CHAPTER 1 ALL Flashcards

1
Q

Define PEST

A

an acronym for political, economic, social, and technological that looks at opportunities and threats of the external environment within which businesses operate

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2
Q

what is the purpose of PEST?

A

to use at the start of a strategy review process, such as assessing the feasibility of an overseas investment project

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3
Q

what are the elements of Political?

A
  • government legislation
  • government intervention
  • applying government policies to control business behavior
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4
Q

what are the elements of Economic?

A
  • government policies
  • attitudes/actions of foreign countries
  • levels of business
  • consumer confidence in the economy
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5
Q

what are the elements of Social?

A

-attitude of society towards a wide range of different issues (such as business ethics, social welfare, women, religion, animals)

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6
Q

what are the elements of Technological?

A

expected gains in efficiency (as measured by productivity, flexibility, communications)
-profits

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7
Q

Define SWOT.

A

useful decision-making tool

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8
Q

What is the purpose of SWOT?

A

to assess the current and future situation of a brand, product, company, proposal or decision

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9
Q

What’s the internal and external factors for SWOT?

A

internal: strengths, weaknesses
external: opportunities, threats

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10
Q

What are the factors of Strengths?

A
  • unique selling point
  • brand recognition/loyalty
  • experience
  • market share
  • corporate image/reputation
  • product qualities
  • geographical location
  • value for money
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11
Q

What are the factors of Weaknesses?

A
  • limited source of revenues
  • escalating costs of production
  • higher prices than competitors
  • unproductive workforce
  • limited source of finance
  • lack of spare capacity
  • restricted product range
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12
Q

What are the factors of Opportunities?

A
  • economic development
  • trade liberalization
  • weakening exchange rate
  • upswing in the business cycle
  • technological developments
  • new markets/locations
  • mergers/acquisitions of rival firms
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13
Q

What are the factors of Threats?

A
  • new entrants in the marketplace
  • outbreak of infectious diseases
  • pressure group actions
  • social/environmental/legal constraints
  • media coverage/publicity
  • unfavorable changes in seasons/weather
  • changes in fashion/tastes
  • price/non-price competition from rivals
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14
Q

Define Mission statement.

A

the declaration of an organization’s overall purpose

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15
Q

Define Vision statements.

A

an organization’s long-term aspirations, i.e. where it ultimately wants to be

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16
Q

What are advantages of sole traders?

A
  • Few legal formalities
  • Receives all profits, being your own boss, personalized service
  • Enjoy privacy
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17
Q

What are disadvantages of sole traders?

A
  • Unlimited liability
  • Limited source of finance
  • High risks
  • Workload and stress
  • Lack of continuity
  • Higher costs of production
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18
Q

What are advantages of partnerships?

A
  • Financial strength

- Division of labour and specialization

19
Q

What are disadvantages of partnerships?

A
  • Unlimited liability
  • Decisions making taking longer
  • Lack of continuity
  • Must having a huge amount of mutual trust
  • Faces difficulties in raising capital
20
Q

What are advantages of private limited companies?

A

-Owners have greater control of the business and being cheaper to set up a private limited company than a public limited company

21
Q

What are disadvantages of private limited companies?

A

-They do not tend to be able to raise as much finance as public limited companies

22
Q

What are advantages of public limited companies?

A

-They’re able to advertise and sell its share to the general public via the stock exchange

23
Q

What are disadvantages of public limited companies?

A

-It allows the general public to buy shares in the public company when there’s dilution of control (more shares = company has more owners, thereby wakening its ability to control the business), public companies are expose to takeover bids from other investors that seek to purchase a majority stake in the company

24
Q

What’s the order of the business cycle?

A
  • Boom
  • Recession
  • Slump
  • Recovery
25
What's boom?
- Consumer - Expenditure - Investment and export earnings are high - Unemployment is low
26
What's recession?
- Declining aggregate demand - Lower investment expenditure - Falling export sales - Rising unemployment
27
What's slump?
-High level of unemployment along with low levels of consumer spending, investment and export earnings
28
What's recovery?
-National income begins to increase again, consumption, investment, exports and employment will all gradually rise
29
What's ANSOFF matrix?
- Market penetration - Product development - Market development - Diversification
30
What's market penetration?
- A low-risk strategy; focuses on selling exiting products in existing markets i. e. to increase their market share of current products. - This might be achieved by improving a firm's marketing mix, such as using better advertising to enhance the desirability of the product or by offering more competitive prices.
31
What's product development?
- A medium-risk growth strategy ; businesses aiming to sell new products in a existing market - It is suitable for products that reached the saturation or decline stage of their product life cycle
32
What's market development?
- A medium-risk growth strategy - Businesses selling existing products in new markets - i.e. an established product that is marketed to a new market segment. This might be done by using new distribution channels to sell the product in a different location or overseas, although this could be quite risky if the business is unfamiliar with local market conditions and cultures.
33
What's diversification?
- A high risk growth strategy - Business marketing new products in new markets - It is suitable for firms that have reached saturation in their markets and are seeking new opportunities for growth
34
What is tactical (operational)?
-Short-term objectives that affect a segment of the organization
35
What is strategic?
-Longer term aims of a business organizations
36
What is ethical?
-The more principles that guide decision-making and strategy
37
What are objectives of tactical?
- Strive toward survival | - Sales revenue maximization
38
What are objectives of strategic?
- Profit maximization - Growth - Image/reputation - Market standing
39
What are objectives of ethical?
- Improving corporate image - Staff motivation - Staff morale - Increasing customer loyalty - Cost cutting
40
What are factors of private limited companies?
- Share are sold to private family members/friends - Shares in a private company cannot be traded without the prior agreement from the Board of Directors - Shares cannot be traded via the stock exchange - More cheaper to set up than a public limited company
41
What are factors of public limited companies?
- Able to advertise and sell its shares to the general public via the stock exchanges - The general public are allowed to buy shares in the public company (dilution of control_ - Raise more finance
42
What are factors of mission?
- Medium/long term objectives - Updated more frequently than vision - Have actual targets - Outline/highlight the values of the business - Sets the tone for how mangers/employees behave on a day-to-day basis
43
What are factors of vision?
- Long term objectives - Do not have actual targets that must be realized - Allows people to see what could be the actual target