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Business environment > Module 1 revision cards > Flashcards

Module 1 revision cards Flashcards

1
Q

Name 3 sectors of business activity

A

Primary, Secondary & Tertiary

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2
Q

Tertiary can be split into what 2 further sections

A
  1. Quaternary - knowledge sector. Scientific research, IT
  2. Quinary - high level decision makers and domestic activities. Gov officials, childminders
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3
Q

How do you define the size of a company

A

Number of employees & turnover. Micro, small, medium and large

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4
Q

What are SME’s

A

Small and medium sized enterprises

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5
Q

Why size an organisation

A

Helps to inform gov policy e.g. tax rates and decide who is eligible for subsidies

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6
Q

What is a limited liability structure

A

Can only lose what money has been invested/put in

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7
Q

What is an unlimited liability structure

A

Can lose their business and personal possessions up to the value of what is owed

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8
Q

Name all 6 types of organisation in the private sector

A

1.Sole Trader
2.Partnership - General, Limited Liability & Limited
3. Limited Companies - by shares (public or private) or guarantee
4. Parent & Subsidiary
5. Unincorporated Associations
6. Co-operatives

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9
Q

Name all types of organisation in the public sector

A
  1. Central & Local Government
  2. Public Corporations
  3. Municipal Enterprises
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10
Q

Name all types of voluntary organisations

A
  1. Charities
  2. Foundations
  3. Community Groups
  4. Recreational Clubs
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11
Q

Company objectives are dependant on what factors

A
  1. Business sector
  2. Legal structure/ownership type
  3. Goals of stakeholders
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12
Q

What are the objectives of a private sector organisation

A

Breakeven
Survival
Profit maximisation
Growth

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13
Q

What are the objectives of public sector organisations

A

Service provision
Reducing costs
Value for money
Meeting charitable purposes

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14
Q

What are the objectives of voluntary sector organisations

A

Helping a particular cause
Benefit and enrich society
Meet charitable purposes

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15
Q

What 3 statements are used to help achieve company objectives

A

Mission
Vision
Value

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16
Q

What are the main internal and external uses of vision and mission statements

A

Internal - help strategic planning, develop KPIs, motivate employees to work to common goals, develop ethical framework

External - encourages support from 3rd parties, better relationships with customers, suppliers and external stakeholders. good PR tool

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17
Q

What is the purpose of org charts

A

Show how work roles are delegated, controlled and coordinated
Show how information and work flow through an organisation

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18
Q

What should be considered when structuring workforce

A

Type of business and how complex operations are
Efficiency of operations
Culture and future growth
Layers of management
Where decision making lies

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19
Q

What 2 ways can organisations be designed/divided

A

Vertical/tall
Horizontal/flat

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20
Q

Characteristics of vertical organisation

A

Many layers of management (CEO and delegating down)
Employees and departments have well defined responsibilities
Must have strong leadership at the top to avoid poor decision making. reduced productivity and low morale

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21
Q

Characteristics of a horizontal organisation

A

Flat structure with less layers of manager
Better employee morale as they feel more part of decision making process
Faster response to issues as less layers
Cost less to run as less managers to pay
More transparent as easier for information to flow through the biz
May have less defined roles which can cause problems and make task delegation difficult
If organisation grows, becomes difficult to manage

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22
Q

Authority for decision making can be structured in 2 ways, what are they

A

Centralised
Decentralised

23
Q

Explain the characteristics of centralised authority

A

Senior managers who delegate to middle/lower managers = well defined command

Good control and consistency across the business

Quick decision making

Info stored in one place

Less flexible when responding locally

Demotivating for managers lower down

Example: military

24
Q

Explain the characteristics of decentralised authority

A

Decisions can be made more locally

Quicker decisions that affect local areas

Less control and consistency through business

Information not all stored centrally

More motivation for lower managers in decision making

More opportunities for staff development

Less bureaucracy

Incurred costs for role duplication

Policies can be harder to impliment company wide

25
Q

Organisational structures are designed in 3 ways, what are they

A

Functional
Divisional
Matrix

26
Q

How is a board made up and what is their role

A

Chair
CEO
Executive directors
Non executive directors
Independent directors
Senior independent director

27
Q

What are the factors that make an NED independent

A

not an employee in the last 5 years
no material business relationship in the last 3 years
no additional remuneration except director fee
no close family tie with senior employees or advisors
doesnt represent a significant shareholder
hasnt served on the board for 9 years from first appointment

28
Q

3 committees that INEDs are involved in

A

Remuneration
Audit
Nomination

29
Q

Why is it important to separate the role of chair and CEO

A

Avoid dominance of 1 person
Encourage constructive challenge and discussion
Avoid poor decision making

30
Q

What must be considered in board size and composition

A

A balance of skills and abilities
No domination of one person
Clear division of leadership of the board and leadership of the business
Excluding the chair at least half directors should be INEDs
Diverse in gender and ethnicity

31
Q

Name the 2 types of board structure and how they are different

A

Unitary
Two tier

32
Q

What is the definition and role of stakeholders

A

Individuals, groups or organisaitons who have an interest or stake in the business
They affect and influence the decisions made by the business

33
Q

How are stakeholders grouped

A

Primary and secondary (by proximity to the business)
Internal and external (by their connection to it)

34
Q

Define internal and external stakeholders

A

Internal - aware and involved in the internal matters of the business
External - do not know about the day to day matters but are affected by its activities

Based on their proximity to the business

35
Q

Name internal stakeholders

A

Shareholders
Employees

36
Q

Name external stakeholders

A

Financial institutions
Customers
Suppliers
Creditors
Debtors
Government
Trade unions

37
Q

Define primary stakeholders

A

Anyone who has direct engagement, functional or financial interest in the business

38
Q

Define secondary stakeholders

A

Those who have an interest in the business but no direct engagement or direct involvement

39
Q

Give examples of conflicts between different types of stakeholder

A

Owners high profit may not want to pay high wages
Directors focus on increased sales, owners want high profit
Business move customer service abroad may impact customer service

40
Q

Explain stakeholder theory of corporate governance

A

Business should make decisions considering and creating all stakeholders and not just owners or shareholders
Responsibility business has to society as a whole
Argues in favour of corporate social responsibility

41
Q

Define “business environment”

A

A set of factors that have a DIRECT effect on the companies operations e.g technology, financial resource

42
Q

Define internal and external organisation environment

A

Internal - factors inside the org that may affect the way it operates e.g company structure and resources to carry out its biz activities

External - factors outside of the org that may affect the way it operates e.g customers, suppliers, competitors

43
Q

Define situational analysis and give example of types of analysis used

A

The process of collecting, evaluating and organising info regarding internal and external environments e.g SWOT & LoNGPESTEL to help determine where the biz is and where help to where it wants to go

44
Q

List benefits of performing situational analysis

A

Thorough understanding of how biz operates
Devise clear path from where it is to where it wants to go
Helps realise company vision
Identify issues and anticipate changes in advance so can plan

45
Q

What does LoNGPESTEL stand for

A

Local
National
Global
Politics - policy and legislation
Environment - climate change, eco friendliness
Sociocultural - consumer behaviour, demographics
Technology - advancements in mobile, new production
Economic - taxes, inflation, wage costs
Legal - health and safety, consumer protection

46
Q

List benefits and drawbacks of PESTEL

A

Focuses specifically on key external areas

Doesnt consider internal
Relies heavily on sourcing external data and info
Some data not easy to find
Factors can change quickly

47
Q

What does SWOT stand for

A

Strengths - internal to the org, tangible and intangible assets
Weaknesses - internal to the org, things that place biz at a disadvantage
Opportunities - external to the org, attractive factors that would allow the business to thrive and prosper
Threats - external to the org, factors beyond the biz control but can help foresee and put a plan in place to avoid

48
Q

List benefits and drawbacks of SWOT

A

Looks at both internal and external factors
Doesn’t rely on obtaining potentially difficult info
Provides a visual overview

Quite black and white
Doesn’t cover anything that doesn’t fit into the 4 options
Doesn’t allow overlap into more than one area
Subjective to the individual creating the analysis
Doesnt specify where to focus attention

49
Q

What are the 3 sectors of business

A

Private companies
Public companies
Voluntary organisations

50
Q

What is the purpose of the vision, mission and values statements

A

To help with the companies strategic planning and company objectives

51
Q

What is the purpose of the values statement for a company

A

Sets out the behaviour, principles and values that the leaders will follow when actioning their mission and values statements

52
Q

Name the 3 types of partnership and how the differ

A

General - all equal for the debts and liabilities of co

Limited - General partner = liability. Silent partners = no liability. Silent must have no day to day running in the business

Limited liability - Assets of other partners not at risk if one is sued

53
Q

What is the purpose of situational analysis

A

To collate, evaluate and organise information on internal and external environments to help devise a clear path from where the company is towards their desired position

54
Q

Consequences of not understanding a business external environment

A

Management implementing unrealistic strategy
Declines in profit, reputation and market share
Not responding to opportunities or risks

Business environment (1 decks)

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