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Business Theme 3 > Key Terms > Flashcards

Key Terms Flashcards

1
Q

Objectives

A

Statements of specific outcomes that are to be achieved

  • the specific outcomes of business strategy
  • targets which the business adopted in order to achieve its aims
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2
Q

Corporate objectives

A

Objectives that relate to the business as a whole

Driven and influenced by vision, mission and aims of business

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3
Q

Short termism

A

Where a business prioritises short term rather than long term performance

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4
Q

Strategy

A

How the business intends to achieve its objectives

  • long term
  • made by senior management
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5
Q

Tactics

A

Support achievement of specific targets

  • short term
  • delegates to junior management
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6
Q

Mission statement

A

Overriding purpose of the business and the reason for its existence

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7
Q

Ansoff Matrix

A

Famous marketing planning model that helps business determine its product and market strategy

  • market penetration
  • product development
  • market development
  • diversification
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8
Q

Product development

A

Growth strategy where a business aims to introduce new products into existing markets

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9
Q

Market development

A

Growth strategy involves a business seeking to sell its existing products into new markets

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10
Q

Diversification

A

A growth strategy where a business markets new products in new markets

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11
Q

Market penetration

A

Growth strategy where a business aims to sell existing products into existing markets

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12
Q

Competitive advantage

A

An advantage over competitors gained by offering consumers greater value, either by means of lower prices of by providing greater benefits and service that justifies higher prices

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13
Q

Distinctive capabilities

A

The capabilities a business has which other firms cannot replicate even after they realise what the benefits are that owning the capability confers

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14
Q

Core competencies

A

Something unique that a business has, or can do, strategically well, which provide a source of competitive advantage

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15
Q

Porters generic strategies

A

Porter argued that differentiation and low cost are effective strategies for firms to gain competitive advantage

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16
Q

Porter: low cost strategy

A

The objective is to become the lowest cost operator in a market or industry

Typically involves production or operations on a large scale which enables business to exploit EOS

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17
Q

Porter: differentiation

A

Where a business is able to distinguish its product or service in the minds of consumers as offering better value- perhaps through quality, branding or other attributes that consumers value

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18
Q

Product portfolio analysis

A

Assesses the posterior of each product of brand in a firm’s portfolio to help determine the right marketing strategy

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19
Q

Boston matrix

A

A model which helps businesses analyse their portfolio of businesses and brands. Categorises the products into four different areas based on market share and market growth

  • stars
  • cash cows
  • question marks
  • dogs
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20
Q

Boston matrix: starts

A

High growth products competing in markets where they are strong compared with the competition

  • need heavy investment to sustain growth
  • growth will slow and become cash cows ;assuming they keep their market share)
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21
Q

Boston matrix: cash cows

A

Low growth products with a high market share

  • mature, successful products with relatively little need for investment
  • need to be managed for continued profit- so they continue to generate the strong cash flows the company needs for its stars
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22
Q

Boston matrix: question marks

A

Products with low market share operating in high growth markets

  • suggest they have potential, but may need substantial investment to grow market share at the expense of larger competitors
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23
Q

Boston matrix: dogs

A

Products that have a low market share in unattractive, low growth markets

  • may generate enough cash to break even
  • rarely worth investing in
  • usually sold or closed
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24
Q

SWOT analysis

A

A method for analysing a business, it’s resources and it’s environment

  • strengths
  • weaknesses
  • opportunities
  • threats
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25
Q

Strengths

A

Features within the control of a business that are a source of competitive advantage

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26
Q

Weaknesses

A

Features within the control of a business that are a source of competitive advantage

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27
Q

Opportunities

A

Features of the external environment that crate opportunities for a business to leverage its strengths to benefit the business

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28
Q

Threats

A

Features of the external environment that threaten the performance and position of a business if not addressed

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29
Q

PESTLE

A 
Useful way to analyse the external environment 
Political
Economic 
Social
Technological 
Legal 
Ethical/ environmental
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30
Q

Economic growth

A

Measure of the value of output (activity) in the economy

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31
Q

Market demand

A

How much of a good or service a consumer wants

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32
Q

Real incomes

A

Measure the amount of disposable income available to consumers

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33
Q

Interest rates were

A

Reward for saving and the cost of borrowing expresses as a percentage of the money saved or borrowed

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34
Q

Demography

A

Concerned with the size and completion of a population

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35
Q

Environmental issues

A

Concern for the impact of business on the environment is now a significant issue that goes well beyond the potential reputational damage from issues such as pollution and noise

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36
Q

Porters five forces

A

A framework for analysing the nature of competition within an industry

  • bargaining power of customers
  • bargaining power of suppliers
  • threat of new entrants to a market
  • threat from substitute products
  • intensity of rivalry
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37
Q

EOS

A

When unit costs fall as output increases

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38
Q

Overtrading

A

When a business expands to quickly without having the financial resources to support such a quick expansion

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39
Q

Organic growth

A

Involves expansion from within a business
E.g
Expanding product range, number of business units and locations

40
Q

Takeover

A

Involves one business acquiring control of another business

41
Q

Merger

A

Combination of two previously separate firms which is achieved by forming a completely new firm into which the two original businesses are integrated

42
Q

Forward vertical

A

Acquiring a business further up in the supply chain
E.g
Manufacturer guys a distributor

43
Q

Backward vertical

A

Acquiring a business operating earlier in the supply chain

E.g retailer buys a wholesaler

44
Q

Horizontal

A

Acquiring a business at the same stage of the supply chain

E.g manufacturer buys a competitor

45
Q

Conglomerate

A

Where the acquisition has no clear connection to the business buying it

46
Q

Joint venture

A

A separate business entity created by two or more parties involving shared ownership, returns and risks

47
Q

Horizontal integration

A

Acquiring a business at the same stage of the supply chain

48
Q

Vertical integration

A

Acquiring a business at right an earlier or later stage of the supply chain

49
Q

External growth

A

Growth that comes from outside the business

E.g takeover or joint venture

50
Q

Franchising

A

When a franchisor grants a licence (franchise) to another business (franchisee) to allow it trade using the brand/ business format to

51
Q

Quantitative sales forecasting

A 
Forms the basis for most other common parts of business planning: 
HR plan 
Production/ capacity plans 
Cash flow forecasts 
Profit forecast and budgets
52
Q

Extrapolation

A

Involves the use of trends establish by historical data to make predictions about future values

53
Q

Moving average

A

Helps point out the growth trend and it is this which extrapolation would use first to predict the path of future sales

54
Q

Correlation

A

Method of sales forecasting that looks at the strength of a relationship between two variables

55
Q

Payback period

A

The time it takes for a project to repay its initial investment

56
Q

Average rate of return

A

Looks at the total accounting return for a project to see if it meets the target return

57
Q

Discounted cash flow (NPV)

A

Calculated the monetary value now of the projects future cash flows

58
Q

Expected value

A

This is the financial value of an outcome calculated by multiplying the estimated financial effect by its probability

59
Q

Net gain

A

This is the value to be gained from taking a decision

Calculation
Expected value of each outcome + deducting costs associated with decision

60
Q

Critical path analysis

A

Management planning tool to help manage complex and time critical projects

61
Q

Subjective decision making

A

Based on intuition, gut feel and experience

62
Q

Evidence based decision making

A

Based on data and analysis

63
Q

Organisational culture

A
  • shared values of a business
  • beliefs and norms that affect every aspect of work life
  • behaviours typical of day to day behaviour
64
Q

Power culture

A

Held by just a few individuals whose influence spreads throughout the organisation

65
Q

Role culture

A

Based on rules
Highly controlled with everyone in the organisation knowing what their roles and responsibilities are
Power is determined by a persons posterior

66
Q

Task culture

A

Forms when teams in an organisation are formed to address specific problems or progress projects

67
Q

Person culture

A

Individuals see themselves as unique and superior to the organisation

68
Q

Stakeholder

A

Any individual or organisation who has a vested interest in the activities and decision making of a business

69
Q

Shareholder

A

Owner of a business

70
Q

Ethics

A

Moral guidelines which govern acceptable behaviour

71
Q

Ethical behaviour

A

Doing what is morally right

72
Q

Corporate social responsibility

A

Concerned with:

  • the extent to which a business addresses the concerns and obligations to its wider stakeholders
  • actions a business takes over and above the minimum required by law in addressing societal needs and wants
73
Q

Income statement

A

Measures the business’ performance (income and costs) over a given period of time

74
Q

Statement of financial position

A

A snapshot of the business’ assets (what it owns or is owed) and it’s liabilities (what it owes) on a particular day

75
Q

Cash flow statement

A

Shows how the business has generated and disposed of cash and liquid funds during a specific period

76
Q

Gearing

A

Measures the proportion of a business’ capital (finance) provided by debt

77
Q

Capital

A

Represents the finance provided to it to enable it to operate over the long term growth

78
Q

Equity finance

A

Proportion and amount of the capital structure that is provided by shareholders or left as retained profits
E.g
Share capital
Retained profits

79
Q

Debt finance

A

Finance provided to the business by external parties

E.g bank loans

80
Q

ROCE

A

Tells us what returns (profits) the business has made on the resources available to it

81
Q

Ratio analysis

A

Involves the comparison of financial data to gain insights into business performance

82
Q

Labour turnover

A

Measures the percentage of the workforce (employees) that leave a business within a given period (usually a year)

83
Q

Absenteeism

A

An employees intentional or habitual absence from work

84
Q

Empowerment

A

Involves giving people greater control over their working lives

85
Q

Change management

A

The process that ensures a business responds to the environment in which it operates

86
Q

Step change

A

Dramatic or radical change

Required when a business has suffered from strategic drift

87
Q

Incremental change

A

Many small changes which take place as a business develops a responds to subtle changes in the external environment

88
Q

Disruptive change

A

Change that arises from changes in the external environment which impact the market as a whole

89
Q

Internal causes of change

A

Arises from factors within the control of the business

90
Q

External causes of change

A

Arise from factors outside the control of the business I.e as a result of changes in the external environment

91
Q

Scenario planning

A
  • prepare for predictable and quantifiable problems
  • preparing for unexpected and unwelcome events
    Minimise the impact of a significant foreseeable event and to plan for how the business will resume normal operations after the event
92
Q

Risk management

A

Identifying and dealing with the risks threatening a business

93
Q

Crisis management

A

Handling potentially dangerous events for a business

94
Q

Risk

A

Possibility of loss or business damage

A threat that may prevent or hinder the ability to achieve business objectives

95
Q

Succession planning

A

Planning for the orderly replacement of key management and employees

Business Theme 3 (7 decks)

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