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Business Definitions > Theme 3 > Flashcards

Theme 3 Flashcards

1
Q

strategy

A

the medium to long term plans of a business to achieve its corporate objectives. details how objectives will be met through decisions and activities relating to all aspects of the business.

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2
Q

tactics

A

short term actions taken by a business. made on a day to day basis, made by managers lower down the hierarchy.

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3
Q

mission statement

A

a brief written statement that states the main purpose of a business or organisation. this provides a common focus for everyone within an organisation and, therefore, a common sense of direction.

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4
Q

corporate objectives

A

medium to long term goals of a business that form its guiding principles.

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5
Q

corporate strategy

A

medium to long term plans of a business, detailing how objectives will be met through decisions and activities relating to all aspects of the business.

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6
Q

product portfolio analysis

A

a technique used to analyse the range of products and brands that a business has under its control. this can help a business identify where each of its products are positioned in the market and identify potential gaps.

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7
Q

distinctive capability

A

the combined expertise, knowledge and experience of the leaders and founders of a business that create the unique set of qualities. these qualities are difficult to imitate and this gives a business a competitive advantage [the three attributes are architecture, innovation and reputation]

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8
Q

SWOT analysis

A

a diagnostic tool used to identify the internal strengths and weaknesses and the external opportunities and threats to a business.

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9
Q

Political

A

the government actions that influence the behaviour of businesses and their customers [PESTLE]

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10
Q

economic

A

factors that influence how resources are allocated in society and impact on investment and consumption decisions [PESTLE]

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11
Q

social

A

characteristics of society and trends in consumer behaviour that influence the behaviour of businesses and their customers [PESTLE]

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12
Q

technological

A

scientific advancements that influence behaviour of businesses and their customers [PESTLE]

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13
Q

legal

A

the collection of legislation that impact on the activities of organisations [PESTLE]

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14
Q

environmental

A

external influences linked to the natural environment that impact behaviour of individuals to reduce the negative impacts on the natural environment [PESTLE]

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15
Q

economies of scale

A

advantages of a business when unit costs fall as scale of production increases.

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16
Q

internal economies of scale

A

advantages of an increase in the scale of operations, leading to a fall in unit costs.

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17
Q

external economies of scale

A

advantages of an increase in the scale of production within the industry in which it operates leading to lower unit costs.

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18
Q

diseconomies of scale

A

disadvantages of a business increasing the scale of its operations, leading to a rise in unit costs.

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19
Q

internal communication

A

transferring information between interested parties within an organisation.

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20
Q

overtrading

A

a business expands too rapidly resulting in it operating at a level beyond its resources, causing liquidity problems. also applies to a business where supply exceeds demand due to fast growth.

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21
Q

merger

A

a form of external growth when two or more businesses agree to become integrated to form one business.

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22
Q

takeover

A

a form of external growth when one business gains control over another and becomes the owner (can be hostile or friendly)

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23
Q

horizontal integration

A

businesses that operate at the same stage of production join together [a form of external growth]

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24
Q

vertical integration

A

businesses that operate at different stages of production join together [a form of external growth]

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25
Q

conglomerate

A

the integration of two or more unrelated businesses.

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26
Q

inorganic growth

A

when a business expands the scale of operations through external means (e.g. integration and acquisitions)

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27
Q

organic growth

A

when a business expands in size internally by increasing the scale of its operations.

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28
Q

quantitative sales forecasting

A

numerical techniques used to predict future sales volumes.

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29
Q

time-series analysis

A

technique that shows past sales figures in date order to inform sales forecasting [a type of quantitative sales forecasting]

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30
Q

moving averages

A

technique that shows whether a tread is significant by smoothing out fluctuations in data [a type of quantitative sales forecasting]

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31
Q

scatter graphs

A

technique that plots the relationship between two variables to help identify a correlation to inform sales forecasting [a type of quantitative sales forecasting]

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32
Q

extrapolation

A

using past data to extend a trend for longer. this is a useful technique when the market is relatively stable.

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33
Q

investment appraisal

A

techniques that analyse the predicted financial outcomes fo potential investments.

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34
Q

investment criteria

A

a set of guidelines against which an investment can be judged.

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35
Q

corporate social responsibility (CSR)

A

a business decision to accept responsibility to its stakeholders for social, environmental and ethical actions.

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36
Q

CSR pyramid

A

A theory that highlights the four aspects of corporate social responsibility. society expects businesses to meet these obligations.

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37
Q

economic responsibility

A

part of the CSR pyramid. responsibility of a business to be profitable.

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38
Q

legal responsibility

A

part of the CSR pyramid. responsibility to obey the law (e.g. health and safety regulations)

39
Q

ethical responsibility

A

part of the CSR pyramid. responsibility to behave in a way seen as morally correct (e.g. treatment of employees and suppliers)

40
Q

philanthropic responsibility

A

part of the CSR pyramid. responsibility to give back to society (e.g. through charitable acts)

41
Q

payback

A

cumulative cash flow = no. of years
initial investment - cumulative cash flow = x
net cash flow of following year/x = no. of months

42
Q

average rate of return

A

total net cash flow/no. of years = x
x/initial investment x 100

43
Q

net present value

A

net cash flow x discount factor of that year
add up

44
Q

decision trees

A

a model that visually presents courses of action when making a decision.

45
Q

expected value

A

final outcome of success x chance
final outcome of failure x chance

46
Q

net gain

A

initial cost - expected value

47
Q

risks

A

measurable unknowns in decision making.

48
Q

uncertainties

A

non-measurable unknowns in decision making.

49
Q

opportunity cost

A

the cost of one course of action in terms of the next best alternative forgone.

50
Q

critical path analysis

A

a technique used to identify which tasks can be completed simultaneously and the order to complete them to find the shortest time possible.

51
Q

total float time

A

the amount of extra time available to complete a non-critical activity without delaying the whole project.
calculation: LFT - duration - EST

52
Q

short-termism

A

pressure on a business to perform in the short term.

53
Q

long-termism

A

decision making is focused on achieving in the long term.

54
Q

corporate culture

A

the values and standards shared by people and groups within an organisation.

55
Q

power

A

a type of organisational culture. key decision makers that are central to the way the business operated. commonly found in family businesses.

56
Q

role

A

a type of organisational culture. clear rules and procedures which result in a clear hierarchy. the organisation functions based on individual roles within the structure.

57
Q

task

A

a type of organisational culture. the business focuses on achieving the desired outcome from a specific task or project. teams are made from different business areas and work together to complete tasks.

58
Q

person

A

a type of organisational culture. a high degree of autonomy given to individuals within the organisation. employees are likely to be highly skilled in specialist areas.

59
Q

stakeholders

A

any individual or group with an interest in the actions of a business.

60
Q

internal stakeholders

A

individuals and groups from within the business with an interest in the actions of the business (e.g. managers, employees, owners)

61
Q

external stakeholders

A

individuals and groups from outside of the business with an interest in the actions of the business (e.g. suppliers, community, government)

62
Q

stakeholder objectives

A

the requirements and aims of each individual that are affected by the actions of a business.

63
Q

shareholders

A

investors who are part owners of a company providing equity capital in return for a percentage of ownership.

64
Q

stakeholder conflict

A

stakeholders have different objectives and therefore when a business makes a decision, there may be disagreements between some stakeholders.

65
Q

business ethics

A

morality in decision making and doing what is ‘right’ within the business.

66
Q

trade-off

A

when one decision results in the loss of an alternative outcome [not opportunity cost]

67
Q

corporate social responsibility (CSR)

A

a business’ decision to accept responsibility to its stakeholders for its social, environmental and ethical actions.

68
Q

financial statements

A

formal records that summarise a business’ financial performance, activities and worth over a specific period of time.

69
Q

statement of comprehensive income

A

a formal financial document that summaries a business’ trading activities and expenses to show whether the business has made a profit or a loss over a specified period of time.

70
Q

statement of financial position

A

a formal financial document that summarises the net worth of a business at a given point in time.

71
Q

liquidity

A

a measure of business’ ability to meet day to day expenses a short-term debts and hence its ability to survive.

72
Q

ratio analysis

A

comparisons made between two or more figures in a set of financial accounts.

73
Q

gearing ratio

A

a measure of the proportion of a business’ capital that is funded through long term loans (debt/equity)

74
Q

human resources (HR)

A

the function within a business that relates to the management and strategies involved in dealing with individuals and groups that make up the workforce.

75
Q

human resource data

A

quantifiable information that can be used to measure workforce performance

76
Q

labour productivity

A

a measure of workforce performance that looks at the output per worker.

77
Q

labour turnover

A

the rate of change in a business’ labour force.

78
Q

absenteeism

A

the name of staff who miss work as a proportion of the total number of staff.

79
Q

financial rewards

A

the variety of methods that have money value and are used to incentive the workforce and influence their behaviour at work.

80
Q

piece rate

A

a type of financial incentive. when payment is based on the number of items produced by an employee.

81
Q

commission

A

a type of financial incentive. when payment is based on the number of unites sold.

82
Q

bonus

A

a type of financial incentive. an additional, lump sum, one off payment to an employee for meeting individual, team or company targets.

83
Q

salary schemes

A

a type of financial incentive. a basic rate of pay given to employees, usually paid monthly, but determined on an annual basis. it is normally based on level of experience and skills.

84
Q

perfoRmance related pay (PRP)

A

when employees receive a bonus based on the performance of the employee measured againsT a pre agreed range of criteria.

85
Q

employee share ownership

A

a human resource strategy that involves giving employees shares or the option to buy shares in the company.

86
Q

consultation strategies

A

the process of seeking the thoughts and opinions of employees prior to making decisions.

87
Q

empowerment strategies

A

a human resource strategy that involves delegating greater responsibility to employees, allowing them to use their abilities and to have a greater say in the decision making process.

88
Q

poor business performance

A

when a business is failing to meet its corporate and functional objectives. if poor business performance is experienced for a sustained period of time then the need to make changes will become inevitable.

89
Q

transformational leadership

A

leaders, with a clear vision, who are able to lead others to achieve the extraordinary.

90
Q

scenario planning

A

the process by which organisations try to prepare for unexpected and potentially disastrous events.

91
Q

risk mitigation

A

the actions taken by a business to minimise or eliminate risk through a process of identifying, assessing and prioritising potential threats.

92
Q

succession planning

A

the process of planning for the loss of a leader or key member of staff.

93
Q
A

Business Definitions (4 decks)

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