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Business A Level > Theme 3 > Flashcards

Theme 3 Flashcards

1
Q

Mission statement

A

A mission statement is a qualative statement of an organisation aims

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2
Q

Corporate objectives

A

This should follow the mission statement and corporate vision and is to please the shareholders

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3
Q

Department objectives

A

Is objectives which are set by each section of the business which will follow Coprate objectives

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4
Q

Benefits of a mission statement

A

Helps yo focus and involve all employees
Helps to motivate employees by giving worth
Helps to create an identity in a competitive market

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5
Q

Limitations of a mission statement

A

Can be unrealistic
Can be a waste of management time and resources
Can affect a business if it changes and the mission statement doesn’t
Can be ambiguous

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6
Q

Coprate timescales

A

Corporate timescales refers to strategy and the expectation of when a return will be achieved

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7
Q

Short termism

A

This is when a business only cares about making profit and is only interested in a quick fincail reward
Choosing a path which is good in the short term but may affect the business in the long term
Only focused on short term return on investments instead of investment which will give them a competitive advantage

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8
Q

Long termism

A

A whole business approach

• Incorporates CSR
• Considers ethical behaviour of the
business in decision making
• Research and development have long term goals
• Staff development is seen a long term objective of the business, to retain and develop staff
• Long-term technology investments secure data for the future

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9
Q

Evidence based descions making

A

Decisions relating to the business are based on evidence and data which is valid and trusted information and should be a combination of critical thinking and best available evidence

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10
Q

Subjective decision making

A

Descions relating to a business based on personal opinions

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11
Q

Shareholders / stakeholders

A

Shareholders are interested in the profitability and the dividend pay out
Stakeholders are interested in the business and the way it conducts it suppliers etc people’s and ethically

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12
Q

Csr defined

A

Corporate socail responsibility is a business approach that contributes to sustainable devolpment with economic socail and environmental benefits for stake holders

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13
Q

Advantages of csr approach

A

Happy staff
Good pr
Happy customers
happy suplliers
New products
New markets

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14
Q

Disadvantages of csr

A

It is a fad which people say consumers will get bored/tired of it and move onto someth else
Cost could just increase even with a csr approach it could not give you enough of a competitive advantage and would just result in a more expensive product

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15
Q

Swot analysis

A

Internal considerations:strength and weaknesses
External considerations:opportunity and threats

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16
Q

Internal factors for swot analysis

A

Internal strengths :factors within a business that can help it achieve its objectives
Internal weakness : factors which could prevent a business from reaching their objectives

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17
Q

C

A
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18
Q

Corporate strategy

A

The overall scope and direction of the business and the multiple business operations which are working together to achieve one central goal

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19
Q

Ansoffs matrix

A

Where a company looking for growth can chooses the right marketing strategy or new markets

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20
Q

Limitations of ansoffs matrix

A

It oversimplifies the market
Large Mncs have thousands of sub operations

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21
Q

Potters strategic matrix

A

He there were 3 businesses strategies to gain a competitive advantage:
Cost leadership
Differentiation
Focus

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22
Q

Cost leadership

A

Useful in a highly competitive market where homogeneous products are as consumers are constantly switching finding the best deal

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23
Q

Differentiation

A

Useful ina technological market where products and their features are rapidly changing and customers need are diverse

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24
Q

Cost focus

A

Useful strategy when a business wnat to offer a product/service which a low price for a small market segment

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25
Q

Differentiation focus

A

Useful strategy when a business wants to offers diffrneated and aimed products to a small niche market

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26
Q

Limitations of potters strategic matrix

A

It is relevant to dynamic markets
No useful in a crisis situation
Oversimplifies teh market structure

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27
Q

Boston matrix

A

Planning tool which helps the businesses to create a balanced product portfolio it looks at market share and market growth
Star - high both product normally in growth phase
Question mark-low share high growth normally just launched
Cash cow - high share and low growth normally at teh mauturity phase with customer loyalty
Dog - low both in the decline phase of its product life cycle

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28
Q

Limitations of bcg

A

Bcg shows business as either high or low but business can also be medium
High market share doesn’t equal higher profits

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29
Q

Kay’s distinctive capabilities

A

John Kay suggest that key to success and a strong business was to make sure you had good relationships with customers / employees /suppliers
He also said there a three distinctive capabilities which gives a business a competitive advantage:
Reputation: through their customer service
Architecture:relationships with customers / employees/ suppliers
Innovation - bringing products to the market

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30
Q

Strategic descion

A

Long term direction of the business
What the business wil do to meet their aims and objectives
Pro active descions making
Forward thinking / future planning

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31
Q

Tactical descions

A

Short or medium direction of the business
How the business will implement their strategy
reactive to competitors actions
Present day thinking what is happening now that needs dealing with

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32
Q

Objectives of growth

A

To achieve economies of scale
Increased market power over customers and suppliers
Increased market share and brand recognition i
Increased profitability

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33
Q

Problems arising from growth

A

Diseconomies of scale
Overtrading
Internal communication

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34
Q

Business growth

A

Business growth is the point at which a business a business needs to expand and seek options to genearate more profits

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35
Q

Bulk buying / economies

A

As the business grow they need to order large donations of products inputs as the order value increase the buy8mg power of the business increase

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36
Q

Technical economies of scale

A

Business with large scale production can use more advanced machinery .like mass production techniques

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37
Q

Managerial

A

As teh business grows larger they will need to take on specialist staff

38
Q

Financial economies of scale

A

Small businesses often find it hard to obtain finance this is because small business are seen as risky compared to large business which find it easier to obtain finance

39
Q

Marketing economies of scale

A

As the business grows larger it will be able to the spread it cost of marketing over a wider product portfolio

40
Q

Risk bearing

A

Bigger companies can spread there risk by investing in more products and markets

41
Q

Problems arise big from growth

A

Diseconomies of scale
Internal communication
Overtrading

42
Q

Dis economies of scale

A

As a business grows they may expand the minus efficient scale and the this will lead to average cost per unit rising as production rises

43
Q

Overtrading

A

This is when the business accepts more orders than it can complete

44
Q

Internal communication

A

As teh workforce increase they will be less face to face communication and it will talk longer for messages to reach the correct staff as there are more layers of management this leads to mistakes made , more wastage which will lead to a higher unit cost

45
Q

Merger

A

A meter is a legal deal to bring two business together under one board of directors

46
Q

Take over

A

Thai is a legal deal where one larger business purchases a smaller one

47
Q

Reasons for mergers and takeovers (tactical)

A

Attempt to ensure increased market share
Access to technology , staff ore intellectual property

48
Q

Reasons for mergers and takeovers (strategic )

A

Access to new markets
Improved distribution networks
Improved brand awareness

49
Q

Three sectors in business

A

Primary sector:farm or quarry
Secondary sector: clothes factory or cheese maker
Tertiary sector :eg banks insurance companies

50
Q

Horizontal integration

A

Business operating in teh same sector merge or takeover another business in teh same sector

51
Q

Vertical integration

A

Vertical integration is when one business in one sector takes over or ,edges with a businnes in another sector or parts of the supply chain

52
Q

Financial risks of mergers and takeovers

A

Original purchase cost
Cost of change into a new business
Redundancies of duplicate staff

53
Q

Problems with mergers and takeovers

A

Clash of cultures
Diseconomies of scale
Communication problems
Unrielable merger partners

54
Q

Organic growth

A

Organic growth is the process of business growth which comes from within the business

55
Q

Methods of growing organically

A

New product launches
Opening new stores
Expand to forgein markets
Expansion of workforce

56
Q

Advantages of organic growth

A

Cheaper then merger
Higher production means eos
Retains the company culture

57
Q

Disadvantages of organic growth

A

Is a very high risk strategy as it is capital intensive
Long period between investment and return on investment
Growth may be limited

58
Q

What is quantitative sales forecasting

A

is a sastical strategy which anyalises to make predictions about the future

59
Q

Uses of qsf

A

Organise production
Organises marketing
Organises resources on the business

60
Q

Limitations of qsf

A

Past performance is no guarantee of he future
Business need to appreciate the swot and pestle factors that may affect future predictions

61
Q

Investment appraisal

A

Investment appraisal attempts to determine the value of capital expenditure projects . It enables the business and its invest to compare projects so that the business

62
Q

Ia descions makin

A

A business will have many ideas how will not have the funds to support all of them so ia is the planing process to chose which one they should invest in

63
Q

Pay back

A

A business will have a table with all the project they want to invest in and payback table will show the, how quickly they will be oyed back

64
Q

Arr

A

Arr system which looks at the average rate of return of the projects

65
Q

Npv

A

Bet present value and it takes into account that money in the future is not short what it is today

66
Q

Payback limitations

A

Very simple only looks at the speed of pay back

67
Q

Arr limitations

A

Doesn’t take into account the effects of time on the value of money

68
Q

Npv limitations

A

Very complex not used by small business , also results dependent on the rate of discount used

69
Q

Critical path anyalsis

A

A management tool which helps a business to identify how long a project will take and what the critical takes in the project are

70
Q

Uses of cpa

A

Can be used to schedule building projects
Launch a new product onto a markets
Instillation of new technology in a business
Advertising campaigns

71
Q

Benefits of cpa

A

Stake holders will be able to see the total time frame for the projects comepletion
Very useful for business in the fast moving customer good markets where speed is important
Useful to know when to deliver resources or labour

72
Q

Ratio

A

A ratio measures a company’s ability to meet financial obligations

73
Q

Current ratio formula

A

Current assests / current liabilities
Know as working capital ratio

74
Q

Acid test ration formula

A

Current assests - inventory/ current liabilities
The acid test ratio is also know as the quick ratio and is the most commonly used ratio to judge the financial health of a business

75
Q

Gearing ratio formula

A

Non current liabilities/ capital employed x100
img ratio looks at the long term finance of the business and where it comes from

76
Q

Roce ratio formula

A

Operating profit / capital employed x100
Roce mean return on capital employed and is a measure of the profitability of the business

77
Q

Ratio limitations

A

The balance sheet is just the snapshot of the business in one day of the business and as the markets are dynamic the are changing all the time
Ratios are only good as the information provide d

78
Q

Statement of comprehensive income

A

This used to be called profit and loss account , this is part of a legal documents that must be published each year by ltd or plc companies ( shows if a business has made a profit of loss

79
Q

Revenue + calculation

A

Revenue is the money coming into the business for ordinary trading
Quanity x price

80
Q

Gross profit

A

The cost of sales of the stoic that has been sold as of ordinary trading
Revenue - costs of sales

81
Q

Operating profit

A

Is the overall profit the business makes after tax and overall costs

82
Q

Pros and cons of critical path anylsis

A

Pros
Can find a critical path and focus on it reducing waste and improving efficiency
Improve and Switch production process which can increase cash flow by reducing production cost eg. Jit stock
Always the business to delegate tasks to different managers
Cons
Takes time and costs a lot
the estimates may be wrong ruining the project
Might become to obsessed with the cpa and neglect different ares of the business eg quality suffers by taking shortcuts leading to bad customer reputation

83
Q

Ansoffs marrying four strategises

A

Market penetration -selling more of your existing product to existing consumers or markets (lowest risk )
Market development - this is entering new markets
Product development-devolping on your existing products
Diversification - entering new markets with a new product or service (highest risk )

84
Q

Different stakeholders

A

Shareholders
Employees
Managers
Trade unions customers
Banks
Government

85
Q

What share holders wnat

A

Want profitability depends on short term or long term (dividends to be high )
Share price to be high

86
Q

What employees and managers want

A

Job security
Pay
Safe working environment
Managers
Status
Bonuses
Job security

87
Q

What customers want

A

Quality
Degrees of choice
Value

88
Q

What supplier want

A

Regular orders
Prompt payment
Fairness in price

89
Q

What local community wants

A

Jobs
Coprate social responsibility

90
Q

What government wnat

A

Expanding
Exporting
Making sure their sticking to laws

91
Q

Managing relationships with stakeholders

A

Satisficing
Sequential attention -meet stakeholders need one at a time
Side payments - offer something less than want stake holders main wants
Excerise of power - force their descions

92
Q

Porters five forces

A

5 competitive forces :
Supplier power
Buyer power
Entry threat
Rivalry
Substitute threat

Business A Level (4 decks)

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