Theme 3 AO1 Flashcards
What is a strong culture in a business?
Strong cultures have good communication and have a strong focus on their core values
What is a weak culture?
A weak culture demonstrates bad customer service, lack flexibility in demand and have a demotivated workforce.
Average rate of return formula (ARR)?
(Average annual profit/ Capital cost of investment) x100
Define synergy
When agents work together to produce something greater than the simple sum of its parts.
What is a vertical integration?
When a firm merges with another firm that is not part of the same stage of production
What is backwards vertical integration?
merging with a firm that is closer to the primary stage of production.
What is forwards vertical integration?
merging with a firm that is closer to the tertiary production stage
What is horizontal integration?
When a firm merges with another firm at the same stage of the production line.
What is a conglomerate merger?
A firm merging with a firm from a completely different industry.
What is the difference between a merger and a takeover?
Takeovers are more hostile
What does PESTLE stand for?
Political, Economic, Social, Technological, Legal, Environmental.
What are the objectives of growth?
Achieving EOS, Increase market power over suppliers, Increase market share and brand recognition, Increase profitability.
What are some problems that may arise with growth?
Diseconomies of scale, Worsened internal communication, Overtrading.
What are 5 reasons why a business would want to complete a merger or takeover?
Achieve synergy, Gain knowledge of the market, Access EOS, Aquire assets, Gain market share.
What is the difference between organic and inorganic growth?
Organic growth is when a business expands internally where as inorganic growth is when a business expands by using other businesses.
What is an example of organic growth?
Opening new locations and employing more staff.
What is an example of inorganic growth?
Mergers and takeovers.
What are three advantages of growing organically?
Businesses can use retained profit, they will grow at a sustainable rate, easier to avoid the principal-agent problem.
What is the principle agent problem?
When owners do not control what happens and the managers do instead.
What are three disadvantages of organic growth?
Rivals may opt for inorganic growth to grow faster, Hard to build market share if they are already leading, Takes more time.
What is HANDY’s Power culture?
There is a central figure that makes decisions. There is a competitive attitude amongst employees to gain power.
What is HANDY’s Role culture?
Decisions are made through rules and procedures and power comes from higher hierarchal status. It is bureaucratic and there is usually a lot of paperwork involved.
What is HANDY’s Task culture?
It focuses on completing project. Power comes from those with expertise and knowledge. It involves a lot of teamwork.
What is HANDY’s Person culture?
People of similar expertise are grouped together. These all work on a client to client basis rather than a project to project basis.
How is corporate culture formed?
Role models (founders), Mottos, Norms and values, Artefacts (uniforms).
What is the labour productivity calculation?
Total output/ Number of workers.
What does the labour productivity calculation measure.
How efficient each employee is on average.
What is the labour turnover calculation?
(Number of employees/ Average number of employees) x 100
What is the absenteeism calculation?
(Number of work days lost through absence/ Total possible days worked) x100
In regard to corporate culture, Define surface manifestation.
Visible, tangible elements of a corporate’s culture that can be noticed by an outsider.
