The Business Organisation And Its External Environment Flashcards
A1. The Purpose And Types Of Business Organisation A2. Stakeholders in business organisations A3. Political and legal factors affecting business A4. Macro-economic Factors A5. Micro Economics Factors A6. Social and Demographic Factors A7. Technological Factors A8. Environmental and sustainability factors A9. Competitive Factors
True or False?
Legal entities owned by private owners are known as limited companies
True
Name the different types of organisations
- Commercial –> company (ltd, plc), partnership, sole trader
- NFPs
- NGOs
- Public Sector
- Co-operatives
Name the primary stakeholders of an organisation
- Internal stakeholders (management and employees)
- Connected stakeholders (shareholders, lenders, customers, suppliers) –> people with the money
*they have a contractual relationship with the organisation
What is a NGO?
A non governmental organisation. An independent voluntary association of people who act together for some common purpose which does not include making money.
What are the benefits that derive from an organisation?
- Synergy –> people that work together towards a common goal achieve more than when they act as individuals.
- Expertise –> individuals can focus on what they do best
- Sharing knowledge
Name the segments of the Mendelow’s Matrix
- High power + high interest–> key players–> keep involved and happy e.g. shareholders
- High power + low interest –> keep satisfied e.g government
- Low power + high interest –> consult/ inform e.g. media
- Low power + low interest –> ignore
What does the Cyert & March theory say?
The consensus theory of company objectives
It states that at any time, NOT all stakeholders can be satisfied due to their conflicted interests. Organisations should be striving to achieve the most satisfaction.
What does PEST stand for and what is it used for?
Political/ Legal e.g. taxation, employment law
Economical e.g growth, government spending
Social e.g. demographics, lifestyle
Technological e.g. AI, new systems, online learning
It’s an analysis based on the above factors in order to understand the external environment the organisation operates into better.
Name the principles of GDPR under which an organisation can process personal data?
- Data not kept longer than necessary
- Data adequate, relevant and not excessive
- Fairly and lawfully processed
- Used for limited purposes
- Accurate and up to date
- Not transferred abroad
- Kept secure
True or False
The shift to homeworking would be classed as a social factors in a PEST analysis
True
True or False
Resources available to public sector are limited
True
What are the objectives of a shareholder?
Maximize share price, max divis and earnings, organisational growth, maintaining control
What are the objectives of lenders?
security of interest, repayment of money
What are the policy objectives a government can use to affect the economy?
- Unemployment
- Interest rates
- Growth/ stagnation
- Balance of payments (imports and exports)
What is inflation?
the rise of prices over time
What are the types of unemployment?
- Structural e.g. a declining industry (steel workers)
- Frictional: e.g. short term (increased number of graduates)
- Seasonal e.g. winter workers
- Cyclical e.g. economic cycle goes up and down
- Technological e.g. tech taking over jobs (AI)
“The current account is in deficit in the UK”. What does this mean?
Imports > Exports
More money going out than coming in
Describe the impact of inflation in the economy
Rise of prices–> the same amount of money buys you less products–> when income fixed, you struggle–> interest rates up to choke demand–> mortgage payments up–> people prefer to save than spending–> demand down–> exchange rates up–> uncertainty–> economy shrinks
List the government policies
- Fiscal - government spending
- Monetary - interest rates & exchange rates, price stability
- Quantitative Easing - prints money, helps circulation, increase demand
- Budget deficit - “expansionary” strategy, spends more than it earns
- Budget surplus - “inflationary” gap, takes money out of the economy
True or False
A negative public sector net cash requirement indicates a deficit in public finances.
False
it requires a surplus.
True or False
Frictional unemployment is long term.
False
Frictional and seasonal unemployment are short term.
What is the law of Demand?
if price increases, then demand decreases, ceteris paribus.
negative slope
What are the factors that can cause a shift in the curve of demand?
- change in price of a substitute product
- change in price of a complementary product
- change in the income of consumers
- change in tastes and preferences
- change in interest rates
What is the law of Supply?
If prices increases, then supply increases, ceteris paribus. The supplier is more willing to provide larger quantities for a larger price.
Upwards slope
What are the factors that can cause the supply curve to shift?
- Change in the cost of production (αν μου στοιχίζει λιγότερα να το παράξω, θα αυξήσω την παραγωγή μου–> shift to right)
- Changes in production technology
- government taxes and subsidies
- change in the price of substitute
- change in the number of producers in the market
What is Equilibrium Price? (or Market clearing price)
the point where Supply=Demand
