3.1 + 3.2

Question 1

Aims definition

Answer 1

a generalised statement of where a business is heading

Question 2

Mission definition

Answer 2

overall purpose of the business

Question 3

Vision definition

Answer 3

overall vision of the business

Question 4

Corporate objectives definition

Answer 4

more precise and detailed statements of aims/goals

Question 5

Functional objectives definition

Answer 5

set for each key business function and are designed to ensure that corporate objectives are achieved

Question 6

Stake holder definition

Answer 6

someone who has interest in the success of the business. If the business does well they do well

Question 7

SMART

Answer 7

specific
measurable
agreed
related
time

Question 8

Mission statement definition

Answer 8

a small passage of text sets out the overall purpose of the organisation

Question 9

Ansoff’s matrix definition

Answer 9

a market planning model that helps a business determine its product and market strategy

Question 10

Equity definition

Answer 10

person giving money (shareholder) gets percentage of the business

Question 11

true of false equity is not in exchange for dividends

Answer 11

false

Question 12

what is a profit statement

Answer 12

• aka income statement
• costs/revenues
• covers one year
• calculates profit or loss

Question 13

what is a balance sheet

Answer 13

aka statement of financial position
- assets + liabilities
- a snapshot of one moment in time (very short term)
- shows net worth of the value of the business

Question 14

Goodwill definition

Answer 14

the idea that a business already has a good reputation

Question 15

Label a balance sheet

Answer 15

Non-current assets

-current assets share capital
-current liabilities profit (reserves)
-non=current liabilities

-net assets capital and reserves

Question 16

Accruals definition

Answer 16

debt from a separate financial period

Question 17

Market mapping definition

Answer 17

a grid comparing two extremes (e.g quality and cost) to identify the gap in the market/competition

Question 18

What are the 4 main points of Ansoff’s matrix

Answer 18

• Market development
• Product development
• Diversification
• Market penetration

Question 19

Market penetration definition

Answer 19

existing product to existing market

Question 20

Market development definition

Answer 20

existing products to new market

Question 21

Product development definition

Answer 21

new products to existing market

Question 22

Diversification definition

Answer 22

new products to new markets

Question 23

Synergies definition

Answer 23

= The when two or more businesses combine and are worth greater than the individual sum of each

Question 24

benefit of brand diversification

Answer 24

• if one brand performs badly, other brands can continue to perform as they used to

Question 25

risks that geographical diversification can bring (2)

Answer 25

-more political risk
-more economic risk

Question 26

what are the 5 main types of economies of scale ?

Answer 26

-technical
-purchasing
-managerial
-financial
-marketing

Question 27

what is economies of scope ?

Answer 27

= when a business is able to spread its costs over several markets or products

Question 28

managerial economies of scale meaning

Answer 28

= when a business is large enough and able enough to introduce specialist staff for each of its functions

Question 29

purchasing economies of scale definition

Answer 29

= when a business is able to take advantage of bulk ordering discounts

Question 30

technical economies of scale meaning

Answer 30

= when a business is able to adopt advanced technological approaches to production as a result of their scale and size

Question 31

diseconomies of scale meaning

Answer 31

= when a company or business grows so large that the costs per unit increase

Question 32

objectives for business growth (4)

Answer 32

-gain economies of scale
-market power
-market share and brand
-profitability

Question 33

problems with growth

Answer 33

-diseconomies of scale
-lack of communication
-overtrading (businesses over spending)

Question 34

merger definition

Answer 34

when one business joins another

Question 35

takeover definition

Answer 35

when one business purchases another, owning over 50%

Question 36

vertical integration meaning

Answer 36

acquiring a business at a different stage of the supply chain

Question 37

horizontal integration meaning

Answer 37

acquiring a business at the same stage

Question 38

forward vertical integration

Answer 38

acquiring a business further up the supply chain

Question 39

backward vertical integration

Answer 39

acquiring a business earlier in the supply chain

Question 40

benefits of horizontal integration

Answer 40

-EOS
-potential to secure synergies
-wider range of products

Question 41

benefits of vertical integration

Answer 41

-create barrier to entry
-greater insights to customer needs
-secure sources of supply or distribution

Question 42

methods to gain EOS (6)

Answer 42

-bulk buying/purchasing
-technical EOS
-specialization/managerial
-financial EOS
-marketing EOS
-risk bearing

Question 43

problems that can arise from business growth (5)

Answer 43

-dis. EOS
-lack of motivation
-lack of co-ordination
-less effective communication
-overtrading

Question 44

porters 5 forces

Answer 44

-bargaining power of suppliers
-bargaining power of buyers
-threat of new entrants
-threat of substitutes
-rivalry among existing businesses

Question 45

problems with growth (5)

Answer 45

-diseconomies of scale
-lack of motivation
-lack of communication
-lack of co-ordination
-overtrading

Question 46

positives of vertical integration (3)

Answer 46

-create barrier to entry
-greater insights to customer needs
-secure sources of supple distribution

Question 47

positives of horizontal integration (3)

Answer 47

-EOS
-secure synergies
-wider range of products