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department of business exam Flashcards

1
Q

advantages of the private limited companies (3)

A
  • owners/shareholders have limited liability
  • ownership is not lost to outsiders
  • the business contains a friendly feel with good customer service
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2
Q

Disadvantages of private limited companies (4)

A
  • dividends have to be split between many shareholders
  • requires a complicated legal process to set up the company
  • limited amount of money can be raised as shares are not sold publicly
  • financial statements have to be shared publicly
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3
Q

advantages of a public limited company (4)

A
  • shareholders have limited liability
  • large amount of finance can be raised
  • easy to borrow finance due to size and reputation so less risky for banks
  • can easily dominate the market
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4
Q

disadvantages of a public limited company (4)

A
  • dividends are split between many shareholders
  • control of the business can be diluted or lost as shares are sold on the stock market
  • annual accounts must be shared
  • setting up cots are high and complicated
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5
Q

advantages for the franchiser (2)

A
  • low risk form of growth
  • receives a percentage of all franchisee’s profits each year
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6
Q

disadvantages for the franchiser (2)

A
  • the reputation of the franchise can be ruined by one poor franchisee
  • only a share of profits is received rather than all profits
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7
Q

advantages of a franchisee (3)

A
  • the franchise is a well known business with existing customers
  • industry knowledge and training is provided
  • the franchisee benefits from national advertisements carried by the franchiser
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8
Q

disadvantages for the franchisee (3)

A
  • little control over decision making as franchiser decides on products. store layout and uniform
  • royalties have to be paid each year
  • high initial start up fees
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9
Q

advantages of a multinational (4)

A
  • wages and raw material costs are lower in different countries
  • businesses can avoid legislations in the original country
  • grants can be issued by governments to expand which do not have to be paid back
  • business can avoid tariffs issued by their governments
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10
Q

disadvantages of a multinational (4)

A
  • language barriers can slow communication
  • cultural differences can affect production
  • exchange rates can affect purchasing and paying expenses in different countries
  • time differences can slow communication between head office and branches around the world
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11
Q

central government facts (6)

A
  • provides national service to citizens living in the UK
  • armed forces, NHS, healthcare, transport and infrastructure
  • paid through taxation
  • controlled by politicians
  • includes nationalised companies
  • public sector can be sold making it private
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12
Q

local government facts (3)

A
  • provide service to public schools, refuse collection and street lighting fro free
  • finance comes form taxation collected by the government
  • aim to provide service not to make profits
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13
Q

charities advantages (3)

A
  • charities do not pay tax such as VAT and corporation tax
  • low wage costs due to volunteers working for free
  • private companies are willing to donate and sponsor charities as it is good PR
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14
Q

charities disadvantages (2)

A
  • can be difficult to compete with large marketing budgets of organisations within the private sector
  • charities rely heavily on volunteers who may leave for paid work
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15
Q

voluntary organisation facts (3)

A
  • aim to provide a service for their members or community
  • finance raised through membership subscription
  • controlled and run volunteers
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16
Q

social enterprise advantages (4)

A
  • social aims can mean a social enterprise is liked
  • good quality employees who believe in values attract to organisation
  • likely to receive government grants
  • asset lock - if enterprise shuts down, sales of assets go to benefit the cause
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17
Q

company objectives (8)

A
  • maximising profits
  • managerial objectives
  • survival
  • satisfying
  • providing good quality service
  • sales maximisation
  • CSR
  • growth
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18
Q

methods to ensure good CSR (4)

A
  • ethical responsibilities such as not using child labour
  • donating to charity
  • environmental responsibilities such as being sustainable
  • following laws set by the government
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19
Q

advantages of good CSR (4)

A
  • business gets a good reputation for a caring nature
  • customers agreeing with the aim are more likely to use the business
  • business can attract high quality staff who believes in the ethics of the business
  • society and the environment are kept well benefiting the business in the long run
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20
Q

Advantages of growth (4)

A
  • reduce the risk of failure as business with more products or branches can spread the risk
  • increase in profits as more products are sold
  • removed competition as larger businesses take over smaller ones
  • economies of scale such as bulk buying, finance, specialist functions.
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21
Q

internal growth strategies (4)

A
  • launching new products
  • opening new branches
  • introducing e-commerce
  • hiring more staff
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22
Q

what is diversification benefit and drawback

A

when products are launched across different markets
- which increases potential customers
- spreads the risk across different markets
- although it requires numerous resources and finance

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23
Q

what is horizontal integration

A

this occurs when two businesses form the same sector of industry become one business. can be merging or take over

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24
Q

advantages of horizontal integration (3)

A
  • new larger businesses can dominate the market as competition willi be vastly reduced
  • new business can benefit from economies of scale to reduce prices
  • due to reduced competition the larger businesses can raise prices increasing profits
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25
Q

disadvantages of horizontal integration (3)

A
  • the merge or takeover may breach competition rules
  • quality may suffer due to lack of competition
  • customers may have to pay higher prices for the same goods
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26
Q

what is forwards vertical integration

A

occurs when businesses takes over another business form in a later stage of production.
such as a manufacturer of mobiles taking over mobile phone shop
a secondary business sells products directly to the customers at a higher price increasing profits

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27
Q

advantage of forwards vertical integration (2)

A
  • the business can control supply of its products and could decide to not supply to competition
  • can increase profits by cutting the middle man and adding value itself
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28
Q

advantage of backwards vertical integration (3)

A
  • guaranteed and timely supply of inventory
  • no need to pay a suppliers marked up prices so inventory is cheap
  • quality of supplies can be strictly controlled
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29
Q

Disadvantage for both backward and horizontal vertical integration (2)

A
  • company may be incapable of managing new activities efficiently meaning higher costs
  • focusing on new activities can adversely affect core activities
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30
Q

what is backwards vertical integration

A

a business taking over or merging with a business in an earlier sector of industry such as their supplier

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31
Q

what is lateral integration

A

when a business takes over or merges with a business that is in the same industry but doesn’t provide the same product is they are not in direct competition with each other

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32
Q

advantages of lateral integration (2)

A
  • the business can target new markets and therefore increase sales
  • new products can compliment existing ones
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33
Q

disadvantages of lateral integration (2)

A
  • the lack of knowledge in a slightly different market may affect the performance for the products
  • may affect core activities
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34
Q

what is conglomerate integration

A

when a business in different markets join together (merge) whose activities are unrelated.

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35
Q

advantages of conglomerate integration (5)

A
  • business can spread the risk. is one market fails the losses can be compensated by others
  • overcome seasonal fluctuations meaning all year round sales
  • competition is reduced
  • the buyer acquires the assets of the other company
  • the business gains the customers and sales of the acquired businesses
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36
Q

disadvantages of conglomerate integration (3)

A
  • a business may take over a market they know nothing about causing new businesses to fail
  • having too many products across different markets can cause the company to loose focus on core activities impacting other products
  • business may become too large and inefficient to manage
37
Q

advantages of takeovers (4)

A
  • buying businesses gains the market share and resources of the taken over business
  • risk of failure can be spread
  • economies of scale can be achieved
  • competition is reduced which willi increase sales
38
Q

disadvantages of takeovers (5)

A
  • integration can lead to job losses in the taken over business as the buying business wants its own management and employees
  • if the buying of the business involves moving production to its home country which can have a negative impact on the businesses local economy
  • can be bad for customers as less competition means higher prices
  • changes mean loyal customers are lost as they may dislike them
  • can be expensive to acquire another business
39
Q

advantages of merging (5)

A
  • market share and resources are shared spreading risk of failure and increases profits
  • economies of scale
  • each business can bring different areas of expertise
  • jobs are more likely to be spared in both businesses
  • overcome competition therefore increase prices
40
Q

disadvantages of merging (3)

A
  • customers may dislike changes a merger makes as familiarity of pervious businesses are lost
  • marketing can be expensive
  • can be bad for customers as less competition willi mean higher prices
41
Q

advantages of deintegration (2)

A
  • business can focus on core activities
  • meet competition rules set by EU
42
Q

disadvantages of deintegration (2)

A
  • the business willi have to pay marked up prices for suppliers
  • competitors could acquire deintegrated components and take control of the supply chain
43
Q

what is divestment

A

selling off parts of the business such as branches in order to concentrate on others

44
Q

what is asset stripping

A

taking over another company in order to sell of its assets for a profit

45
Q

de-merger advantages (3)

A
  • each component can concentrate on its own core activities and grow as a result
  • each new component has the best chance to operate efficiently
  • de merger components can divested which can meet competition regulations
46
Q

what is de-merger

A

when a single business splits into two or more separate components

47
Q

disadvantages of de-merger (2)

A
  • customers may be put off by the de merger and abandon the business
  • financial significant costs involved
48
Q

what is outsourcing

A
  • when a business plans for another business to carry out certain activities
  • organisations will do this to concentrate core activities
49
Q

outsourcing advantages (4)

A
  • allows a business to concentrate on core activities
  • less labour and equipment is required for outsourced activities
  • there should be high quality work from the outsourced business
  • benefits form economies of scale so cheaper
50
Q

political factors (5)

A
  • changing laws or legislation
  • changing income tax rates
  • VAT
  • corporation tax
  • public spending
51
Q

political policy

A
  • fiscal
  • monetary
52
Q

economic factors (6)

A

boom
recession
recovery
interest rates
exchange rates
European union - tariffs

53
Q

social factors (5)

A

ageing population
women with professional careers
changing fashion trends
flexible working arrangement
ethical considerations

54
Q

technological factors (4)

A

cloud computing
social media
wi-fi
4G

55
Q

environmental factors (3)

A

weather
recycling
carbon footprint

56
Q

owners interest and influence

A

interest - profits in order to see a return in investments
influence - can invest more money and make important decisions

57
Q

managers interest and influence

A

interest - pay rise or promotion
influence - decision making

58
Q

employees interest and influence

A

interest - job security and pay rise
influence - standard of work and industrial action

59
Q

customers interest and influence

A

interest - want good quality products and services
influence - can spread good or bad word

60
Q

suppliers interest and influence

A

interest - get business debts payed
influence - can change prices and quality

61
Q

conflict between owners and employees

A

employees want a pay rise whereas owners want to maximise profits

62
Q

conflict between customers and owners

A

customers want low prices and value for money whereas owners want to raise prices to maximise profits and meet objectives

63
Q

conflict between suppliers and owners

A

suppliers want to be paid as soon as possible with cash whereas the owners want trade credit to keep cash flow good

64
Q

conflict between government and owners

A

government may want to introduce legislation to improve society however owners may disagree as it impact their company negatively

65
Q

tall structure advantages (4)

A
  • each staff member knows their role and who to report too
  • high chances of promotion opportunities to motivate staff
  • narrow span of control so employees can be regulated
  • managers do not feel as under pressure as there are others who can support them
66
Q

tall structure disadvantages (3)

A
  • communication is slow through the levels which slows down decisions
  • slow reaction to external changes
  • expertise cant share their knowledge with other staff
67
Q

flat structure advantages (4)

A
  • communication is fast
  • fast response to external factors
  • managers have less delegated tasks so staff feel trusted
  • staff are empowered to make decisions
68
Q

flat structure disadvantages (4)

A
  • fewer promotion opportunities so staff may leave to gain promotion
  • staff may have more tasks which can increase the pressure
  • snap decisions and less planning time
  • subordinates have no one to seek help form
69
Q

flat structure features (3)

A
  • few levels of management
  • short chain of command
  • for small to median organisations
70
Q

tall structure features (3)

A
  • many levels of management so different levels of responsibility
  • for larger organisations
  • long chain of command
71
Q

what is delayering

A
  • removing levels of management
72
Q

delayering advantages (4)

A
  • money is saved from paying salaries of the management level that is removed
  • quicker decision making and communicating as shorter chain of command
  • faster response to external changes
  • wider span of control
73
Q

delayering disadvantages (3)

A
  • fewer promotion opportunities for staff
  • organisation will loose key members of staff in the reconstruction
  • remaining employees may feel unsecured as others were kicked off
74
Q

what is a centralised structure

A
  • decision making and control is kept at the very top level
75
Q

advantages of a centralised structure (2)

A
  • high corporate identity and decisions are made for the whole organisation
  • low risk of information leaking from branches or departments
76
Q

disadvantages of a centralised structure (3)

A
  • less responsibility is given to subordinates which can results in demotivation of staff
  • decisions willi not reflect the need of the local market
  • organisation willi react slowly to external factors
77
Q

what is a decentralised structure

A
  • control is delegated to individual branches
78
Q

advantages of a decentralised structure (4)

A
  • quick reaction to external factors
  • decisions are made quickly
  • subordinates are empowered encouraging creativity
  • senior management feel relieved from all decision making
79
Q

Disadvantages of decentralised structures (4)

A
  • corporate image can be lost if each branch is operating differently
  • local branches could compete if they can make key decisions
  • additional training is required for middle management which is time consuming
  • lower level management can make decisions that could harm the whole businesses
80
Q

what is a matrix structure

A

teams of skilled workers to make a project or carry out a skilled task

81
Q

advantages of a matrix structure (3)

A
  • skills and knowledge can be shared
  • complex problem solving occurs
  • staff can use their expertise and have job satisfaction and motivation
82
Q

disadvantages of a matrix structure (3)

A
  • many managers means higher wage costs
  • duplication of resources such as administration and equipment
  • staff may be confused on who to report to
83
Q

what is an Entrepreneurial structure

A

used by small organisations with one main decision maker

84
Q

advantages of an entrepreneurial structure (3)

A
  • decisions are made quickly
  • staff know who to report too
  • high quality decisions are made as decision makers are experienced
85
Q

disadvantages of entrepreneurial structure (3)

A
  • heavy workload for main decision maker
  • if owner is busy decisions cant be made
  • other staff cant show initiative and creativity and possibly demotivating some staff
86
Q

what is a strategic decision (4)

A
  • made to set out aims
  • made by senior management
  • long term decisions
  • high risk
87
Q

what is a tactical decisions (4)

A
  • made to put strategic decisions in action
  • made by middle management
  • middle term
  • medium risk
88
Q

what is an operational decision (4)

A
  • day to day decisions so short term
  • made by supervisors and all staff
  • low level risk
  • made in response to external factors

business (7 decks)

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