3.1 + 3.2 Flashcards
Aims definition
a generalised statement of where a business is heading
Mission definition
overall purpose of the business
Vision definition
overall vision of the business
Corporate objectives definition
more precise and detailed statements of aims/goals
Functional objectives definition
set for each key business function and are designed to ensure that corporate objectives are achieved
Stake holder definition
someone who has interest in the success of the business. If the business does well they do well
SMART
specific
measurable
agreed
related
time
Mission statement definition
a small passage of text sets out the overall purpose of the organisation
Ansoff’s matrix definition
a market planning model that helps a business determine its product and market strategy
Equity definition
person giving money (shareholder) gets percentage of the business
true of false equity is not in exchange for dividends
false
what is a profit statement
- aka income statement
- costs/revenues
- covers one year
- calculates profit or loss
what is a balance sheet
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
Goodwill definition
the idea that a business already has a good reputation
Label a balance sheet
Non-current assets
-current assets share capital
-current liabilities profit (reserves)
-non=current liabilities
-net assets capital and reserves
Accruals definition
debt from a separate financial period
Market mapping definition
a grid comparing two extremes (e.g quality and cost) to identify the gap in the market/competition
What are the 4 main points of Ansoff’s matrix
- Market development
- Product development
- Diversification
- Market penetration
Market penetration definition
existing product to existing market
Market development definition
existing products to new market
Product development definition
new products to existing market
Diversification definition
new products to new markets
Synergies definition
= The when two or more businesses combine and are worth greater than the individual sum of each
benefit of brand diversification
- if one brand performs badly, other brands can continue to perform as they used to
risks that geographical diversification can bring (2)
-more political risk
-more economic risk
what are the 5 main types of economies of scale ?
-technical
-purchasing
-managerial
-financial
-marketing
what is economies of scope ?
= when a business is able to spread its costs over several markets or products
managerial economies of scale meaning
= when a business is large enough and able enough to introduce specialist staff for each of its functions
purchasing economies of scale definition
= when a business is able to take advantage of bulk ordering discounts
technical economies of scale meaning
= when a business is able to adopt advanced technological approaches to production as a result of their scale and size
diseconomies of scale meaning
= when a company or business grows so large that the costs per unit increase
objectives for business growth (4)
-gain economies of scale
-market power
-market share and brand
-profitability
problems with growth
-diseconomies of scale
-lack of communication
-overtrading (businesses over spending)
merger definition
when one business joins another
takeover definition
when one business purchases another, owning over 50%
vertical integration meaning
acquiring a business at a different stage of the supply chain
horizontal integration meaning
acquiring a business at the same stage
forward vertical integration
acquiring a business further up the supply chain
backward vertical integration
acquiring a business earlier in the supply chain
benefits of horizontal integration
-EOS
-potential to secure synergies
-wider range of products
benefits of vertical integration
-create barrier to entry
-greater insights to customer needs
-secure sources of supply or distribution
methods to gain EOS (6)
-bulk buying/purchasing
-technical EOS
-specialization/managerial
-financial EOS
-marketing EOS
-risk bearing
problems that can arise from business growth (5)
-dis. EOS
-lack of motivation
-lack of co-ordination
-less effective communication
-overtrading
porters 5 forces
-bargaining power of suppliers
-bargaining power of buyers
-threat of new entrants
-threat of substitutes
-rivalry among existing businesses
problems with growth (5)
-diseconomies of scale
-lack of motivation
-lack of communication
-lack of co-ordination
-overtrading
positives of vertical integration (3)
-create barrier to entry
-greater insights to customer needs
-secure sources of supple distribution
positives of horizontal integration (3)
-EOS
-secure synergies
-wider range of products
