paper 2 theme 3 revision Flashcards
What is the acronym for PESTLE?
Political
Economic
Social
Technological
Legal
Environmental
What are the sections of ansoffs matrix
•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)
What is the hierarchy of objectives?
Aim
mission
corporate objectives
functional objectives
business unit/individual targets
What is the difference between mission statement’s and aims?
•Mission statement
-overriding problem of business
-reason for its existence
-strategic perspective
-vision for the future
What is the gearing ratio equation
non current liabilities
—————————- x 100
capital employed.
what is capital employed ?
total equity + non current liabilities
What is return on capital employed equation?
operating profit
———————- x100
capital employed
how do you work out net profit margin?
profit for the year
————————- x100%
revenue
how do you work out current ratio?
current assets
———————
current liabilities
how do you work out operating profit margin?
operating profit
———————- x100
revenue
what is the acid test ratio?
current assets-inventory
———————————-
current liability’s
what is gross profit margin?
gross profit
—————-x100
revenue
what are porters 5 forces
•threat of new entry
•competitive rivalry
•buyer power
•supplier power
•threat of substitution
what are the three current assets ?
inventory
receivables
cash
what are your current liabilities?
suppliers
overdraft
what is working capital?
current assets-current liabilities
what is swot?
Strength, weakness (internal)
opportunities, threats(external)
what are economies of scale?
as output rises cost per unit falls
-INTERNAL -EXTERNAL
purchasing. infrastructure
technical. technology
managerial knowledge
financial
problems arising from growth?
diseconomies of scale
internal communication
over trading
what are the types of mergers and takeovers (inorganic growth)?
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
what are the benefits and limitations of international frantic growth?
-benefits
•synergy
•economies of scale
•profit
-limitations
•regulators
•employees
•cost
•diseconomies of scale
what is the difference between mergers and takeovers?
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)
what is organic growth ?
try and grow business inside the organisation
benefits
•less risky
•no intervention
limitations
•slow
•less eos
•rivals may grow faster inorganically
why do business stay small ?
•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
