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A Level Revision > Business Theme 3 > Flashcards

Business Theme 3 Flashcards

1
Q

What does SMART in Smart Objectives mean?

A

Specific, Measurable, Achievable, Relevant and Time-bound.

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2
Q

What is a mission statement?

A

A mission statement is the main goal for a business, explaining what its purpose is.

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3
Q

What is a corporate objective?

A

A corporate objective outlines the general policy or direction of an organization to fulfil its mission statement.

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4
Q

What are the common business objectives?

A

Profit maximization
Survival
Growth
Diversification
cash flow
Ethics

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5
Q

What is the hierarchy of objectives?

A

Mission Statement
Corporate Aims
Corporate Objective
Functional Objectives

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6
Q

What are the benefits of a mission statement?

A

Every member understands what they are striving towards
Makes decision making easier
Can give responsibility to a workforce

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7
Q

What are the limitations of a mission statement

A

If its unrealistic, the mission statement may get ignored
May demotivate workforce if management ignore suggestions from employees
Only effective if everyone supports them

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8
Q

What are the interests of Employees as stakeholders?

A

Regular income
Job Security
Safe place of work
Opportunities to further career

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9
Q

What are the interests of customers as stakeholders?

A

Fair prices that do not fluctuate
Safe products
Good customer service and after-sales service

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10
Q

What are the interests of shareholders as stakeholders?

A

Increase in dividends
Rising share prices

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11
Q

What are the interests of creditors as stakeholders

A

Repayment
Return on investment

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12
Q

What are the interests of suppliers as stakeholders

A

Secure supply contract to businesses
Fair prices

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13
Q

What are the interests of the local community as stakeholders

A

Local employment
Low levels of employment
Giving back to their community

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14
Q

What are the 4 boxes in Ansoff’s Matrix?

A

Market Penetration
Product Development
Market Development
Diversification

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15
Q

What is the purpose of Ansoff’s Matrix?

A

Helps a business analyze its strategy through the products that it offers and which markets it is competing in.

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16
Q

What are the uses of Ansoff’s Matrix?

A

A business can better understand the options that are available, helping them choose how it wants to grow
Helps businesses concentrate on the elements of the marketing mix that are most likely to affect them

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17
Q

What are the drawbacks of Ansoff’s Matrix?

A

The four cells of the model do not always line up with real scenarios
Ansoff’s is the most used model in strategy, if a business wants to be innovative, using this may be counter productive

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18
Q

What are Porters 4 points in strategy?

A

Cost Leadership
Cost Focus
Differentiation
Differentiation Focus

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19
Q

What does cost leadership mean?

A

When a firm leads the market in terms of the lowest possible costs, using economies of scale and supply chain innovation to achieve this

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20
Q

What does cost focus mean?

A

Companies concentrate on providing a specialized service to a niche market, aiming to attract customers by offering the lowest price for the product or service

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21
Q

What does cost focus mean?

A

Companies concentrate on providing a specialized service to a niche market, aiming to attract customers by providing distinctive attributes that provide the unique needs of the consumers

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22
Q

What does differentiation mean?

A

Looks outwards from a business to better understand customer needs and fulfil them, creating a unique product for the mass market.

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23
Q

What are the uses of Porters Strategic Matrix?

A

Helps businesses better understand the options of competitive advantages available to them
Businesses are able to assess potential risk

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24
Q

What are the drawbacks of Porters Strategic Matrix

A

Porter claimed that every business must fit into one single category to achieve strategic success, however there are many examples that buck this trend
If market changes, strategy would no longer be relevant

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25
Q

What is the purpose of a portfolio

A

Helps spread risks, if one product does poorly, it can be supported by other products

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26
Q

What is Kay’s model of distinctive capabilities?

A

Architecture
Reputation
Innovation

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27
Q

What does Architecture mean in Kays Distinctive capabilities?

A

Positive management of relationships
encouraging individuals to meet company aims
maintaining a culture of cooperation

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28
Q

What does Reputation mean in Kays Distinctive Capabilities?

A

Conveying to consumers the quality of products
Selling at a price that is neither too high nor too low

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29
Q

Why is Innovation in Kays Distinctive Capabilities difficult to convert into a competitive advantage?

A

Costs and uncertainty
Management required to inspire innovation
Allocation of rewards

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30
Q

What is a tactical decision?

A

Shorter term decisions that a business makes in order to support its strategy

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31
Q

What is a strategic decision?

A

Long term decisions that a business makes in order to build its strategy and achieve its ultimate goal

32
Q

What does a SWOT analysis stand for?

A

Strengths
Weaknesses
Opportunities
Threats

33
Q

What are the strengths for a business?

A

Internal factors:
Innovation
quality
efficiency
research and eeveopment
investment in fixed assets
training
profitability
communications

34
Q

What are the weaknesses for a business?

A

Internal factors:
Limited opportunities for employee training
high staff turnover
too many products nearing end of life cycle
poor communications
bad reputation
negative cash flow
limited experience in markets
poor location

35
Q

What are the opportunities for a business?

A

External factors:
new markets opening abroad
fall in exchange rate
social trends shifting to green products
main rival is in financial trouble
government policy encouraging spending

36
Q

What are the threats to a business?

A

External factors:
Ageing population = fewer sales
taxes increasing for particular firms
maturation of product life cycle is imminent
competition levels are high
pressure groups threaten business to change
technology makes products obsolete

37
Q

What does PESTLE stand for?

A

Political
Economic
Social
Technological
Legal
Environmental

38
Q

What does Political mean in PESTLE

A

Businesses are affected by taxation, and must compensate for increases, however by increasing price, or lowering costs they might deter consumers

39
Q

What does Environmental mean in PESTLE

A

By becoming environmentally friendly, can attract ethical consumers, however requires particular skills, which may be a high cost

40
Q

What does Social mean in PESTLE

A

following trends and changes in fashion, the ability to react.

41
Q

What does Technological mean in PESTLE

A

using improved processes can increase efficiency, and reduce costs overall, however equally competitors could use these

42
Q

What does Legal mean in Pestle

A

Businesses must comply with legislation and may need to purchase new equipment.
Can look attractive to consumers if following legislation correctly

43
Q

What does Economic mean in PESTLE

A

Consumer demand increases as economy moves through the business cycle
Exchange rates also have an impact

44
Q

What are Porters 5 forces?

A

Bargaining Power of Market Suppliers
Bargaining Power of Market Buyers
Threat of New Entrants to the Market
Threats of Substitute Product/Services
Rivalry of the market

45
Q

What are some objectives of growth?

A

Economies of scale
Increased market power over customers and suppliers
Increased market share and brand recognition
Increased profitability

46
Q

What are the problems with growth?

A

Diseconomies of scale
Internal communication
Overtrading

47
Q

What are the tactical reasons for merging or takeovers

A

Increase business’s market share
Gain skilled staff
Increase technology
Gain ownership of intellectual property
Expanding to other location

48
Q

What are the strategic reasons to for merging or takeovers

A

Increase profitability
Increase greater brand awareness
Increase distribution capabilities
Moving a business to new markets

49
Q

What does merging mean?

A

The coming together of 2 companies, that supports the strategies of the merging companies as best as possible.

50
Q

What does a takeover mean?

A

The buying out of one company by another, usually through the purchase of shares

51
Q

What is horizontal integration?

A

Takeover or merger of a business within the same industry

52
Q

What is upwards vertical integration?

A

Takeover or merger of a business to fulfil a role formerly completed by the business further down the supply chain

53
Q

What is backwards vertical integration?

A

Takeover or merger of a business that would had previously supplied good to the business

54
Q

What is a conglomerate integration?

A

When 2 businesses in completely different markets merge or takeover

55
Q

Reasons for Horizontal integration?

A

Instantly increases market share
Buyers benefit from economies of scale
Expansion can help enter a new market segment

56
Q

Reasons for vertical integration?

A

Maintain and control the supply chain
Personally manage the standard of quality
Keeps supplies away from rival companies
Access to market

57
Q

What are some ways a business can grow organically?

A

Launching a new product/service
Increasing advertising and promotion
Opening new stores/branches
Introducing a new brand
Market research and development
Entering/leaving market segments
Expanding the business’s workforce

58
Q

What are some advantages of organic growth?

A

Works out cheaper for business in long run
Businesses have more control over their internal factors and so there is less risk overall
Organic growth means that they are not forced to change their corporate cultures
Maintenance of growth is manageable

59
Q

What are the disadvantages of organic growth?

A

Much longer process than inorganic growth
May take longer to react to market changes
Funds for supporting growth are normally invested in generating more sales
organic growth is not always enough to sustain a business

60
Q

What is the purpose of simple payback?

A

Benefits the business as calculations show them how long their money will be at a risk

61
Q

What are the limitations of simple payback?

A

Not a definitive estimate
Only focuses on short term, ignoring potential long term benefits
Only focuses on payback, not profitability

62
Q

How do you calculate payback?

A

Payback = sum invested/ net cash per time period

63
Q

What are the limitations of appraisal?

A

Can take time to gather information required for investment appraisal
Many unforeseen costs and taxes
By putting a figure on the risk, owners may lose sight of the rewards from taking risks
Often only look at short term rewards instead of long term potential

64
Q

What are decision trees?

A

Help with making choices, considering the choice in question, the probability of success, and financial gain

65
Q

What do the 2 shapes in a decision tree represent?

A

Square - A decision that a business needs to make
Circle - The chance of success

66
Q

What are the benefits of using decision trees?

A

They focus on uncertainty, ensuring managers act carefully
Makes it easier to see the full picture
Shows value as well as probability
Useful for forecasting something that had happened before

67
Q

What are the limitations of using decision tress?

A

Only really work for tactical decisions rather than strategic decisions
Takes time
Only generally concerned with monetary gain
External changes can occur

68
Q

What is critical path analysis used for?

A

To utilize the least resources to complete a project in the least amount of time.

69
Q

What are the advantages of critical path analysis?

A

useful for project based management
Identifies when resources are required
Estimates minimum completion time
Reduces waste as management can plan ahead

70
Q

Limitations of critical path analysis

A

Not as useful in large scale operations as diagram becomes long and complicated
Requires good resource management
Does not consider external factors
Only helpful as a guide at the start, as it is not flexible for changes to be made

71
Q

What influences corporate decision making?

A

Risk
Attitude to risk
Past successes
Nature of the industry
Stakeholder power
Ethical values
Resources available

72
Q

What is short-termism?

A

Form of decision making that works mostly toward meeting quarterly figures

73
Q

What is long-termism?

A

Form of decision making more focused in the long term, generally having more invested in research and development

74
Q

What is the process for evidence based decision making?

A

Set objectives
Gather objectives
Analyze data
Select a course of action
Implement the plan
Review the effect

75
Q
A

A Level Revision (19 decks)

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