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Business > introduction to business and business objectives and strategy > Flashcards

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
Q

advantages of a strategic alliance

A
  • 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
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26
Q

disadvantages of a strategic allaince

A
  • 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
Q

what is a co operative

A

a business owned by its members

28
Q

internal stakeholders

A

someone who has an interest from within the business
managers

29
Q

external stakeholders

A

someone who has an interest from outside the business
suppliers

30
Q

what is a mission statement

A

a description of a businesses cultures, values and purpose

31
Q

advantages of having a mission statement

A
  • helps business make the right decisions
  • investors can feel confident about investing into the business if it sticks to the mission statement
32
Q

disadvantages of having a mission statement

A
  • can be unrealistic
  • can take a lot of money and time to come up with the right statement
33
Q

corporate social responsibility

A

a business model which helps the business stay socially accountable to itself, shareholder and public

34
Q

how can plan-do-review cycle improve business performance

A

it can help spot mistakes and build on efficiency and reduce waste

35
Q

contingency plans

A

a back up strategy for a business to respond efficiently to an event/incident

36
Q

advantages of having a contingency plan

A
  • 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
Q

disadvantages of having a contingency plan

A
  • 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
Q

opportunity cost

A

the loss of one option when the alternative has been chosen

39
Q

crisis management

A

dealing with unexpected and usually unwelcome events eg- covid19w

40
Q

why should a business have a crisis management

A

to try and retain company reputation and so that you don’t loose current or future customers

41
Q

porters 5 force model

A

a model which identifies 5 competitive forces that shape every industry and helps determine the businesses weaknesses and strengths

42
Q

what are the 5 forces

A
  • threat of new entrants
  • threat of substitutes
  • bargaining power of buyers
  • bargaining power of suppliers
  • degree of rivalry
43
Q

benefits of porters 5 forces

A
  • helps to estimate the competition in the industry
  • helps with decision making
44
Q

negatives of porters 5 forces

A
  • model is only short and brief
  • results are short term
  • doesn’t give an action plan
45
Q

non financial measures of business performance

A
  • customer reviews
  • staff retention
  • market share
  • customer retention
46
Q

financial measures of business performance

A
  • cash flow
  • profits
  • financial statements
  • market share
  • budgets
47
Q

differenced between cash flow and profit

A

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
Q

what are the factors affecting the choice of legal structure of a business

A
  • the amount of control you have
  • the amount of tax you pay
  • how big the business is
  • the risk you want to have
49
Q

what are the functions of finance department

A

storing and sorting all the records of figures and financial activities that go into running the business

50
Q

what are the functions of HR department

A

deals with the labour matters within the business

51
Q

what are the functions of the marketing department

A

responsible for creating marketing content to persuade potential clients into buying there products/services

52
Q

what are the functions of the production department

A

ensures the business is using all the resources efficiently to a satisfactory quality for customers

53
Q

how is the size of a business measured?

A
  • number of employees
  • market share
  • sales turnover
  • capital employed
54
Q

what are corporate objectives

A

specific tasks and activities a business must accomplish to satisfy corporate aims

55
Q

what are tactical objectives

A

projects that need to be done to implement a strategy

56
Q

what are strategic objectives

A

organisational goals which help set and shape the strategy of a business
- create new products

57
Q

what are operational objectives

A

specific, measurable targets the business sets for day to day operations

58
Q

what is the importance of setting SMART objectives

A
  • accountability
  • reassurance
  • timing
  • keeps the project moving foreward
59
Q

what is the hierarchy of objectives

A

starts with mission, corporate, functional, team, individual
- they increasingly become more detailed as you go from top to bottom

60
Q

objectives of stakeholders

A
  • high profits so high dividends
  • business growth to increase the return on capital invested
61
Q

what are conflicts between different stakeholders

A
  • 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
Q

how should a business deal with stakeholders having conflicting objectives

A
  • negotiation
  • compromise
  • effective communication
63
Q

what is the impact of changing a mission statement

A

as the business is constantly growing and evolving it can create more innovation and keep the employees on task to fit into morals

64
Q
A

Business (6 decks)

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