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Principles Of Business > Term 1 > Flashcards

Term 1 Flashcards

1
Q

First evidence of an organisation in the modern world

A

Sreni, was an org. started in India. Started in 800 BC

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2
Q

Co-operatives (def)

A

an organisation thats owned and run by its members

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3
Q

Industrial Revolution

A

People moved from rural to urban areas for work. Mergence of machinery. Infastrcture developed.
Goverment subsidised as wanted growth

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4
Q

Mid 1970s (evolution of bussiness)

A

Banks packaged together financial instrments, which gave rise to a rapid growth of org. who had easy access to capital
Shareholders introduced to companies. Shareholders demand profit (who runs v owns a company)

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5
Q

Shareholder

A

Owns a piece of paper that belongs to a company (own part of company)

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6
Q

New Revolution (tech)

A

Organisations beginning to be run in a new way, tech (code), makes process frictionless (e.g. google, FB).

Power now with experts instead of managers.

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7
Q

Facebook, personal?

A

Over 2 billion users 1/4 of worlds pop- yet personal.

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8
Q

Uber, minimal assets

A

Sold for $40 billlion, never owned any cars

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9
Q

What are share prices effected by?

A

Profits, politics, management resignations, major world events.

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10
Q

Evolution of business

A

Sreni (first org) to INdustrial revolution, to mid 1970s (shares and banks), to new revolution (tech)

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11
Q

Key features of business plan

A

all contain market research and financial projections

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12
Q

Whats a Value Proposition Canvas

A

Summary explaining why your business is going to be better than your competitors

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13
Q

Stakeholder Analysis

A

A process of systematically collecting and analysing qualititive information to determine whose interests should be taken into account when developing and/or implementing a policy or programme

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14
Q

Communism (general info)

A

State run and owned
Few entrepuinal oppturnuties.
Little or no ability to start up a business.

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15
Q

Socialism (general info)

A

State ownership of some producive resources.
Mixed economy
Some state provisions of some goods and services to minimise differences between the economic classes
e.g. UK

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16
Q

Capitalism (general info)

A

Private ownership. Little government intervention
Government policies to support entrupners.
Survival of fittest

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17
Q

Order of commnism, socialism and capitalism

A

Communism, socialism, Capitalism

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18
Q

Economic System

A

The mechanism that deals with the production, distribution, and consumption of goods and services.

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19
Q

Communist system is a

A

command economy

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20
Q

Socialism system is a

A

mixed economy

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21
Q

Capitalism system is a

A

free market economy

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22
Q

Command economy

A

Government own most/all resources. Bias towards large scale capital intensive production.

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23
Q

Mixed economy

A

Government and private ownership of economic resources mixed in varying proportion
Goal of balancing economic effiency, but process against excess greed and self interest e.g. healthcare, education, defence

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24
Q

Market economy

A

Mostly private owned, little/no governement
Bias towards enetrepunual innovation (lower tax and incentives)
In a market economy individuals (rather than government make most economic decisions)

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25
Q

Coporate Social Responsibility (CSR) def.

A

Companies take responsibility for their impact on society

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26
Q

Why is CSR important to competitiveness of enterprises

A

Keeps good publicity e.g. VW with gas emissioin scandal, rigged 11 mil cars to change emission during test

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27
Q

VW CSR example

A

11 mil cars rigged
$15 bil to pay out to customers
No longer thought as ethical or trusted

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28
Q

In large companies excitives have a battle between being

A

legal and ethically sound, or making a large profit

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29
Q

Philanthrophy CSR

A

The donation of money, times, goods or services to charitable, humanitarian, or educational institutions

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30
Q

Strategic CSR

A

Social contributions that are directly aligned with a company’s overall business stratergy

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31
Q

Economic responsibilities of company

A

Paying workers a fair wage

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32
Q

4 perspectives of CSR

A

Proactive, Defensive, Cynical, Minimal

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33
Q

Proactive (CSR)

A

Companies have a responsibility to help society beyond simply paying taxes and obeying law

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34
Q

Defensive (CSR)

A

Companies engage in CSR only after being shamed or forced into it

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35
Q

Cynical

A

Companies use CSR as a marketing ploy to distract attention from self centred behaviour. Manipulate people into buying there stuff.
Purely motivated by company to sell

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36
Q

Minimal

A

Companies don’t have social responsibilities beyond earning money and obeying the law

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37
Q

Law of Supply

A

if demand goes down, produce goes down. or vice versa if demand increases production increases

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38
Q

Society needs business

A

Employment and wages
Investment and innovation
Profit and taxes

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39
Q

Business needs Society

A

Create demand
Public assests and infastructure
Legal protection

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40
Q

Free market view (debate on CSR)

A

The job of business is to create wealth for shareholders

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41
Q

CSR View (debate on CSR)

A

Business should be concerned with social issues

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42
Q

Examples how CSR can be demonstrated

A 
Sustainable sourcing
Responsible markeing
Safe working conditions and fair pay
Responsible customer service
Protecting the environment
Investing in edcation
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43
Q

Ethics is about

A

what is right, and what is wrong

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44
Q

Law is about

A

what is lawful and what is unlawful

45
Q

The amoral business

A

seeks to win at all costs. ANything is accptable including breaking the law

46
Q

The legalistic Business

A

will obey the law but no more then that

47
Q

The responsive business

A

Accepts thats being ethical can pay off

48
Q

The ethical business

A

ethical practice is at core of business

49
Q

Joining is a public market is

A

a way to grow and enhance your business

50
Q

FTSE 100

A

top 100 largest global companies

51
Q

FTSE 250

A

is the next 250 top companies in the UK (so 100-350)

52
Q

Why do companies float on a stock exchange? What is stock exchange?

A

To gain money and capital. Stock exchange is a market in which securities are bought and sold. Companies might want to sell shares to get brand awareness out, as increase in public profile, as public buying shares. Also want to do shares, as can give employees shares in a salary scheme, to increase brand productivity.

53
Q

What is meant by the term capital?

A

Cash or Money

54
Q

How many years must the company have usually operated for to issue standard shares on the London Stock Exchange?

A

0 years, anyone can list on London stock exchange, as long as you meet stock exchange requirements and laws.

55
Q

Mission statement

A

is for internal use, companies don’t publicise them. Its for employees, to gel a company culture, and direct employees in a company to earn revenue.

56
Q

Vision statement

A

is looking to the companies future and where you see your company being in x amount of years

57
Q

Value proposition

A

is where your company is going to differentiate itself, What different values do you have to other companies e.g. product, service. Could be the price of your product or the quality of your product that differentiates you.

58
Q

What makes a company successful?

A
  • Is the product/ service unique
  • Perceived better product (tesla)
  • Cheaper (ryanair)
  • The X factor- selling a particular image/lifestyle related to apple/steve jobs. Or perception of iphone (iphone)
  • Do they have the right people in the business? (google)
59
Q

Command economy is

A

autocratic.

60
Q

Market economy is

A

democratic.

61
Q

CSR

A

value: doing good, seperate from profit maximisation (giving without any return), impact limited by corporate footprint and CSR budget. E.g. Fair trade purchasing

62
Q

Corporate Social Value

A

Value:economic and societal benefits relative to cost of company. Moving from responsive CSR to strategic CSR. Integral to profit maximisation. Realigns the entire company budget e.g. Transforming procurement to increase quality and yield.

63
Q

CSV getting money for the company

A

strategically

64
Q

Discuss profit maximisation in terms of pricing, costs and industry factors in the context of real organisations:

A
  • Minimise cost, maximise price (Maximising margins)
  • economy scale/mass production (how much you can produce for)
  • demand of products (price at quality you are producing it for?
65
Q

High elasticity

A

The level of demand does effect the price

66
Q

Low elasticity

A

the level of demand does not effect as much for the price

67
Q

What is a market?

A

It’s a exchange of value, that is voluntary

68
Q

Different type of markets: (3)

A

Perfect competition, monopoly, Oligopoly

69
Q

Perfect competition

A

endless supplier and choices

70
Q

Monopoly

A

one company dominates a market (socialist or communist societies)

71
Q

Oligopoly

A

lots of companies in the market (capitalist countries)

72
Q

Buyers determine demand, therefore

A

Sellers determine supply

73
Q

Quantity demand

A

The quantity of goods that consumers are ‘willing and able’ to purchase at a given price, within a specified period of time. QD is negatively related to price.

74
Q

Law of demand

A

other things equal (ceteris paribus), when the price of a good rises, the quantity demanded of the goods fall, and when quantity falls, the quantity of demanded rises.

75
Q

Variables that can shift the demand curve:

A
  • Income- if we all lost our job due to recession, we would go for cheap supermarket brand shampoos instead of aussie shampoo
  • Prices of related goods: subsitutes and complements-say if cartidge price for printers go up, then the price of a printer is going to go up. Price of oil directly effects the cost of cosuer goods
  • Taste and Preferences
  • Expectations- what possibly will come out e.g. if a new apple iphone is coming out, going to alter purchases of current iphone on market
  • Number of buyers- e.g. in baby boomer years therefore greater demand for child projects in 1970s
76
Q

Defintion of quantity of supply

A

the demand of goods that firms are ‘willing and able’ to supply at a given price, within a specified period of time

77
Q

Supply curve

A

the higher the price, the greater the profit, therefore more companies want to sell it.

78
Q

Variables that can shift supply curve:

A
  • Input Prices
  • Technology- decrease on dvds, increase in streaming e.g. netflix, therefore increase on money spent on content for netflix
  • Expectations
  • Number of sellers
79
Q

Why do organisations scan their environment?

A
  • to be able to compete effectively
  • to be able to make better informed decisions
  • to understand where to strengthen the business
  • to be aware of the dynamic and changing nature of the environment they work in
  • to inform their overall long term and strategic planning approach
  • to highlight potential threats and opportunities within a timescale that enables effective action to be taken.
80
Q

Swot analysis

A

Strengths -Internal
Weakness -Internal
Opportunities -External
Threats -External

81
Q

SWOT (internal)

A

Strengths -Internal

Weakness -Internal

82
Q

SWOT (external)

A

Opportunities -External

Threats -External

83
Q

Red Ocean Strategy

A
  • compete in existing market
  • beat the competition
  • exploit existing demand
  • make the value-cost trade-off
  • align the whole system of a firms activities with its strategic choice of differentation or cost
  • saturated
84
Q

Blue Ocean Strategy

A
  • create uncontested market to serve
  • make competition irrelevant
  • create and capture new demand
  • break the value-cost trade-off
  • align the whole system of a firms activities in pursuit of differentation or cost
  • unsaturated
85
Q

Graves Value Model how many levels

A

9

86
Q

Red DNA- Graves Value Model

A

Modern conqueror: tough
Determined competition, fast, energetic
Power & growth-driven, expansion
More about individual

87
Q

Blue DNA - Graves Value Model

A

Organiser: formal, reliable, loyal
Structured and organised via clearly defined roles and responsibilities
Order & process-driven, structured
Group Orientated

88
Q

Orange DNA- Graves Value Model

A

Achiever: tactical thinking
Competitive and measurable team drive
Goal-driven, status & image
INdividual- only work in a group if it benefits the groups productiveness and hit goals

89
Q

Green DNA -Graves Value Model

A

Work-Life-Integrator: balanced
Shared responsibilities, cooperative, equal, transparent
People-driven. agile
Group orientated

90
Q

Family Business (Purple DNA) (GVM) (Business Culture)

A

We are maintaining our traditional position. We don’t have a formal strategy. At times the boss comes up with new strategic ideas.
The boss shares his/her ideas and the ones entrusted with the jobs get on with it.

91
Q

Speed Boat (Red DNA) (GVM) (Business Culture)

A

By the boss and his/her confidants.

Everyone has to get his/her jobs done and maximise successes.

92
Q

Authoritative Structure (Blue DNA) (GVM) (Business Culture)

A

By the management floor, internal experts and external consultants.
By the management floor, internal experts and external consultants.

93
Q

Strategic Enterprise (Orange DNA) (GVM) (Business Culture)

A

According to market opportunities and by knowledgeable employees and suitable strategy consultants.
According to the market opportunities and by knowledgeable employees and suitable strategy consultants.

94
Q

Dynamic Network (Green DNA) (GVM) (Business Culture)

A

By all employees, with any required support from external consultants with market perspective.
By all employees, with any required support from external consultants with market perspective.

95
Q

McKinsey 7 elements:

A
  • stratergy (hard element)
  • structure (hard element)
  • systems (hard element)
  • shared values (soft element)
  • skills (soft element)
  • staff (soft element)
  • style (soft element)

All elements are interdependent, changing one changes all

96
Q

Swot analysis

A

Strengths -Internal
Weakness -Internal
Opportunities -External
Threats -External

Is a micro-analysis, focussed, on a certain part in a business.
Internal factors, company have some control. Internal of business
External factors, companies have less/no control

97
Q

The PESTEL Analysis

A 
Political
Economic
Socio-cultural
Technological
Legal
Environment

Is macro-analysis, looking at wider scope of environment.
All external
Political, Economic, Socio-cultural, Technological are more variable then Legal and environmental

98
Q

Micheal Porters Five Force Model

A
  • threat of new entrants
  • threat of substitutes
  • bargaining power of buyers
  • bargaining powers of suppliers
  • Degree of Competitive Rivalry
99
Q

High industry profits are associated with:

A
  • Weak suppliers
  • Weak customers
  • High entry barriers
  • Few opportunities for substitutes
  • less rivalry
100
Q

Low industry profits are associated with:

A
  • Strong suppliers
  • strong customers (buyers)
  • Low entry barriers
  • Many opportunities for substitutes
  • Intense rivalry
101
Q

How much does the NHS spend on over 65’s than U25’s

A

x4.5 per head

102
Q

What is Holacracy?

A

Holacracy® is a new way of structuring and running your organization that replaces the conventional management hierarchy. Instead of operating top-down, power is distributed throughout the organization, giving individuals and teams more freedom to self-manage, while staying aligned to the organization’s purpose.

103
Q

Main funding methods for startup businesses?

A
  • Personal savings or from family/friends
  • Loans
  • Venture Capaitalist
  • Crowdfunding
  • Grants
104
Q

What is a loan

A

-Secured and unsecured
-Secured use assets for security, therefore interest rate is normally lower e.g. company car, laptop
-Unsecured- do not require any assets. May require personal guarentee based on your credit rating- risky.
Start up often can’t use unsecured as don’t have neccesary assets to obtain it.
you can acquire term loans where you borrow a fixed amount of money at a certain interest rate over an agreed time period. Short-term loans are similar but with a much shorter time period and often a higher interest rate.

105
Q

Angel investors

A

Angel investors are often known as high-net worth individuals who want to invest their personal money and make their own decisions about investment opportunities. They can often provide less finance than a venture capital firm but have the potential to back riskier undertakings.

106
Q

Crowdfunding

A

Peer-to-peer lending involves investors lending money to an individual for a fixed interest rate.

Peer-to-business is similar to peer-to-peer lending but with loans for businesses, instead of individuals, via investors, companies and government institutions.

Reward-based crowdfunding allows you to receive funds in exchange for giving your investors a reward, such as a sample of your product or an event.

107
Q

Equity crowdfunding

A

Equity crowdfunding is similar to rewards-based but instead of providing capital for rewards, you offer shares (equity) in your company in exchange for investment.

108
Q

Grants

A

Grants are available for businesses from the government and other institutions.

109
Q

Contribution margin

A

the contribution ratio of the revenue to fixed costs.

The contribution margin is selling price per unit minus VARIABLE expenses per unit.

Principles Of Business (8 decks)

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