Theme 3 Key terms Flashcards
Mission
an organisation’s aims and long term intentions, its ultimate purpose.
Mission statement
sets out the purpose and primary objectives of a business
SMART objectives
specific
measurable
achievable
realistic
time related
Corporate Objectives
objectives that relate to the performance of the business as
a whole, which for the focus of business strategy decisions
strategy
How the business intends to achieve its objectives
tactics
Support achievement of specific targets
Ansoffs matrix
marketing planning model that helps a business determine its product and market strategy.
market penetration
trying to increase your market share in your existing market
product development
selling new products to your existing market
market development
selling existing products to new markets
diversification
selling new products to new markets
Porters generic matrix
identifies a competitive strategy based on competitive advantage and the market
portfolio analysis
assesses the position of each product or brand in a firm’s portfolio to help determine the right marketing strategy
boston matrix
Stars= high market share, high market growth
Cash cows= low market growth, high market share.
Question marks= low market share, high market growth
dog= low market share, low market growth
competitive advantage
an advantage over competitors gained by offering consumers greater value
Distinctive Capabilities
something a business is good at that other businesses don’t do
SWOT analysis
is a method for analysing a business, its resources, and its environment.
Market conditions
relate to the attractiveness of the overall market in which a business operates.
PESTLE
assesses the external influences on a business: Political, Economic, Social, Technological, Legal and Environmental
Business cycle
all about the rate of change in the value of economic activity.
Gross Domestic Product (GDP)
The total measured value of economic activity in an economy,
measured over a particular period.
boom
high levels of consumer spending and business confidence
recession
falling levels of consumer spending and confidence
slump
low levels of consumer spending and many business failures
recovery
increasing levels consumer spending
Inflation
A sustained increase in the average price level of an economy
exchange rate
is the price of one currency expressed in terms of another currency.
porters 5 forces
analyses competition within an industry and judging how attractive the market is
Economies of scale
arise when unit costs fall as output increases
average cost per unit
total production costs/ total output x100
Internal Economics of Scale
arise from the increased output of the business itself
External Economies of Scale
occur within an industry: i.e. all competitors benefit
diseconomies of scale
units costs start to rise as output rises
Overtrading
when a business expands too quickly without having the financial resources to support such a quick expansion.
Organic (Internal) Growth
involves expansion from WITHIN a business, e.g by expanding the product range, or number of business units and locations.
sales forecasting
a prediction of future sales based on past data and market research
Extrapolation
involves the use of trends established by historical data to make predictions about future values.
Correlation
looks at the strength of a relationship between two variables.
Payback period
The time it takes for a project to repay its initial investment
Average rate of return
Looks at the total accounting return for a project to see if it meets the target return
Discounted cash flow (NPV)
Net present value (“NPV”) calculates the monetary value now of the project’s future cash flows
decision trees
is a mathematical model that uses tree uses estimates and probabilities to calculate likely outcomes and is used to help managers make decisions.
Expected value
The financial value of an outcome is calculated by multiplying the estimated financial effect by its probability
Net gain
The expected value of each outcome less the costs associated with the decision
critical path analysis
identifies the most efficient and cost effective way of completing a complex project.
earliest start time
Identifies the earliest time an activity can begin
lastest finish time
Identifies the latest time an activity can finish without holding up the whole project
total float time
Total float time = LFT− duration − EST
Income statement
This measures the business performance
Statement of Financial Position (balance sheet)
A snapshot of the business’ assets and its liabilities on a particular day
Cash flow statement
Shows how the business has generated and disposed of cash and liquid funds during a specific period
Administration expenses
Operating costs and expenses that are not directly related to producing the goods or services
Gross profit
The difference between revenue and cost of sales.
Operating profit
records how much profit has been made in total from the trading activities
Finance expenses
Interest paid on bank and other borrowings
Taxation
An estimate of the amount of corporation tax that is likely to be payable on the profits for the period.
