Theme 3 Flashcards

1
Q

What are 4 focuses for corporate objectives?

A
  • Innovation
  • Profitability
  • Growth
  • Sustainability
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2
Q

What is a corporate objective?

A

Quantifies mission and sets measurable targets for business.

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3
Q

What is a mission statement and what does it include (2 things)

A

Sets out the purpose of a business.
- Business values
- Business Scope

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4
Q

What is the Ansoff Matrix? And the 4 segments

A

Tool to help businesses determine a market to operate in.

  • Market Penetration (E,E)
  • Product Development (N Product, E)
  • Market Development (N Market, E)
  • Diversification (N,N)

E = Existing
N = New

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5
Q

Describe each of the 4 segments of Ansoffs Matrix

A

Market Penetration
- Strategy to boost sales of current product

Product Development
- Develop new products for existing customers

Market Development
- Take existing product into new market / segment

Diversification
- Offer new products to new customers in new market

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6
Q

What is Porters corporate strategy?

A

3 strategies to compete in a market.

  • Competitive advantage
    (Low Cost & Differentiation) on X axis
  • Market scope
    (Broad vs Narrow) on Y axis
  • Low Cost & Broad = Cost Leadership
  • Low Cost & Narrow = Cost Focus (Cutting costs)
  • Differentiation & Broad = Differentiation (USP)
  • Differentiation & Narrow = Differentiation focus (Focusing on a niche)
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7
Q

Strategy Vs Tactics

A

Strategy
- Long term plan for business to achieve objectives

Tactics
- Day to day decisions achieve strategy

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8
Q

The Objectives Hierarchy from top to bottom

A
  • Aims
  • Mission Statement
  • Corporate Objectives
  • Functional objectives
    (Objectives in specific areas: finance, operations etc)
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9
Q

Define SWOT

+ / - of SWOT Analysis

A

Tool to measure business position in market
(Strengths, Weaknesses, Opportunities, Threats)

+ Low Cost and simple
+ Can be combined with PESTLE

  • Subjective (opinions of managers)
  • No clear solutions
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10
Q

Define PESTLE

A

Way to analyse external influences that impact a business.
(Political, Economic, Social, Technological, Legal, Environmental)

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11
Q

What are Porters 5 forces and what are they used for?

A

Framework for analysing the competitive environment

  • Competitive Rivalry
  • Bargaining Power Of Suppliers
  • Bargaining Power Of Buyers
  • Threat Of Substitutes
  • Threat Of New Entrants
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12
Q

3 Types of EOS explained

A

Technological - larger business invest in larger technology

Purchasing - Bulk Buying

Financial - Better interest rates and more capital

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13
Q

Problems due to diseconomies of scale

A

Communication
- Harder to communicate across business

Motivation
- Workers in large organisations struggle to see their impact

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14
Q

What is Overtrading

A

When business becomes too big and overstretch financial resources.

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15
Q

Types of business growth (Acquisitions)

(4)

A

Backward Vertical
- Taking over supplier

Forwards Vertical
- Taking over a customer such as retailer

Horizontal
- Merging with another business at same level in supply chain

Conglomerate
- Taking over unused business in different market

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16
Q

+ / - Of Organic growth

A

+ Controlled pace
+ Diseconomies of scale minimised

  • Slow pace not good for stakeholders
  • Competition may be growing faster
17
Q

3 Reasons to stay small

A
  • Lower Costs
  • Convenience as USP
  • Flexibility (fast decisions)
18
Q

What is a moving average?

A

Average of a 3 to 4 period time period

  • Just the mean of x NO. months
19
Q

What is Quantitative Sales Forecasting?
- Limitations to Quantitative Sales Forecasting

A

Method to predict future sales using past quantitive factors.

  • Short term (data looses value after 1/2 years)
  • Less valuable in volatile markets
20
Q

What is variance?

A

Difference between budgeted costs and actual costs

Variance = Actual - Forecast

Budget Variance % = (Actual Costs / Budgeted Costs) x 100%

21
Q

What is an investment appraisal?

A

Techniques to assist businesses judge the desirability of investing in something

22
Q

What is Simple Payback?

And Drawback

A

Investment Appraisal technique

-> Focus on time taken to recoup initial investment

  • Profitability ignored
23
Q

What is Average Rate Of Return? Formula?

And Drawback

A

Investment Appraisal technique

-> Measures profits of an investment over time

  • Effects of inflation ignored

(Average Annual profit / Assets Initial Cost)

*Make sure its annual profits

24
Q

What is Net Present Value “Discounted Cash Flow”

And Drawback

A

Investment Appraisal technique

-> Factors in future value of money by discounting cash flow

  • Complex calculations

*(Estimating value of investment using future cash flows)

25
Q

What are decision trees? + / -

A

Way of tracing alternative outcomes from a range of business decisions

+ Clarifies possible outcomes
- Probabilities estimated

26
Q

What is Critical Path Analysis?

3 pieces of information needed to complete

A

Diagram to help managers complete projects in shortest time & identify critical activities

  • Length of time for each task
  • Order tasks to be completed
  • Activities that can be completed simultaneously
27
Q

Stakeholders vs Shareholders

A

Stakeholders:
Someone that is effected by business decisions

Shareholders:
Someone that owns a section of the company

28
Q

What are ethics?

  • What are 3 ethical business practices?
A

Moral principles that guide business behaviours

  • Correct working conditions and pay for workers
  • Fair payment to suppliers
  • Sustainable production

etc

29
Q

What is CSR?

  • How to use this in an exam?
A

Belief that a business should act responsibly and protect interests of all stakeholders.

  • Evaluation - This depends on (Impacts on employees, cheap labour)
30
Q

What is the use of a Statement Of Comprehensive Income?

A
  • HMRC for taxation
  • Employees to determine bonuses
  • Shareholders to determine dividends
31
Q

What is ROCE?

Equation

A

Return On Capital Employed
- Determines what profits a business has made from its resources.

  • Compares operating profit to capital employed

-> (Operating Profit / Capital Employed) x 100%

32
Q

What is a Gearing Ratio?

Equation

A

proportion of businesses equity that is borrowed

-> (Non-Current Liabilities / Total Equity + Non-Current Liabilities) x 100%

33
Q

Formula for:

  • Labour turnover
  • Absenteeism
A

-> NO. staff leaving over time / Average NO. staff

-> NO. staff absent for time period / total employees

34
Q

What Is absenteeism?

A

habitual non-presence on an employee

35
Q

What are 3 causes of change within a business?

A
  • PESTLE (External Forces)
  • New Ownership (LTD -> PLC etc)
  • Size
36
Q

What are 2 reasons for resistance to change?

A

Self interest
- Harder work
- Less pay

Misunderstanding
- Employees not understanding the need for change OR what It involves

37
Q

What is scenario planning and whats the goal?

A

Process of anticipating future risks

  • Formulate contingency plans to minimise impact of the risk