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Business studies key terms > Theme 3 > Flashcards

Theme 3 Flashcards

1
Q

Corporate aims

A

Broad, long term ideas as to how the business should develop

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2
Q

Corporate
objective

A

A goal that a business strives to achieve in order to meet its long
term aim

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3
Q

Critical appraisal

A

Assesses if the corporate aims and mission statement continue to
reflect the current corporate vision

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4
Q

Mission statement

A

A set of guiding principles which is often used to steer stakeholders in
order to achieve a business’s aims and objectives

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5
Q

Ansoff’s Matrix

A

A strategic tool to help a business analyse business growth

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6
Q

Architecture/origin

A

Refers to the contracts and relationships within and around an
organisation

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7
Q

Cost leadership

A

A strategy of seeking lower cost to allow a business to reduce prices
and therefore increase sales and revenue

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8
Q

Distinctive
capabilities

A

A skill or attribute possessed by a business

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9
Q

Diversification

A

New products to a new market. It is considered by Ansoff to be more
risky than market penetration but potentially more rewarding because
it offers greater opportunities to sell to a greater range of markets

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10
Q

Financial
resources

A

Resources used to finance a business strategy and can include cash,
current assets and the ability to borrow finance for future operations

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11
Q

Innovation

A

Developing a new product or process in the production of a product

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12
Q

Market
development

A

The marketing of an existing product in new markets

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13
Q

Market
penetration

A

Selling existing products in an existing market, which is considered
the least risky strategy by Ansoff

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14
Q

Porters Strategic
Matrix

A

Identifies the sources of competitive advantage that a business might
achieve in a market

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15
Q

Product
development

A

Marketing new or modified products in existing markets

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16
Q

Strategic
decisions

A

Long term and relates to achieving an overall goal

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17
Q

Reputation

A

The operational factors concerned with premises, equipment and
other resources needed to meet customer needs

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18
Q

Tactical decisions

A

Short term actions that help to achieve the strategy

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19
Q

SWOT analysis

A

A strategic planning technique used to help a business identify its
internal strengths, weaknesses, and its external opportunities, and
threats

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20
Q

Economic factors

A

Economic variables that can affect a business such as exchange
rate, inflation and interest rates

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21
Q

Environmental
factors

A

Businesses have a general obligation to the environment and some
businesses are closely monitored

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22
Q

Legal factors

A

Legal requirements that a business must follow when operating in the
country

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23
Q

PESTLE factors

A

The political, economic, social, technological, legal and
environmental influences that can affect business strategy.

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24
Q

Political factors

A

Regional, national and international laws and government policies
that could affect a business such as regulations and subsidies

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25
Q

Porter’s five force
mode

A

A framework for analysing the nature of competition within an
industry. It does this by looking at five main factors – threat of
substitutes, threat of new entrants, bargaining power of buyers,
bargaining power of suppliers and competitive rivalry. It can be used
to identify the potential profitability of a particular strategic decision

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26
Q

Technological
factors

A

The adaption of technologies that could affect a business such as
new production processes, mobile technology and disruptive
technologies such as electronic vehicles

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27
Q

Social factors

A

Demographic changes such as an aging population, changing
lifestyles and tastes and fashion

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28
Q

Threat of
competition

A

The behaviour of competitors that may lead to the loss of market
share

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29
Q

Diseconomies of
scale

A

A rise in average/unit costs experienced as a business grows in size

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30
Q

External
economies of
scale

A

The average cost reductions available to all businesses as the
industry grows

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31
Q

Economies of
scale

A

When average costs can fall as total output increases in a business

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32
Q

Financial
economies of
scale

A

Large firms have advantages when they try to raise finance as they
will have a wider variety of sources to choose from and they can
often gain better interest rates

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33
Q

Growth

A

Expanding the sales revenue of a business, probably in hope that
profits will increase too

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34
Q

Internal
economies of
scale

A

When a business invests in expanding production resulting in lower
average costs

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35
Q

Purchasing/
marketing
economies of
scale

A

Large firms are likely to get better rates when buying raw materials in
bulk

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36
Q

Risk bearing
economies of
scale

A

As a firm grows they may diversify to reduce risk

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37
Q

Specialisation/ma
nagerial
economies of
scale

A

As a firm grows they can afford to employ specialist managers e.g.
marketing, Human resources

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38
Q

Technical
economies of
scale

A

Large businesses can often be more efficient through the use of
capital equipment

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39
Q

Horizontal
integration

A

The joining of businesses that are in exactly the same line of
business

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40
Q

Merger

A

When two businesses join together and operate as one

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41
Q

Takeover

A

When one business acquires a majority shareholding of another
business to gain control

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42
Q

Vertical
integration

A

The joining of two businesses at different stages of production

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42
Q

Inorganic (or
external) growth

A

Expansion by either merging with, or taking over another business

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43
Q

Organic (or
internal) growth

A

Expansion from within a business, for example by expanding the
product range, or number of business units and location. It does not
involve another business taking over or merging with it

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44
Q

E-commerce

A

Buying and selling of goods or services over the internet

45
Q

Extrapolation

A

When the trend line is extended to forecast future sales

46
Q

Four period
moving average

A

The average figure based on four time periods (oftern quarters of a
year). It ‘moves with time’. It is usually calculate using centring,
based on an 8 period total.

47
Q

Line of best fit

A

A line that goes roughly through the middle of all the scatter points on
a graph

48
Q

Moving averages

A

A succession of averages derived from successive segments of a
series of values

49
Q

Quantitative sales
forecasting

A

Such as time-series analysis involves making future predictions
based on trends identified from past data

50
Q

Scatter graphs

A

A graph showing the performance of one variable against another
independent variable on a variey of occasions

51
Q

Three period
moving average

A

An average calculated by adding 3 periods up and dividing by 3

52
Q

Average
(Accounting) Rate
of Return

A

A method of investment appraisal that measures the net return per
annum as a percentage of the initial spending

53
Q

Discounted Cash
flow (Net present
value only)

A

A method of investment appraisal that takes interest rates into
account by calculating the present value, discounted according to the
interest foregone (given up)

54
Q

Investment
appraisal

A

The evaluation of an investment project to determine whether or not it
is likely to be worthwhile

55
Q

Payback

A

The length of time a project will take to make recover the initial
investment cost

56
Q

Simple payback
method

A

An investment appraisal technique that measures the time it takes for
a project to repay its initial investment

57
Q

Decision trees

A

A decision making tool showing the possible outcomes of a decision
with the estimated probability and expected monetary value of each
of these outcomes

58
Q

Expected
monetary rewards

A

The value gained from taking a decision

59
Q

Probabilities

A

The likelihood of possible outcomes happening

60
Q

Critical path

A

The tasks involved in a project, which if delayed, could delay the
project

61
Q

Critical path
analysis (CPA)

A

The process of planning the sequence of activities in a project in
order to discover the most efficient and quickest way of completing
the project whilst ensuring that all stages are finished.

62
Q

Earliest Start
Time

A

How soon a task in a project can begin

63
Q

Free float

A

The time by which a ask can be delayed without affecting the project
completion time

64
Q

Latest Finish
Time

A

The latest time that a task in a project can finish. without delaying the
whole project

65
Q

Network diagram

A

A chart showing the order of the tasks involved in completing a
project, containing information about the times taken to complete the
tasks

66
Q

Evidence based
decision making

A

An approach to decision making that involves gathering information
and using a systematic and rational approach to reach a conclusion

67
Q

Long-termism

A

The time period where decisions have an impact on the vision,
mission and objectives of a business, typically longer than five years

68
Q

Short-termism

A

Where business and managers are focussed on quick financial
rewards, such as quarterly profit or sales figures, often at the
expense of investment in important areas

69
Q

Subjective
decision making

A

A more holistic approach to business strategy, incorporating aspects
such as CSR and ethical behaviour

70
Q

Corporate culture

A

An unwritten code of conduct within a business organisation that
reflects its values and embodies the shared beliefs and assumptions
that underpin the decision-making processes.

71
Q

Culture

A

Shared attitudes, values, customs and expectations.

72
Q

Person culture

A

Where there are a number of individuals in the business who have
expertise, but they don’t necessarily work together

73
Q

Power culture

A

Where there is a central source of power responsible for decision
making

74
Q

Role culture

A

Decisions are made through well established rules and procedures

75
Q

Strong culture

A

A culture where the values, beliefs and ways of working are deeply
embedded within the business and its employees

76
Q

Task culture

A

When a business allows teams to focus on a particular task within the
broad remit of the overall aim of the business

77
Q

External
stakeholders

A

Groups outside a business with an interest in its activities

78
Q

Weak culture

A

When the needs of the business are put before the needs of the
customer, communication is weak, staff turnover is high and mistakes
are about blame not learning

79
Q

Internal
stakeholders

A

Includes employees, managers, board of directors and the owners of
the business

80
Q

Shareholder
approach

A

When a business should focus purely on shareholder returns in its
business decisions/objectives

81
Q

Shareholders

A

The owners of a company who have taken a risk by investing their
capital into the business

82
Q

Stakeholder
approach

A

When a business should consider all of its stakeholders in its
business decisions/objectives

83
Q

Stakeholders

A

People or groups who have an interest in the actions of a business.
They include owners, employees, customers, suppliers, the local
community, pressure groups, local and central government.

84
Q

Capital employed

A

All the long term finance of the business including the share capital,
retained profits and non current liabilities. Calculated as Non-current
liabilities + Total equity

85
Q

Corporate Social
Responsibility
(CSR)

A

When a business pays attention to the impact the company’s actions
have on social and environmental issues and the impact on a range
of stakeholders, not just shareholders.

86
Q

Ethics

A

Moral principles that determine how business decisions are made
and may include providing good working conditions, fair pay and
assessment of environmental impacts. They are considered to be the
right thing to do

87
Q

Socially
responsible
business

A

One that considers business ethics as a key influence on its strategic
decisions

88
Q

Gearing ratio

A

Measures the performance of a business that is financed from long
term borrowing. Highly geared is over 50%. Calculated as noncurrent liabilities/capital employed x100

89
Q

Return on capital
employed

A

The profit of a business as a percentage of the total amount of money
used to generate it. Calculated as Operating profit/Capital employed
x100

90
Q

Return on
investment

A

The financial benefits or profits made from an investment, such as
setting up a production location in another country

91
Q

Consultation
strategies

A

When the management actually engage in discussions with
employees about strategies and working practices

92
Q

Absenteeism

A

The number of staff who are absent as a percentage of the total
workforce. Calculated as number of staff absent on a day/ total
number of staff x100

93
Q

Employee share
ownership

A

Where key employees will be paid a trance of shares if the business
reaches important performance targets

94
Q

Empowerment
strategies

A

It is achieved by granting employees more authority in the workplace

95
Q

Human resources

A

The set of people who make up the workforce of a business.
Including the recruitment, training and redundancy of employees

96
Q

Labour
productivity

A

A measure of how efficiently a business uses its employees to
produce output and is expressed as output per employee per time
period. Calculated Total output/average number of employees

97
Q

Labour retention

A

The number of employees that remain in the business over a period
of time

98
Q

Labour turnover

A

Measures the percentage of employees leaving a business over a
period of time.

99
Q

Business
continuity

A

A plan for a business to continue operating after a serious incident

100
Q

Transformational
leadership

A

The ability to implement a vision through radical policies and
strategies to bring about a positive change

101
Q

Contingency plan

A

A course of action designed to help a business respond successfully
to a major future event that may or may not happen

102
Q

Risk acceptance

A

Where the full cost of mitigation is greater than the cost of the risk
itself. This is often the case for small businesses

103
Q

Risk assessment

A

Identifying and evaluating the potential risks that may be involved in
an activity that a business proposes to undertake, ensuring
compliance with health and safety legislation

104
Q

Risk avoidance

A

This is the opposite of risk acceptance. It could involve ceasing to
follow a particular action altogether; for example, a multinational
pulling out of an unstable country

105
Q

Risk limitation

A

This is the most common risk management strategy used by
businesses. An example of risk limitation is a company accepting that
data storage may fail and avoiding a long period of failure by having
back-ups.

106
Q

Risk mitigation

A

Identify, assess and prioritise risks and plan responses to d

107
Q

Risk transference

A

This is the involvement of handing risk off to a willing third party. For
example, numerous companies outsource operations such as
customer service, payroll services, etc

108
Q

Risk transference

A

This is the involvement of handing risk off to a willing third party. For
example, numerous companies outsource operations such as
customer service, payroll services, etc

109
Q

Scenario planning

A

The process of anticipating possible changes in a business’s situation
and devising ways of dealing with them

110
Q

Succession
planning

A

A human resourcing process for identifying and developing new
leaders who can replace old leaders when they leave, retire or die

Business studies key terms (4 decks)

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