onto the next
71
Herzberg - theory of motivation
two factor theory
motivation - is doing something because you want to do it - distinguished it from movement.
to something to be rewarded or avoid punishment - motivated workers give their best at all time to solve problems and embrace change.
factors affecting work - motivators and hygiene factors
