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IB Business and Management > CHAPTER 1 ALL > Flashcards

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
Q

What’s boom?

A
  • Consumer
  • Expenditure
  • Investment and export earnings are high
  • Unemployment is low
26
Q

What’s recession?

A
  • Declining aggregate demand
  • Lower investment expenditure
  • Falling export sales
  • Rising unemployment
27
Q

What’s slump?

A

-High level of unemployment along with low levels of consumer spending, investment and export earnings

28
Q

What’s recovery?

A

-National income begins to increase again, consumption, investment, exports and employment will all gradually rise

29
Q

What’s ANSOFF matrix?

A
  • Market penetration
  • Product development
  • Market development
  • Diversification
30
Q

What’s market penetration?

A
  • 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
Q

What’s product development?

A
  • 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
Q

What’s market development?

A
  • 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
Q

What’s diversification?

A
  • 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
Q

What is tactical (operational)?

A

-Short-term objectives that affect a segment of the organization

35
Q

What is strategic?

A

-Longer term aims of a business organizations

36
Q

What is ethical?

A

-The more principles that guide decision-making and strategy

37
Q

What are objectives of tactical?

A
  • Strive toward survival

- Sales revenue maximization

38
Q

What are objectives of strategic?

A
  • Profit maximization
  • Growth
  • Image/reputation
  • Market standing
39
Q

What are objectives of ethical?

A
  • Improving corporate image
  • Staff motivation
  • Staff morale
  • Increasing customer loyalty
  • Cost cutting
40
Q

What are factors of private limited companies?

A
  • 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
Q

What are factors of public limited companies?

A
  • 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
Q

What are factors of mission?

A
  • 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
Q

What are factors of vision?

A
  • Long term objectives
  • Do not have actual targets that must be realized
  • Allows people to see what could be the actual target

IB Business and Management (5 decks)

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