Chapter 1 BTF Flashcards

1
Q

What is an organisation?

A

A social arrangement for the controlled performance of collective goals, with a boundary separating it from its environment.

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2
Q

What are the two main categories of organisations?

A

Profit-oriented and Not-for-profit.

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3
Q

Give three examples of profit-oriented organisations.

A

A multinational car manufacturer, an accountancy firm, a mobile phone operator.

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4
Q

Give three examples of not-for-profit organisations.

A

A charity, a trade union, an army.

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5
Q

Why do organisations exist? (List at least three reasons)

A

To let people specialize in what they do best,
save time,
accumulate and share knowledge,
let people pool their expertise,
and enable synergy.

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6
Q

What do all organisations have in common?

A

They are social arrangements for controlled performance of collective goals, have a boundary separating them from the environment.

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7
Q

What is the purpose of having a boundary in an organisation?

A

To separate the organisation from its environment.

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8
Q

How is performance monitored in an organisation?

A

Performance is monitored against goals and adjusted as necessary to ensure the goals are accomplished.

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9
Q

What is the key feature of the social arrangement in organisations?

A

Individuals are gathered together for a purpose.

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10
Q

How do organisations differ?(7)

A

Organisations differ in ownership, (public vs private)
control, (Manage by who, owners themself?, workers?)
activity, what they do
profit orientation,
size, (small, sme, mnc)
legal status, (Company, partnership, sole trader)
and technology.(high or low use of technology)

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11
Q

What is a common feature of all organisations?

A

All organisations are designed to get things done.

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12
Q

How is performance controlled in an organisation?

A

Performance is monitored against goals and adjusted as necessary to ensure the goals are accomplished.

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13
Q

What is meant by ‘social arrangement’ in the context of an organisation?

A

It refers to individuals gathered together for a purpose.

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14
Q

What are the boundaries in an organisation?

A

Boundaries distinguish the organisation from its environment, both physically and socially.

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15
Q

Definition of a business

A

An organisation that is oriented towards making a profit for its owners to maximise wealth.

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16
Q

What are collective goals in an organisation?

A

Collective goals are the organisation’s goals above and beyond the goals of the individuals within it.

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17
Q

what is a stakeholder

A

A person or group of people who has a stake in the organisation, has an interest of protect of what the org does and how it performs

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18
Q

Difference between profit(business) and non profit Primary objective

A

Primary objective of a business: to maximise wealth of owners
Primary objective of a non profit orgranisation: to provide goods and services for its beneficiaries

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19
Q

What does profit maximization involve?

A

It involves creating value by ensuring revenue exceeds costs and managing acceptable levels of risk.

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20
Q

How do not-for-profit organisations generate revenue?

A

Not-for-profit organisations generate revenue mainly through taxation or donations, rather than sales of goods and services.

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21
Q

Primary stakeholder
what is at stake
what do they expect of the business

A
  1. Shareholder
    2.Money invested
  2. A return on their investment so that their wealth increases, growing profit paid out by the business, growth in capital value of their shares
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22
Q

Can the type of goods or services provided determine if an organisation is profit-oriented or not-for-profit?

A

No, the type of goods or services provided does not determine if an organisation is profit-oriented or not-for-profit.

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23
Q

What are some examples of secondary objectives?

A

Market position,
product development,
technology,
employees and management.

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24
Q

Secondary stakeholders?

A

Employees, customers, suppliers, lenders, government and agencies, analyst/advisers/expert, the local community, the natural environment

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25
Q

How does market position serve as a secondary objective?

A

By achieving a particular market share or reputation that supports long-term profitability.
(growth in sales, avoid reliance on a single customer for too big proportion of total sales, enter or leave market when the time is right)

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26
Q

Why can’t profit be pursued at any cost?

A

Businesses must adhere to laws and regulations and consider their social responsibilities.

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27
Q

How can technology serve as a secondary objective?

A

By improving production efficiency and reducing the cost per unit of output.
exploit appropriate tech

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28
Q

What is the importance of product development in business objectives?

A

Developing new products to expand product ranges and satisfy changing consumer demands.
Investing in research and development

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29
Q

How does employee management relate to business objectives?

A

Train employees in necessary skills, reduce number of employees leaving and having to replace them. create an innovative, flexible culture, employ high quality leaders

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30
Q

What is “profit satisficing”?

A

Achieving a satisfactory profit that is acceptable to shareholders without maximizing profits.
(satisfy+sacrifice)

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31
Q

What is revenue maximization?

A

Focusing on increasing market share or sales revenue, not just profits, to improve competitiveness.

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32
Q

Why is ESG important in business?

A

ESG factors are considered alongside financial performance to understand how they may affect the risk and return of investments.

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33
Q

What does the Environmental aspect of ESG include?

A

Issues relating to the quality and functioning of the natural environment and natural systems, such as biodiversity loss, greenhouse gas emissions, climate change, renewable energy, energy efficiency, air and water pollution, waste management, ozone depletion, changes in land use, ocean acidification, and changes to nitrogen and phosphorus cycles.

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34
Q

What are some specific issues included under the Social aspect of ESG?

A

Human rights, labor standards in the supply chain, child, slave, and bonded labor, workplace health and safety, freedom of association and freedom of expression, human capital management, employee relations, diversity, relations with local communities, activities in conflict zones, health and access to medicine, HIV/AIDS, consumer protection, and controversial weapons.

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35
Q

What does the Governance aspect of ESG focus on?

A

Governance issues include board structure, size, diversity, skills and independence, executive pay, shareholder rights, stakeholder interaction, disclosure of information, business ethics, bribery and corruption, internal controls and risk management, and dealing with the relationship between a company’s management, its board, shareholders, and stakeholders.

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36
Q

How is the Governance aspect related to other entities?

A

It includes the governance of companies and other investee entities, addressing business strategy implications for environmental and social issues.

37
Q

What is the role of ethical behavior in ESG?

A

Ethical behavior, while not specifically included in the ESG acronym, underlies all three factors. It involves doing the right thing from a moral perspective and may lead organizations to pursue ESG objectives even if they reduce financial wealth because it is ethically correct.

38
Q

How do investors view ESG objectives in relation to ethical behavior?

A

Investors are increasingly expecting companies they invest in to adopt ESG objectives in addition to financial objectives, reflecting a growing emphasis on ethical behavior.

39
Q

What does ESG stand for?

A

Environmental, Social, and Governance

40
Q

Why is ESG important in business?

A

ESG factors are considered alongside financial performance to understand how they may affect the risk and return of investments.

41
Q

What does the Environmental aspect of ESG include?

A

Issues relating to the quality and functioning of the natural environment and natural systems, such as biodiversity loss, greenhouse gas emissions, climate change, renewable energy, energy efficiency, air and water pollution, waste management, ozone depletion, changes in land use, ocean acidification, and changes to nitrogen and phosphorus cycles.

42
Q

What are some specific issues included under the Social aspect of ESG?

A

Human rights, labor standards in the supply chain, child, slave, and bonded labor, workplace health and safety, freedom of association and freedom of expression, human capital management, employee relations, diversity, relations with local communities, activities in conflict zones, health and access to medicine, HIV/AIDS, consumer protection, and controversial weapons.

43
Q

What does the Governance aspect of ESG focus on?

A

Governance issues include board structure, size, diversity, skills and independence, executive pay, shareholder rights, stakeholder interaction, disclosure of information, business ethics, bribery and corruption, internal controls and risk management, and dealing with the relationship between a company’s management, its board, shareholders, and stakeholders.

44
Q

How is the Governance aspect related to other entities?

A

It includes the governance of companies and other investee entities, addressing business strategy implications for environmental and social issues.

45
Q

What is the role of ethical behavior in ESG?

A

Ethical behavior, while not specifically included in the ESG acronym, underlies all three factors. It involves doing the right thing from a moral perspective and may lead organizations to pursue ESG objectives even if they reduce financial wealth because it is ethically correct.

46
Q

How do investors view ESG objectives in relation to ethical behavior?

A

Investors are increasingly expecting companies they invest in to adopt ESG objectives in addition to financial objectives, reflecting a growing emphasis on ethical behavior.

47
Q

What is the purpose of a business mission?

A

The overall direction of a business, expressing how it satisfies its various stakeholders.

48
Q

What are the four elements of a mission?

A

Purpose, Strategy, Policies and Standards of Behavior, and Values.

49
Q

What is a business vision?

A

A vision is a forward-looking statement of what the business aims to achieve in the future.

50
Q

What are goals and objectives?

A

Goals are desired end results or outcomes. Objectives are specific, measurable steps to achieve these goals.

51
Q

What are the two types of goals?

A

Non-operational (qualitative) and operational (quantitative).

52
Q

What are SMART objectives?

A

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

53
Q

What are the components of the Planning and Control System?

A

Objectives, Plans and Standards, Actual Performance, Comparison of Performance against Plans/Standards, Deviations Identified, and Taking Corrective Action.

54
Q

What are the purposes of setting operational objectives in a business?

A

Implementing the mission, publicizing the direction, appraising validity, and assessing and controlling actual performance.

55
Q

What is the definition of plans and standards?

A

Plans state what should be done to achieve operational objectives, and standards specify the desired level of performance.

56
Q

What are the three types of standards?

A

Physical standards, Cost standards, and Quality standards.

57
Q

What do exam questions in this area usually test?

A

Knowledge of the differences between different types of objectives and the meaning of SMART.

58
Q

What is the study approach suggested for understanding mission, vision, and goals?

A

Think of an organization you know well, understand its mission and vision, and consider what goals it might have.

59
Q

What is sustainability?

A

Sustainability means meeting the needs of the present without compromising the ability of future generations to meet their own needs.

60
Q

What are the three headings under which sustainability issues can be considered?

A

Social, Environmental, and Economic (SEE) or People, Planet, and Profit.

61
Q

What is the internal approach of an organization towards addressing sustainability?

A

Environmental, Social, and Governance (ESG) describes an organization’s internal approach to addressing sustainability.

62
Q

What is climate change?

A

Climate change refers to the long-term shifts in temperature and weather patterns, primarily due to increased greenhouse gas emissions.

63
Q

What are the 17 Sustainable Development Goals?

A

Goals adopted by the UN to promote sustainable development, including ending poverty, improving health and education, reducing inequality, and tackling climate change.

64
Q

What role do accountants play in sustainability and climate change?

A

Accountants help in analyzing the causes and consequences of climate change and aid in selecting and implementing solutions.

65
Q

What is the triple bottom line?

A

The triple bottom line refers to measuring an organization’s performance based on three aspects: people (social), planet (environmental), and profit (financial).

66
Q

What are the 4Rs of recycling?

A

Reduce, Reuse, Recycle, Replace.

67
Q

What is enterprise value?

A

Enterprise value reflects the expectations of the amount, timing, and certainty of future cash flows over the short, medium, and long term.

68
Q

What is social value?

A

Social value is the desire of a business to benefit the communities it is part of and the environment.

69
Q

What is the importance of climate change to businesses?

A

Climate change impacts business operations and can lead to financial risks, regulatory changes, and shifts in consumer demand.

70
Q

Why can businesses not ignore sustainability and climate change?

A

Ignoring these issues can lead to adverse effects on society, environment, and long-term business viability, and businesses are increasingly held accountable for their impacts.

71
Q

What is the definition of sustainable development?

A

Sustainable development aims to ensure that economic activity can continue without causing permanent harm to society and the planet.

72
Q

What is natural capital?

A

Natural capital refers to the stock of renewable and non-renewable natural resources that yield a flow of benefits to people.

73
Q

What are ecosystem services?

A

Ecosystem services are benefits people obtain from ecosystems, such as timber, fish, pollination, water regulation, climate regulation, recreation, mental health, and others.

74
Q

What is biodiversity?

A

Biodiversity includes all different kinds of life found in one area, including animals, plants, fungi, and microorganisms.

75
Q

What are tangible and intangible resources in sustainability?

A

Tangible resources include natural capital (raw materials) and energy, while intangible resources include human/intellectual capital and relationships with stakeholders.

76
Q

What are the impacts and dependencies in sustainability?

A

Impacts are how decisions affect environmental, social, and governance issues positively or negatively. Dependencies are how these issues affect the organization’s ability to create and maintain value.

77
Q

What is the difference between social, environmental, and economic sustainability?

A

Social sustainability focuses on the well-being of people and society, environmental sustainability focuses on the planet and ecosystems, and economic sustainability focuses on sustainable economic growth and stability.

78
Q

What is the Paris Agreement of 2015?

A

An international treaty on climate change that aims to limit global temperature rise to well below 2°C, preferably to 1.5°C above pre-industrial levels.

79
Q

What are the three scopes of greenhouse gas (GHG) emissions?

A

Scope 1: Direct emissions from owned or controlled sources. Scope 2: Indirect emissions from the generation of purchased electricity, steam, heating, and cooling. Scope 3: All other indirect emissions that occur in a company’s value chain.

80
Q

What are some actions businesses can take to support sustainability?

A

Implementing the 4Rs (Reduce, Reuse, Recycle, Replace), adopting mitigation hierarchies (compensate, reduce, eliminate), and reducing emissions and waste.

81
Q

What is the significance of the 17 UN Sustainable Development Goals (SDGs)?

A

The SDGs aim to address global challenges, including poverty, inequality, climate change, environmental degradation, peace, and justice, to achieve a better and more sustainable future for all.

82
Q

How does sustainability concern both tangible and intangible resources?

A

Sustainability involves managing both tangible resources like natural capital and intangible resources like human and intellectual capital to ensure long-term viability.

83
Q

What does the SEE framework stand for, and why is it important?

A

SEE stands for Social, Environmental, and Economic factors. It helps in understanding how a healthy environment supports a healthy society and thriving economy.

84
Q

What is the role of organizations in contributing to climate change?

A

Organizations contribute to climate change through greenhouse gas emissions, deforestation, and other activities that increase carbon footprint and environmental impact.

85
Q

How are businesses held accountable for their impact on society and the environment?

A

Through regulations, consumer expectations, investor pressures, and the need to report on sustainability practices and impacts.

86
Q

Why is it important for businesses to consider social value?

A

Considering social value helps businesses benefit communities and the environment, improving their reputation and long-term success.

87
Q

What are the main components of the triple bottom line?

A

People (social responsibility), Planet (environmental impact), and Profit (financial performance).

88
Q

What does the concept of ‘net zero’ refer to?

A

Achieving a balance between the amount of greenhouse gas emissions produced and the amount removed from the atmosphere.