3.0 revision

Question 1

Calculation for output per employee

Answer 1

Total value of output/ total number of employees

Question 2

Labour cost per unit of output

Answer 2

Total labour cost/ total output

Question 3

What is share capital

Answer 3

Raising finance via selling shares of a business

Question 4

Issues of share capital

Answer 4

Loss of control, time consuming, future profits now shared

Question 5

advantages of share capital

Answer 5

Can control amount of shares released, no interest of money gained, can help business grow through flotation

Question 6

What is a Loan

Answer 6

Amount of cash borrowed from a bank with a set time frame and interest rate

Question 7

Advantages of loan

Answer 7

Quickly raise finance, long term payment, reliable financial source

Question 8

Disadvantages of loan

Answer 8

Interest on cash borrowed, may need to use collateral to pay

Question 9

Gearing meaning

Answer 9

Proportion of finance that is provided by debt within a business

Question 10

Organic growth

Answer 10

expansion of business oer period of time by expanding its reach to customers markets and employees

Question 11

Inorganic growth

Answer 11

Business expands through merging or taking over another business from same or different markets

Question 12

Advantages of organic growth

Answer 12

Avoids risk of merging, cheaper, retains company culture, easier to plan, more market share comes with more influence in market

Question 13

Disadvantages of organic growth

Answer 13

high risk, capital intensive opening many new stores and employees at once, growth is limited to sales forecast predictions, new markets and country’s dangerous to enter, llong time period before recieve money on your investment

Question 14

Advantages of inorganic growth

Answer 14

Fast growth, lower costs on setting up stories already there, economies of scale, increased market share

Question 15

Disadvantage of inorganic growth

Answer 15

Difficult to change company culture, high financial risk, communication issues, less control (lead to diseconomies of scale)

Question 16

What is merger

Answer 16

agreement between shareholders and managers to bring 2 businesses together under 1 board with shareholders in both businesses. (Bringing 2 company’s into 1 big one)

Question 17

What is takeover

Answer 17

when a company buys over 50% of shares in another company and becomes its controlling owner

Question 18

Types of merger

Answer 18

backwards verticle (become own supplier), horizontal (same business), lateral (similar but not competition),
Forwards verticle (closer to company/more interactive), conglomerate (different type of business)

Question 19

What is stockholder

Answer 19

Anyone with an interest in business or may be effected by its activities

Question 20

What is shareholder

Answer 20

A person, business or organisation with at least one owned share in a company (financial stake in business)

Question 21

Internal stakeholders

Answer 21

employees, managers, owners

Question 22

External stakeholders

Answer 22

government, customers, suppliers, local community, competition, environment

Question 23

Stakeholder conflicts

Answer 23

all stakeholders have different objectives which can lead to conflict within a business

Question 24

Why might stakeholders conflict

Answer 24

shareholders want high returns, employees high earnings and managers high rewards, as well as high quality and low price for customers

Question 25

Methods of organic growth

Answer 25

Expanding into foreign markets, expansion of workforce, opening new stores/branches, new product launches