Chapter 1: Introduction to Business

Question 1

What is an organisation?

Answer 1

An organisation is a ‘social arrangement, which pursues collective goals, controls its own performance and has a boundary separating it from its environment’.

Question 2

What 3 things best describe and organisation?

Answer 2

Democracy, Mutual Respect and Individual Liberty

Question 3

What is a social arrangement?

Answer 3

Individuals gathered together for a purpose.

Question 4

What are collective goals?

Answer 4

Working towards the organisation’s objectives.

Question 5

What is a controlled performance?

Answer 5

Performance is measured and relevant action is taken.

Question 6

What is a boundary?

Answer 6

The organisation is distinct from its environment:

• Physical or Social

Question 7

What are the 8 examples of differences between different organisations?

Answer 7

Ownership, Control, Activity, Profit or not-for profit, Size, Legal status, Access to finance and Technology

Question 8

What is a business?

Answer 8

A business is an organisation that is orientated towards making a profit for its owners.

Question 9

What is the primary objective of a profit oriented business?

Answer 9

Primary objective is to maximise the owner wealth.

Question 10

What is the primary objective of a NFP orientated organisation?

Answer 10

Primary objective to maximise benefits to beneficiaries.

Question 11

What is a stakeholder?

Answer 11

A stakeholder is ‘a person or group of persons who has a stake in the organisation’.

Question 12

Who are the primary stakeholders?

Answer 12

The primary stakeholders in a business are the shareholders or owners.

Question 13

Who are the secondary stakeholders? (9 examples)

Answer 13

Management, Employees, Customers, Suppliers, Lenders, Government, Analysts/advisers/experts, Society as a whole and Environment

Question 14

What are 5 examples of secondary objectives?

Answer 14

Market standing, Innovation, Productivity, Staff development, Corporate responsibility

Question 15

What are other objectives can managers choose? (5 examples)

Answer 15

Profit satisficing, Revenue maximisation, Multiple objectives, Business constraints and ESG

Question 16

What is a mission?

Answer 16

A mission is ‘the most generalised type of objective which can be thought of as an expression of its reason for existence’.

Question 17

What is a mission statement?

Answer 17

A mission statement is the written communication of the mission to internal and external stakeholders.

Question 18

What 4 elements should a mission statement contain?

Answer 18

Purpose, Strategy, Policies and Values

Question 19

Explain the four elements of a mission statement; purpose, strategy, policies and values.

Answer 19

Purpose - Why does the organisation exist and what does it aim to achieve for its stakeholders?
Strategy - What resources, competencies or generic strategy give the company a competitive advantage?
Policies - What standards and behavioural patterns are adopted within the organisation?
Values - What beliefs do the managers and employees share?

Question 20

What are aims?

Answer 20

Qualitative non-operational goals.

Question 21

What are objectives?

Answer 21

Quantitative operational goals.

Question 22

What does SMART objectives mean?

Answer 22

Specific - clear statement, easy to understand
Measurable - success or failure can be quantified
Achievable - it is pointless setting unachievable objectives
Relevant - appropriate to the mission and stakeholders
Timed - have a time period for achievement

Question 23

What are plans?

Answer 23

Plans state what should be done to achieve the operational objectives.

Question 24

What are standards and targets?

Answer 24

Standards and targets specify the desired level of performance.

Question 25

Give an example of physical, cost and quality standards.

Answer 25

Physical - kilograms of material used per product Cost - cost per kilogram purchased Quality - targets for a maximum number of faults per batch

Question 26

What is sustainability?

Answer 26

Sustainability means 'meeting the needs of the current generation without affecting the ability of future generations to meet their needs'.

Question 27

What is sustainable development?

Answer 27

Sustainable development is when organisations ensure that their economic activity is sustainable and does not cause permanent harm to society or the planet.

Question 28

What are tangible resources?

Answer 28

'the world's stocks of natural assets which include geology soil, air, water and all living things'.

Question 29

What two benefits can natural capital provide?

Answer 29

Ecosystem services: provided nature such as food, water and timber Abiotic services: from non-living things such as fossil fuels and chemicals

Question 30

What are intangible resources?

Answer 30

Such as human capital and stakeholder relationships.

Question 31

What are the 2 way which organisations can view the impact of sustainability?

Answer 31

Impacts are the effect that the organisation has on sustainability Dependencies are the affect sustainability has on the organisation.

Question 32

In what ways can business activity harm the environment? (5 examples)

Answer 32

Resource depletion, Pollution, Climate Change. Waste Generation and Loss of Biodiversity

Question 33

What is the impact of a physical risk?

Answer 33

An organisation can be affected by physical damage caused by storms, floods, pollution and extreme temperatures.

Question 34

What is the impact of a transition risk?

Answer 34

Regulatory changes or changes in consumers' attitudes can create additional financial risk or reputational risk for the organisations affected.

Question 35

What is the SEE framework?

Answer 35

Social - the impact the organisation has on people and communities. Environmental - the impact the organisation has on the planet and climate. Economic - the impact on the organisation's profit and return to shareholders.

Question 36

What is triple bottom line reporting?

Answer 36

People - fair wages, safe working conditions, positive community impact Planet - reduce use of fossil fuels, minimise environmental damage Profit - achieving an acceptable profit after tax and return to shareholders

Question 37

What is the ESG framework?

Answer 37

Environmental - how to achieve environmental sustainability. Social - how to achieve social sustainability Governance - how the organisation is managed overall

Question 38

The ESG framework aims to focus the attention of management on to what two values?

Answer 38

Enterprise value: the value of the business based on its future cash flows, access to capital investment and risk profile Social value: the desire to generate long-term positive impacts for local communities, the environment, and other external parties

Question 39

What is a scope 1 GHG emission?

Answer 39

The GHG emissions that an organisation makes directly. For example, exhaust emissions from company vehicles.

Question 40

What is a scope 2 GHG emission?

Answer 40

The GHG emissions an organisation indirectly makes. For example, purchasing electricity that is produced in its behalf.

Question 41

What is a scope 3 GHG emission?

Answer 41

All the GHG emissions that an organisation is indirectly responsible for, up and down its value chain. For example emissions by suppliers.

Question 42

What are upstream GHG emissions?

Answer 42

Upstream GHG emissions are emissions from the supply of raw materials and finished products.

Question 43

What are downstream GHG emission?

Answer 43

Downstream GHG emissions are emissions which result from the use and disposal of products.

Question 44

What was the aim of the UN's Sustainable Development Goals?

Answer 44

End Poverty, Fight Inequality and Stop Climate Change

Question 45

What are the key SDG goals which affect businesses?

Answer 45

Decent work and economic growth Industry, innovation and infrastructure Responsible consumption and production

Question 46

What are the 4 R's or recycling?

Answer 46

Reduce, Reuse, Replace, Recycle

Question 47

What are the mitigation hierarchies (IEMA 2020)?

Answer 47

Eliminate negative impact Reduce waste Substitute energy sources, suppliers, etc Compensate those affected