Theme 3 Flashcards
1
Q
Corporate aims
A
Broad, long term ideas as to how the business should develop
2
Q
Corporate
objective
A
A goal that a business strives to achieve in order to meet its long
term aim
3
Q
Critical appraisal
A
Assesses if the corporate aims and mission statement continue to
reflect the current corporate vision
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
5
Q
Ansoff’s Matrix
A
A strategic tool to help a business analyse business growth
6
Q
Architecture/origin
A
Refers to the contracts and relationships within and around an
organisation
7
Q
Cost leadership
A
A strategy of seeking lower cost to allow a business to reduce prices
and therefore increase sales and revenue
8
Q
Distinctive
capabilities
A
A skill or attribute possessed by a business
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
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
11
Q
Innovation
A
Developing a new product or process in the production of a product
12
Q
Market
development
A
The marketing of an existing product in new markets
13
Q
Market
penetration
A
Selling existing products in an existing market, which is considered
the least risky strategy by Ansoff
14
Q
Porters Strategic
Matrix
A
Identifies the sources of competitive advantage that a business might
achieve in a market
15
Q
Product
development
A
Marketing new or modified products in existing markets
16
Q
Strategic
decisions
A
Long term and relates to achieving an overall goal
17
Q
Reputation
A
The operational factors concerned with premises, equipment and
other resources needed to meet customer needs
18
Q
Tactical decisions
A
Short term actions that help to achieve the strategy
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
20
Q
Economic factors
A
Economic variables that can affect a business such as exchange
rate, inflation and interest rates
21
Q
Environmental
factors
A
Businesses have a general obligation to the environment and some
businesses are closely monitored
22
Q
Legal factors
A
Legal requirements that a business must follow when operating in the
country
23
Q
PESTLE factors
A
The political, economic, social, technological, legal and
environmental influences that can affect business strategy.
24
Q
Political factors
A
Regional, national and international laws and government policies
that could affect a business such as regulations and subsidies
25
Porter’s five force
mode
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
26
Technological
factors
The adaption of technologies that could affect a business such as
new production processes, mobile technology and disruptive
technologies such as electronic vehicles
27
Social factors
Demographic changes such as an aging population, changing
lifestyles and tastes and fashion
28
Threat of
competition
The behaviour of competitors that may lead to the loss of market
share
29
Diseconomies of
scale
A rise in average/unit costs experienced as a business grows in size
30
External
economies of
scale
The average cost reductions available to all businesses as the
industry grows
31
Economies of
scale
When average costs can fall as total output increases in a business
32
Financial
economies of
scale
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
33
Growth
Expanding the sales revenue of a business, probably in hope that
profits will increase too
34
Internal
economies of
scale
When a business invests in expanding production resulting in lower
average costs
35
Purchasing/
marketing
economies of
scale
Large firms are likely to get better rates when buying raw materials in
bulk
36
Risk bearing
economies of
scale
As a firm grows they may diversify to reduce risk
37
Specialisation/ma
nagerial
economies of
scale
As a firm grows they can afford to employ specialist managers e.g.
marketing, Human resources
38
Technical
economies of
scale
Large businesses can often be more efficient through the use of
capital equipment
39
Horizontal
integration
The joining of businesses that are in exactly the same line of
business
40
Merger
When two businesses join together and operate as one
41
Takeover
When one business acquires a majority shareholding of another
business to gain control
42
Vertical
integration
The joining of two businesses at different stages of production
42
Inorganic (or
external) growth
Expansion by either merging with, or taking over another business
43
Organic (or
internal) growth
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
44
E-commerce
Buying and selling of goods or services over the internet
45
Extrapolation
When the trend line is extended to forecast future sales
46
Four period
moving average
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
Line of best fit
A line that goes roughly through the middle of all the scatter points on
a graph
48
Moving averages
A succession of averages derived from successive segments of a
series of values
49
Quantitative sales
forecasting
Such as time-series analysis involves making future predictions
based on trends identified from past data
50
Scatter graphs
A graph showing the performance of one variable against another
independent variable on a variey of occasions
51
Three period
moving average
An average calculated by adding 3 periods up and dividing by 3
52
Average
(Accounting) Rate
of Return
A method of investment appraisal that measures the net return per
annum as a percentage of the initial spending
53
Discounted Cash
flow (Net present
value only)
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
Investment
appraisal
The evaluation of an investment project to determine whether or not it
is likely to be worthwhile
55
Payback
The length of time a project will take to make recover the initial
investment cost
56
Simple payback
method
An investment appraisal technique that measures the time it takes for
a project to repay its initial investment
57
Decision trees
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
Expected
monetary rewards
The value gained from taking a decision
59
Probabilities
The likelihood of possible outcomes happening
60
Critical path
The tasks involved in a project, which if delayed, could delay the
project
61
Critical path
analysis (CPA)
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
Earliest Start
Time
How soon a task in a project can begin
63
Free float
The time by which a ask can be delayed without affecting the project
completion time
64
Latest Finish
Time
The latest time that a task in a project can finish. without delaying the
whole project
65
Network diagram
A chart showing the order of the tasks involved in completing a
project, containing information about the times taken to complete the
tasks
66
Evidence based
decision making
An approach to decision making that involves gathering information
and using a systematic and rational approach to reach a conclusion
67
Long-termism
The time period where decisions have an impact on the vision,
mission and objectives of a business, typically longer than five years
68
Short-termism
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
Subjective
decision making
A more holistic approach to business strategy, incorporating aspects
such as CSR and ethical behaviour
70
Corporate culture
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
Culture
Shared attitudes, values, customs and expectations.
72
Person culture
Where there are a number of individuals in the business who have
expertise, but they don’t necessarily work together
73
Power culture
Where there is a central source of power responsible for decision
making
74
Role culture
Decisions are made through well established rules and procedures
75
Strong culture
A culture where the values, beliefs and ways of working are deeply
embedded within the business and its employees
76
Task culture
When a business allows teams to focus on a particular task within the
broad remit of the overall aim of the business
77
External
stakeholders
Groups outside a business with an interest in its activities
78
Weak culture
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
Internal
stakeholders
Includes employees, managers, board of directors and the owners of
the business
80
Shareholder
approach
When a business should focus purely on shareholder returns in its
business decisions/objectives
81
Shareholders
The owners of a company who have taken a risk by investing their
capital into the business
82
Stakeholder
approach
When a business should consider all of its stakeholders in its
business decisions/objectives
83
Stakeholders
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
Capital employed
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
Corporate Social
Responsibility
(CSR)
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
Ethics
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
Socially
responsible
business
One that considers business ethics as a key influence on its strategic
decisions
88
Gearing ratio
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
Return on capital
employed
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
Return on
investment
The financial benefits or profits made from an investment, such as
setting up a production location in another country
91
Consultation
strategies
When the management actually engage in discussions with
employees about strategies and working practices
92
Absenteeism
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
Employee share
ownership
Where key employees will be paid a trance of shares if the business
reaches important performance targets
94
Empowerment
strategies
It is achieved by granting employees more authority in the workplace
95
Human resources
The set of people who make up the workforce of a business.
Including the recruitment, training and redundancy of employees
96
Labour
productivity
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
Labour retention
The number of employees that remain in the business over a period
of time
98
Labour turnover
Measures the percentage of employees leaving a business over a
period of time.
99
Business
continuity
A plan for a business to continue operating after a serious incident
100
Transformational
leadership
The ability to implement a vision through radical policies and
strategies to bring about a positive change
101
Contingency plan
A course of action designed to help a business respond successfully
to a major future event that may or may not happen
102
Risk acceptance
Where the full cost of mitigation is greater than the cost of the risk
itself. This is often the case for small businesses
103
Risk assessment
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
Risk avoidance
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
Risk limitation
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
Risk mitigation
Identify, assess and prioritise risks and plan responses to d
107
Risk transference
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
Risk transference
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
Scenario planning
The process of anticipating possible changes in a business’s situation
and devising ways of dealing with them
110
Succession
planning
A human resourcing process for identifying and developing new
leaders who can replace old leaders when they leave, retire or die
