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Business Studies AQA A-Level > 3.7 > Flashcards

3.7 Flashcards

1
Q

Strategy

A

Medium to long term
aims to achieve corporate objectives

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2
Q

Tactics

A

Short term plan to implement strategy

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3
Q

Put into order: strategic decisions, function decision, objectives

A

Corporate objectives- eg increase sales by 5%
Strategic decisions- eg increase production capacity
Functional decisions- eg HR recruit more peeps

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4
Q

SWOT

A

Internal strengths and weaknesses
External opportunities and threats

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5
Q

Balance sheet

A

Snapshot of a firms finances at a fixed point in time
All business assets and liabilities to show its value of capital

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6
Q

Net asset value - Balance sheets

A

(Fixed assets + Current assets) - (Current liabillties + Non current liabilities)

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7
Q

Total equity - Balance sheets

A

Always equals Net assets
is the share capital and reserves (shows where the business got the finance)

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8
Q

Working capital - Balance sheets

A

net current assets (current assets - current liabilites)

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9
Q

Income statements

A

Shows rev and expenses across a financial year- takes into account seasonal fluctuations

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10
Q

Calculations for Income statements

A

Gross Profit
Operating profit
Profit before tax
Profit after tax
Retained profit

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11
Q

What doesn’t a balance sheet provide

A

Information about the market health or the economy
If bad debts are included in the balance sheet it will be misleading

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12
Q

What doesn’t an income statement show

A

External factors such as demand and the economy
income statements can be distorted in times of high inflation

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13
Q

Liquidity ratios

A

Current ratio= current assets/current liabilities

Liquidity is to determine how easily a business can pay bills without using fixed assets

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14
Q

Profitability rations

A

Profit margins eg gross profit margin, operating profit margin
ROCE (Return on capital investment)= operating profit/(total equity +non current liabilities)*100

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15
Q

Efficiency of performance ratios (inventory turnover)

A

Inventory turnover = Cost of sales/ cost of avg stock held

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16
Q

Payable days and Receivable days

A

PD= Payables/cost of sales365
RD= Receivables/sales rev365

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17
Q

Gearing ratio

A

Gearing= non-current liabilities/(total equity+non-current liabilities)
over 50% is high
How much of funding is from loans

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18
Q

.

A

.

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19
Q

Political and legal influences on a business

A

Competition laws
CMA to prevent monopolies
Laws protecting workers, the environment, noise pollution ect

20
Q

Competition laws

A

Can’t price fix
Can’t limit production/divide up the market to avoid competition

21
Q

Laws to protect consumers

A

Trade descriptions
Sales of goods
Consumer protection act
GDPR

22
Q

Labour laws

A

Equality
Fair recruitment
Minimum wages
Correct process for redundancies
Fair contracts
Working hours

23
Q

Natural monopolies

A

eg gas water energy
Regulated to ensure there is a standard met and consumers aren’t exploited

24
Q

What are core competences

A

features of a business which are hard for competitors to replicate- an example is shared knowledge in the business; if you have the best technology experts, then competitors will struggle to compete with that knowledge

25
Q

Importance of core competencies

A

provides a sustainable competitive edge, can change over time dependant on the demands of customers

26
Q

Kaplan and Norton Balance Scorecard

A

looks at assessing a business’ performance by both financial and non-financial factors

27
Q

The 4 perspectives of Kaplan and Norton

A

Financial perspective
Internal business process perspective
Learning and growth perspective
Customer perspective

28
Q

Financial Perspective

A

“how do we create value for shareholders”
- profitability
- Measure with ROCE
- Target might be increase ROCE by 3%
- initiatives could include promotional campaigns, improve efficiency of production

29
Q

Internal Business Perspective

A

“how can we improve our processes”
- look at efficiency
- Measure with capacity utilisation, unit costs, productivity
- Target could be increase Labour Productivity by 10%
- Initiatives could include looking at different production methods, new technology, offshoring, outsourcing etc

30
Q

Learning and Growth Perspective

A

“how can we continue to grow and improve”
- employee development
- labour retention, training opportunities
- increase retention
- training, organisational structure

31
Q

Customer Perspective

A

“what do our customers value about the business”
- improve customer loyalty, attract new customers
- measure market share, number of new customers vs repeat customers
- initiatives could involve delivery times, quality of product, focusing on value for money

32
Q

Elkington’s Triple Bottom Line (ETBL)- 3P’s

A

Profit
People
Planet
- highlighting the importance of non-financial measures as well as financial

33
Q

ETBL - Profit

A

traditional financial/economic value produced by the business

Elkington was aware that Profit is important for business however he criticises the sole focus on Financial measures

34
Q

ETBL- People

A

measures a company’s social values and it’s ethics, how it treats employees and the local community, CSR would be involved here

Elkington wanted a business’ overall performance to measure it’s effect on all stakeholders, not just their shareholders

35
Q

ETBL- Planet

A

measures the company’s environmental impact and values- again CSR would be involved here

Elkington focuses on sustainability for business performance, which looks at multiple stakeholders, the ideal is for all three to be well balanced

36
Q

Economic environment

A

The impacts of the economic environment on business
economic growth or decline- influences on consumer consumption, security, and employee relations

36
Q

Economic environment

A

The impacts of the economic environment on business
economic growth or decline- influences on consumer consumption, security, and employee relations

37
Q

What is GDP

A

Gross Domestic Product
indicates the size of the economy for a country
a universal measure

38
Q

The life of the economy (normally using a graph)

A

growth vs time
boom-> recession-> slump-> recovery-> boom…
economies almost always grow over time, long term trend line will often be going up

39
Q

How does certain stages of the economy affect business

A

Boom- high confidence, high demand, high wages due to skilled labour shortages
Recession- confidence decreases meaning demand reduces, less spending, difficulties with producing
Slump-redundancies, very low confidence, unemployment high
Recovery- production increases, confidence slowly returns, employment increases, demand grows

the extent of how the business is affected depends on the price elasticity of demand
inelastic goods are least affected by economic environment

40
Q

SPICED

A

Strong
Pound
Imports
Cheaper
Exports Dearer

41
Q

Opportunities and threats- social and technological
SOCIAL

A

Demographic changes and opportunities and threats change with these
increase in senior citizens= business use special rates to entice them (price discrimination)
demographic alters lifestyle and buying behaviour

41
Q

Opportunities and threats- social and technological
SOCIAL

A

Demographic changes and opportunities and threats change with these
increase in senior citizens= business use special rates to entice them (price discrimination)
demographic alters lifestyle and buying behaviour

42
Q

Urbanisation and Migration

A

business’ may choose to close branches or reduce outlets in rural areas if most of their customers are in urban places
production may be moved to rural areas as it is cheaper land - may choose to stay close to urban areas to increase labour available

43
Q

Technological opportunities and threats

A

new tech = new products, improved processes, customisation, new markets, e-commerce, new data to research and assess (loyalty schemes)
risks- costs, impacting staff morale if technology is replacing them
opportunities- better customer experience, reduced unit costs, productivity, new areas for growth

44
Q

Carroll’s Pyramid of CSR

A

Philanthropic responsibilities
Ethical responsibilities
Legal responsibilities
Economic responsibilities

main arguments:
- societal expectations for businesses, can’t be ethical without being legal, cant be legal without survival
- main against is that some businesses do philanthropic gestures but are not ethical to staff/environment etc

45
Q

Porter’s Five Forces

A

Barriers to entry + Buyer power + Supplier power + Threat of substitutes= Competitive environment

substitutes is a different product- not a direct competitor eg transport industry, trains are a sub for cars, bikes are a sub for cars/buses etc

Business Studies AQA A-Level (8 decks)

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