paper 2 theme 3 revision

Question 1

What is the acronym for PESTLE?

Answer 1

Political
Economic
Social
Technological
Legal
Environmental

Question 2

What are the sections of ansoffs matrix

Answer 2

•Market penetration-existing products into existing markets (least risk top left)
•product development-new products into existing markets (mid risk top right)
•Market development existing product in new market (mid risk bottom left)
•Diversification new product into new market (high risk bottom right)

Question 3

What is the hierarchy of objectives?

Answer 3

Aim
mission
corporate objectives
functional objectives
business unit/individual targets

Question 4

What is the difference between mission statement’s and aims?

Answer 4

•Mission statement
-overriding problem of business
-reason for its existence
-strategic perspective
-vision for the future

Question 5

What is the gearing ratio equation

Answer 5

non current liabilities
—————————- x 100
capital employed.

Question 6

what is capital employed ?

Answer 6

total equity + non current liabilities

Question 7

What is return on capital employed equation?

Answer 7

operating profit
———————- x100
capital employed

Question 8

how do you work out net profit margin?

Answer 8

profit for the year
————————- x100%
revenue

Question 9

how do you work out current ratio?

Answer 9

current assets
———————
current liabilities

Question 10

how do you work out operating profit margin?

Answer 10

operating profit
———————- x100
revenue

Question 11

what is the acid test ratio?

Answer 11

current assets-inventory
———————————-
current liability’s

Question 12

what is gross profit margin?

Answer 12

gross profit
—————-x100
revenue

Question 13

what are porters 5 forces

Answer 13

•threat of new entry
•competitive rivalry
•buyer power
•supplier power
•threat of substitution

Question 14

what are the three current assets ?

Answer 14

inventory
receivables
cash

Question 15

what are your current liabilities?

Answer 15

suppliers
overdraft

Question 16

what is working capital?

Answer 16

current assets-current liabilities

Question 17

what is swot?

Answer 17

Strength, weakness (internal)
opportunities, threats(external)

Question 18

what are economies of scale?

Answer 18

as output rises cost per unit falls

-INTERNAL -EXTERNAL
purchasing. infrastructure
technical. technology
managerial knowledge
financial

Question 19

problems arising from growth?

Answer 19

diseconomies of scale
internal communication
over trading

Question 20

what are the types of mergers and takeovers (inorganic growth)?

Answer 20

backward vertical-merge or takeover one of its suppliers
forward vertical- merge or takeover one of its customers
horizontal-merge or takeover one of its rivals

Question 21

what are the benefits and limitations of international frantic growth?

Answer 21

-benefits
•synergy
•economies of scale
•profit
-limitations
•regulators
•employees
•cost
•diseconomies of scale

Question 22

what is the difference between mergers and takeovers?

Answer 22

merger-where two or more firms form a new business
takeover-where one business would like to purchase another business(all of there assets and even name)

Question 23

what is organic growth ?

Answer 23

try and grow business inside the organisation
benefits
•less risky
•no intervention
limitations
•slow
•less eos
•rivals may grow faster inorganically

Question 24

why do business stay small ?

Answer 24

•small businesses act as a supplier
•take advantage of specialist niche products
•avoid diseconomies of scale
•a lot of small businesses run as lifestyle enterprises