KEY FACTS Flashcards
what is retained profit?
an internal source of finance where profit it built up in business over the years for later investment
-no interest has to be paid on this money
what is rationalisation?
when a manger reorganises the business to take it more efficient e.g through selling some of its assets to generate capital and then leasing them back
what are the short term external sources of finance?
- overdrafts
- debt factoring
what are overdrafts?
where a bank lets a business have a negative about of money in the bank
what is debt factoring?
when banks take unpaid invoices off the hands of the business and give them an instant cash payment
what are examples of long term external sources of finance?
Bank loans
- venture capitalists
- crowd funding
what are bank loans and what does a business need to get one?
when business can borrow a fixed amount of money and pay it back over a period
-businesses need security for a loan which is usually in the form of property
advantages of bank loans?
- guranteed money
- only have to pay back loan and interest,the business won’t own any of the business
- interest rates are lower than for an overdraft
disadvantages of bank loans?
- hard to arrange
- may be hard to keep up with the payments
- theres an early pay back charge
what is a venture capitalist?
this is funding in the from of share or land capital thats invested in a business thats thought to be at high risk
what info is gathered from market mapping?
- spot a gap in the market
- shows closet competitors
- if sales are declining a market map may be used to see how they are viewed and how they can reposition themselves
- shows how much a customer is willing to pay
what is extrapolation?
when trends from previous years are continued to the future to forecast future sales
whats an issue of using correlation?
doesn’t show course and effect
what does it mean if a product is price elastic?
-the price changes increases with demand
what does it mean if a products price inelastic?
the demand doesn’t change with price
what is concentrated and differentiated marketing?
concentrated marketing involves targeting one or two segments,good for smaller businesses
differentiated marketing - involves targeting several segments
what does the boston matrix do and what are the components?
-compares market growth with market share
stars,question marks,cash cows and dogs
whats an imitative product and an innovative product?
initiative-new to business but already established in the market
innovative-spotting a gap in the market
what is price skimming?
when new and innovative products are sold at high prices when they first reach the market
-companys such as apple use this long term as a way of keeping the product exclusive
what is penetration pricing
launching a product at a low price in order to attract customers and gain market share
hard hr approach characteristics?
- employees are seen a resource
- hired on a short term basis
- apprasials are judgemental
- training is only one to meet production needs
soft hr approach characteristics?
- emplyees are most important resource
- managed on a long term basis
- training is provided
whats staff turnover and staff retention?
turnover-the promotion of staff leaving a business
retention- the ability a company has to keep employees
whats a span of control?
number of people who directly report to the manager
