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introduction to business and business objectives and strategy Flashcards

1
Q

what are primary organisations

A

raw materials are extracted

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2
Q

what are secondary organisations

A

where goods are made from the raw materials

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3
Q

what are tertiary organisations

A

where the goods and services are sold

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4
Q

what are private sectors organisations

A

organisations ran by individuals eg Tesco

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5
Q

what are public sector organisations

A

organisations ran by the government eg NHS

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6
Q

what are third sector organisations

A

organisations ran as a charity and not in search for a profit

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7
Q

local markets

A

operates only in surrounding areas of the organisation

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8
Q

international markets

A

market outside of the organisations country

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9
Q

national business

A

operates in only one country

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10
Q

multinational business

A

operates in more than 2 countries

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11
Q

unlimited liability

A

owners are personally responsible for any debts in the business

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12
Q

limited liability

A

When the business owners are only responsible for business debts up to the value of their financial investment in the business

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13
Q

private limited company [ ltd ]

A
  • can sell shares in the business but only with people invited in
    has separate legal identity from its owners
  • limited liability
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14
Q

public limited company [ plc ]

A
  • sells shares on the stock market to anyone
  • limited liability
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15
Q

legal structure of a sole trader

A

unlimited liability - high riskier loans

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16
Q

franchise

A

a business that gives the right to another person to sell
goods or services using its name.

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17
Q

franchisees

A

a business that agrees to manufacture, distribute or sell branded products under the licence of a franchisor

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18
Q

franchisor

A

a business that gives franchisees the right to manufacture, distribute or sell its branded products in return for a fixed sum of money

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19
Q

advantages of setting up a franchise

A
  • franchisee gets access to free marketing and training
  • easier to make money
  • less risk
  • franchisee is part of an established business
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20
Q

disadvantages of setting up a franchise

A
  • the franchisee has to pay a percentage of its profits to the franchisor. This is known as royalties
  • it can be expensive to set up
  • the franchisee cannot make individual business decisions without consulting the franchisor
  • other franchises can be set up locally, which can cause competition for customers
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21
Q

joint venture

A

two companies agree to come together to create an entirely new, separate company that each of the existing companies become a parent to.
eg google and nasa creating google earth

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22
Q

advantages of joint ventures

A
  • JV partners benefit from each other’s expertise and resources
  • Reduces the risk of a growth strategy - particularly if it involves entering a new market or diversification
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23
Q

disadvantages of joint ventures

A
  • Risk of a clash of organisational cultures
  • the objectives of each JV partner may change, leading to a conflict of objectives with the other
  • could be an imbalance in levels of expertise, investment or assets brought into the venture by the different partners
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24
Q

strategic alliance

A

an arrangement between two companies to undertake a mutually beneficial project while each retains its independence

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25
advantages of a strategic alliance
- May result in gaining customers, especially ones in unfamiliar markets - May generate additional revenue and increase profitability - May diversify a company's revenue stream - May reduce operational risk of a company due to the addition of unique assets - May positively influence the brand and perception of the company
26
disadvantages of a strategic allaince
- May require more work in collaborating and communicating with larger teams - May result in one side getting a better deal than the other (even if this wasn't what was planned) - May result in conflict should the alliance members disagree on longer-term strategy - May negatively influence the brand and perception of the company
27
what is a co operative
a business owned by its members
28
internal stakeholders
someone who has an interest from within the business managers
29
external stakeholders
someone who has an interest from outside the business suppliers
30
what is a mission statement
a description of a businesses cultures, values and purpose
31
advantages of having a mission statement
- helps business make the right decisions - investors can feel confident about investing into the business if it sticks to the mission statement
32
disadvantages of having a mission statement
- can be unrealistic - can take a lot of money and time to come up with the right statement
33
corporate social responsibility
a business model which helps the business stay socially accountable to itself, shareholder and public
34
how can plan-do-review cycle improve business performance
it can help spot mistakes and build on efficiency and reduce waste
35
contingency plans
a back up strategy for a business to respond efficiently to an event/incident
36
advantages of having a contingency plan
- reduces risks to the business - keeps the business organised in case of emergency - can help the business to reopen very quickly after an event
37
disadvantages of having a contingency plan
- can take time to make - will need to be updating frequently - could be a vague outline of what should be done which may not be helpful
38
opportunity cost
the loss of one option when the alternative has been chosen
39
crisis management
dealing with unexpected and usually unwelcome events eg- covid19w
40
why should a business have a crisis management
to try and retain company reputation and so that you don't loose current or future customers
41
porters 5 force model
a model which identifies 5 competitive forces that shape every industry and helps determine the businesses weaknesses and strengths
42
what are the 5 forces
- threat of new entrants - threat of substitutes - bargaining power of buyers - bargaining power of suppliers - degree of rivalry
43
benefits of porters 5 forces
- helps to estimate the competition in the industry - helps with decision making
44
negatives of porters 5 forces
- model is only short and brief - results are short term - doesn't give an action plan
45
non financial measures of business performance
- customer reviews - staff retention - market share - customer retention
46
financial measures of business performance
- cash flow - profits - financial statements - market share - budgets
47
differenced between cash flow and profit
cash flow is how much money is coming in and out of the business and profit is what is left after all expenses are paid
48
what are the factors affecting the choice of legal structure of a business
- the amount of control you have - the amount of tax you pay - how big the business is - the risk you want to have
49
what are the functions of finance department
storing and sorting all the records of figures and financial activities that go into running the business
50
what are the functions of HR department
deals with the labour matters within the business
51
what are the functions of the marketing department
responsible for creating marketing content to persuade potential clients into buying there products/services
52
what are the functions of the production department
ensures the business is using all the resources efficiently to a satisfactory quality for customers
53
how is the size of a business measured?
- number of employees - market share - sales turnover - capital employed
54
what are corporate objectives
specific tasks and activities a business must accomplish to satisfy corporate aims
55
what are tactical objectives
projects that need to be done to implement a strategy
56
what are strategic objectives
organisational goals which help set and shape the strategy of a business - create new products
57
what are operational objectives
specific, measurable targets the business sets for day to day operations
58
what is the importance of setting SMART objectives
- accountability - reassurance - timing - keeps the project moving foreward
59
what is the hierarchy of objectives
starts with mission, corporate, functional, team, individual - they increasingly become more detailed as you go from top to bottom
60
objectives of stakeholders
- high profits so high dividends - business growth to increase the return on capital invested
61
what are conflicts between different stakeholders
- managers want high profit on sales whereas customers want low prices for high quality goods - if production moves overseas to reduce staff costs it will mean existing staff loose their job but managers keep more money
62
how should a business deal with stakeholders having conflicting objectives
- negotiation - compromise - effective communication
63
what is the impact of changing a mission statement
as the business is constantly growing and evolving it can create more innovation and keep the employees on task to fit into morals
64

Business (6 decks)

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