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1
Q

What services does the local government provide?

A

Local government provides services for their local community, such as:
Social setvices
Council housing
Refuse & recycling collections
Primary and secondary education
Parks

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2
Q

What services does the central government provide?

A

Central government provides nationwide services such as:
Police
Defence
Healthcare
Prisons
Roads

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3
Q

The public sector is split in to 2 distinct parts, what are they?

A

Central government and local government

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4
Q

What is the SWOT analysis?

A

SWOT is taken from the perspective of the organisation by identifying sources of opportunities and threats and analysing the organisations strengths and weaknesses.

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5
Q

Define the public sector

A

The public sector is the part of the economy that is controlled by the government. Organisations in this sector are mostly financed by using taxes people pay to the government.

The government uses this money to provide essential public services.

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6
Q

What is a public corporation?

A

Companies owned by central government are known as public corporations.

A chairperson and board of directors are appointed by a government minister to run the company on behalf of the government.

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7
Q

What are the two public sector organisations that more closely resemble private sector organisations?

A

Municipal enterprise
Public corporations

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8
Q

What are companies owned by the central government known as?

A

Companies owned by the central government are known as public corporations.

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9
Q

How are public corporations set up, run and funded?

A

A chairperson and board of directors are appointed by a government minister to run the company on behalf of the government.

An example of this is the BBC in the UK whose chair is appointed on the recommendation of the Secretary of State.

The organisation is finance through grants from the government and raising finance through charging the general public a fee for a TV licence.

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10
Q

Define a municipal enterprise

A

Municipal enterprises are businesses owned and operated by local government for the purposes of generating revenue.

For example - pay to park car parks

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11
Q

What are the advantages of municipal enterprises?

A

Creates jobs and provides services for local communities
Offers lower rates for services than a private sector equivalent might as they are run for the benefit of shareholders

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12
Q

Why is the idea of local government so running businesses that is usually regarded as a private sector enterprise controversial?

A

Critics have argued money generated from taxes should not be used to provide the capital to start these enterprises and cast doubt over whether local governments posses the skills to run them effectively and economically.

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13
Q

Provide examples of private sector organisations

A

Sole trader
Partnerships
Limited companies
Unincorporated associations
Cooperatives

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14
Q

Define the private sector

A

The private sector consists of organisations that are owned and run by private individuals. These are not under government control and are run with the intention of generating profit for the owners of the business.

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15
Q

List 3 facts about general partnerships

A

Informal arrangement between 2 or more people
Unlimited liability for all partners
No filing requirement so information is kept private

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16
Q

What are the 3 main types of partnerships?

A

General partnership
Limited liability partnership (LLP)
Limited partnership

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17
Q

What are the benefits of a partnership?

A

The benefits of a partnership is that they are easy to establish and combine the skills and resources of the partners involved.

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18
Q

Define a partnership

A

A partnership is established when 2 or more individuals combine money, resources and skills to operate and manage a business and share in the profits and losses of that business.

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19
Q

What is the difference between PESTEL vs LoNGPESTEL?

A

PESTEL does not take in to account geographical factors whereas LoNGPESTEL does.

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20
Q

What are the technological factors in a PESTEL analysis?

A

Technological factors consist of levels and advancements in technology. Changes that impact how organisations can use technology to sell products and communicate with consumers will be of particular interest in a PESTEL analysis and technological factors will be the most important factor to understand for IT based organisations.

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21
Q

What are the environmental factors in a PESTEL analysis?

A

Environmental factors look at issues such as climate change, weather patterns and ecological friendliness of products.

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22
Q

What are the legal factors in a PESTEL analysis?

A

Legal factors often overlap with political factors, but these factors specifically affect how an organisation operate, facilitates business and handles product demand.

Legal factors also include laws covering consumer protection, health and safety and data protection.

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23
Q

What are the political factors in a PESTEL analysis?

A

The political factors look at the governments regulations and legal issues affecting an organisations activities that can only be changed by political parties.

Eg tax policies, copyright and property law enforcement, political stability, trade regulations.

Everyone must abide by these laws or face legal consequences.

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24
Q

What are the economic factors in a PESTEL analysis?

A

Economic factors are anything that influence the economy.

Eg:
Taxes
Inflation rates
Stock market trends
Wage costs

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25
Q

Explain what a co-operative is

A

A co-operative is an organisation owned and run by its members. They are not run for the benefit of the shareholders and operate in the interests of the members.

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26
Q

Definite the primary sector and give examples of what examples are involved.

A

The primary sector extracts and harvest raw materials from the earth.

Farming
Fishing
Mining
Forestry

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27
Q

How are stakeholders grouper?

A

Stakeholders are often grouped and defined according to their perceived proximity to the business (internal or external) or by their connection to it (primary or secondary)

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28
Q

Define stakeholder

A

Stakeholders are individuals, groups or organisations that have an interest or ‘stake’ in a business.

They are affected by activities and policies of a business and in turn can influence decision making within the business.

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29
Q

Who is the chair and what is their role?

A

The chair leads the board and is responsible for ensuring its effectiveness as a decision-making group.

The chair sets the agenda for board meetings and acts as a liaison between the shareholders and the board, ensuring shareholders are kept informed of board decisions and that the board are aware of shareholder concerns.

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30
Q

How is a sole trader business finance and where do the profits go?

A

A sole trader is often financed using the owners personal funds (and sometimes topped up with borrowed funds, eg a bank loan).

Any profits made accrue to the owner.

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31
Q

Define a sole trader and what sector of economy it sits in.

A

Private sector

A sole trader is a business that is owned and run by one, self employed individual who may or may not employ other staff.

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32
Q

What are the negatives of focusing purely on the number of employees to determine a companies size?

A

Focusing purely on the number of employees means critical information about a company such as turnover can be ignored.

There are many organisations that may be small in terms of number of employees but generate significant amounts of revenue.

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33
Q

What are the three main sectors of the economy?

A

Public
Private
Voluntary

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34
Q

How can categorising organisations according to size help the government?

A

Categorising organisations according to size helps to inform government policy, such as tax rates for businesses and eligibility criteria for subsidies.

It is also a useful measure when analysing different types of business on the economy.

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35
Q

What does SMEs stand for?

A

Small and medium sized enterprises

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36
Q

How many employees make up a large company?

A

250+ employees

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37
Q

How many employees make up a medium organisation?

A

50 - 249 employees

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38
Q

How many employees make up a small organisation?

A

10 - 49 employees

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39
Q

How many employees make up a micro organisation?

A

0 - 9 employees

40
Q

What are the 4 main categories used to describe organisational size?

A

Micro
Small
Medium
Large

41
Q

What are the different criteria for categorising organisations in terms of size?

A

Different countries have different criteria for categorising organisations in terms of size, but number of stuff and turnover are often used as the main defining criteria.

42
Q

How can having an established objectives and documented mission and vision statements help a business (inside and outside the organisation)?

A

Inside organisation:
Assist management in developing business strategy
Develop performance measures / KPIs
Motivate and focus employees
Develop an ethical framework & culture

Outside organisation:
Encourage suppose / funding from third parties
Create closer links with customers, suppliers & other stakeholders
Basis for public relations enquiries

43
Q

Organisation objectives vary between business sectors. Explain the differences.

A

For example, in the private sector, a sole trader may be focussed on breaking even & establishing its place in the market. However, a larger more established private sector organisation may be interested in generating large profits for shareholders or pursuing growth to dominate the market.

In contrast, a voluntary sector organisation such as a charity is motivated to generate revenue to fund projects to meet its charitable purpose.

44
Q

What are the defining characteristics of a voluntary organisation?

A

The defining characteristic of voluntary organisations are:

Their voluntary nature
They are run through a trustee board
Finance through donations and grants
Through the help of volunteers

45
Q

Name 6 examples of voluntary sector organisations.

A

Charities - cancer research
Foundations - bill and Melinda gates foundation
Advocacy groups - world wildlife fund
Faith based organisations - churches
Community groups - neighbourhood watch
Recreational sports - running / tennis clubs

46
Q

Explain a voluntary organisation

A

The purpose of a voluntary organisation is to help a particular cause and benefit and enrich society.
They are often set up without profit as a motive and instead of returning profits made to its owners, they are usually invested back in to the community or the organisation itself.

They are independent of the government so are often referred to as non-governmental organisations (NGOs)

47
Q

What is the role of the SID?

A

Provide support for the chair acting as a sounding board where appropriate
Act as an intermediary for other directors if and where necessary
Be an alternative point of contact for investors who feel their concerns have not been adequately addressed by the chair, CEO or Finance director

48
Q

Who are executive directors?

A

Executive directors are involved in the day-to-day running of the business.

49
Q

What circumstances can affect a NEDs independence?

A

Previous employment – five years
Business relationships with the company – three years
Close family ties to the company
Additional remuneration
Significant shareholding
Been on the board for nine years

50
Q

What are the benefits of having NEDs on the board?

A

Provide a balancing influence and help minimise conflicts of interest
Improve the effectiveness of a board by providing objective challenge and criticism in board meetings
Act as a mentor to chair and CEO providing advice and guidance

51
Q

Why do boards need to have a balance of different members?

A

To prevent the risk of power and information being concentrated in one or a few individuals, boards need to have a balance of different members.

This is to ensure that matters and issues are discussed and examined from a variety of perspectives leading to more effective decision making that will benefit the organisation and its stakeholders

52
Q

In a large UK company what / who does the board typically consist of?

A

A chairperson
CEO
Executive directors
NEDs
SID (who often acts as deputy for the chair)

Possibly a deputy chairperson

53
Q

How can economic activity of the nation be divided?

A

Into three sectors.

Primary
Second
Tertiary

54
Q

What percent of UK and EU businesses do SME’s make up?

A

99%

55
Q

What is a centralised organisational structure?

A

In a centralised structure, all of the decisions are made by senior management at the centre of the business.

For example at the head office

56
Q

What is a decentralised structure?

A

In a decentralised structure decision-making is delegated to the managers of different areas or divisions of the business who will make decisions based on their own experiences.

57
Q

What are the advantages of central structure?

A

Consistency across the organisation
Able to show strong leaders
Quick decision-making
Communication and reporting is more straightforward
Easier to control and coordinate the business

58
Q

What are the disadvantages of a centralised structure?

A

More bureaucracy
Less flexible to local market conditions or customer needs
Demotivating for managers who are not in a decision-making position

59
Q

What are the advantages of a decentralised structure?

A

Decisions can be made with local markets or customers in mind
Individual units are self-sufficient
Managers of each branch are able to resolve issues quickly without referring back to the head office
More empowering for managers at a local level
Higher staff motivation

60
Q

What are the negatives of flat structures?

A

Limited opportunity for promotion as your levels available to climb
Employee rules and responsibilities may be less defined which makes it difficult to delegate tasks
Difficult structure to maintain if the organisation grows

61
Q

What are the benefits of a flat structure?

A

Benefits of a flat structure are;

Higher employee morale as employees have more control over every day decisions
Fewer levels of management go through to get to the ultimate decision maker resulting a faster response to issues
Cost less to run as few management salaries to pay

62
Q

What can understanding and organisations shape help?

A

Understanding the shape of an organisation can help management to make more effective decisions on how to change or adapt the organisation to achieve objectives and business goals

63
Q

What is the difference between mission and vision statements?

A

A mission statement communicates how an organisation plans on achieving its objectives and is very much focused on the present, where as a vision statement communicates where an organisation wants or aspires to be in future

64
Q

What are an organisations core values?

A

Core values are how the organisation will behave when achieving its mission and vision

65
Q

Defined the query sector and activities involved

A

The query sector represents highest level decision-makers and an economy or society

For example
Top executives/officials in government
Universities
Not for profit organisations
Police and fire Services
Media

66
Q

Defined the quaternary sector and activities involved

A

The quaternary sector is also known as knowledge economy. It represents organisations involved in intellectual services linked to technological innovation.

For example
Scientific research
Information technology

67
Q

Defined the tertiary sector and give examples of activities Inve

A

The tertiary sector provides finished goods and services

For example
Banks and other financial institutions
Retail and sales businesses
Transport and distribution
Restaurants
Leisure
Tourism

68
Q

Defined the secondary sector and give examples of activities involved

A

The secondary sector manufacturers goods from raw materials, such as making plastic from oil building/constructing and assembling products such as houses and roads

69
Q

Why is it important that the chairperson in the CEO are fulfilled by separate individuals?

A

If one individual occupies both rules it increases the chances of that individual dominating the board

Other board members may feel that they cannot raise objections or challenge constructively if one person is dominating discussions

Can lead to matters and issues not being thoroughly discussed in challenged, resulting in decisions made by the board

70
Q

What is a NED and what is their role?

A

A NED is a member of the companies board who is not part of the executive team and hence does not engage in the day-to-day management of the organisation

The role is to provide constructive challenge, strategic guidance, or specialist advice and hold management to account

71
Q

Compare and contrast the advantages and disadvantages of a sole trader business

A

Whilst being eligible to receive all the profits is definitely an advantage for the owner of a trader business, one significant disadvantage is that if the business makes any losses, the sole trader is personally responsible for them. Since this type of business does not have separately personality, the owner has unlimited personal liability for its debts and liability.

This means the owners personal assets can be seized to pay off any debts if they do not have the funds from the business.

72
Q

What is the purpose of PESTEL analysis?

A

The purpose of PESTEL is to identify the external influences on the company and identify the main factors that may impact the business.

73
Q

What does LoNGPESTEL stand for?

A

L ocal
o
N ational
G lobal
P olitical
E conomic
S ociocultural
T echnological
E nvironmental
L egal

74
Q

Name the methods of situational analysis used to understand an organisations internal and external environment

A

SWOT analysis is used to understand the interconnection between an organisations internal and external environment

75
Q

What are three facts about limited liability partnerships?

A

Formal agreement used for professional firms (accountancy, law or architect firms)
Limited liability for all partners
Must be incorporated and file documents so less privacy

76
Q

Name the methods of situation analysis used to understand an organisations external environment

A

PESTEL or LoNGPESTEL

77
Q

Why are LLPs popular with businesses that carry out trade or profession?

A

Limited liability partnership is popular with businesses at career estate or profession and is often the preferred legal structure of professional firms such as accountancy law or architect firms. In the event of one partner being sued from misconduct or negligence, e.g. malpractice, the assets of the other partners are not put risk.

78
Q

Insufficient analysis of business environment can have detrimental effects on an organisation and survival. Provide examples why?

A

It can result in senior management developing and implementing unrealistic or inappropriate business strategies that cause issues such as decline in profitability, loss of market share, reputational damage, a decreased level of sales are even causing the organisation to fail completely.

Being slow to respond to issues identified in an analysis of the business environment, not developing an appropriate response or failing to respond at all, can also cause an organisation to miss out on opportunities on eventually fail.

79
Q

Why is effective situational analysis useful?

A

Effective situation analysis is crucial in helping organisations realise their vision by identifying factors that may impact on their current mission activities

Since the business environment changes constantly, organisations need to constantly analyse the environment to develop the capacity to identify potential issues and anticipate changes that may affect their activities and be able to respond accordingly

80
Q

Explain parent and subsidiary?

A

A subsidiary company is a company owned or controlled by another company which is referred to as the parent or the holding company.

Generally, the parent will own 50% or more of the subsidiary.

81
Q

Who is responsible for the day-to-day running of a limited company?

A

The shareholders delegate the responsibility of the day-to-day running of the company to the board of directors

82
Q

What are the disadvantages of a sole trader business?

A

Disadvantages of a sole trader business are

No separate legal personality
Owner has unlimited personal liability for its debts and liabilities
Owner must enter into any contracts personally

83
Q

What is the stakeholder theory of corporate governance?

A

Stakeholder theory suggests that a business should make decisions that consider and create value for all of its key stakeholders and don’t just satisfy the needs of its owners or shareholders. Key stakeholders may include, customers, investors and employees.

The theory also considers the role of businesses in society and responsibilities businesses have to society as a whole.

84
Q

Provide examples of stakeholder conflicting interests

A

Owners having an interest in generating high profits may be reluctant to pay employees high wages

Directors deciding to make the pursuit of higher sales a top priority over owners wishes of generating higher profits

Making a business decision to move customer service operations overseas to reduce costs that may result in customers suffering if they receive per customer service

85
Q

Define a primary stakeholder

A

Primary stakeholders can be defined as anyone who has a functional or financial interest in the business

Customers
Suppliers
Employees
Shareholders

86
Q

Define a limited company

A

A limited company is a corporate association with its own legal identity that separate from that of its owners. The company is set up as a legal person in its own right.

These companies have undergone the process of incorporation

They are limited by shares or guarantee

87
Q

Define a secondary stakeholder

A

Secondary holders are those who may affect relationships with primary stakeholders

E.g. pressure group may influence customers by suggesting that companies products failed to meet eco-standards of corporate governance

88
Q

Examples of external stakeholders

A

Customers
Suppliers
Creditors
Debtors
Government
Local and National communities
Trade unions
Pressure groups

89
Q

What are 3 facts about limited partnerships

A

Hybrid model combining the principles of a general partnership and Limited liability partnership
At least one general partner who has unlimited liability and run to business plus limited partners who have limited liability but not involved in the day to day management
Fewer filing requirements than LLPs

90
Q

Explain what an unincorporated association is

A

An unincorporated association is an organisation set up through an agreement between a group of people who come together for a reason other than to make profit

Eg voluntary groups or a sports club

91
Q

Defined what is meant by an external stakeholder

A

External stakeholders are individuals or groups outside of the business who are affected by its activities

92
Q

Does an unincorporated association have to be registered with companies house?

A

No – hence the term unincorporated

93
Q

Provide examples of internal stakeholders

A

Shareholders – invest money into the business and are directly affected by how much profit it makes

Workers/employees – investor labour in the business and are impacted by decisions that affect their salaries and job security

94
Q

Define internal stakeholder

A

An internal stakeholder are individuals or groups within a business. They actively participate in the management of the business and are directly affected by its activities.

95
Q

What are the advantages of a sole trader business?

A

Advantages of a sole trader business are:

Easy to set up
Owner retains all the profits
Fewer filing requirements
Privacy

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