Understand the organisation and the effect of external factors Flashcards
What is an organisation’s purpose?
To give clear direction in order to meet aims and objectives, ensure consistency in products and services and ensure everyone knows the requirements and expectations
What does an organisation’s purpose consist of?
Mission statement, Vision & Values
What is a mission statement?
It defines what the business does, its objectives, and how it will reach these objectives
What is a vision statement?
It states where the organisation aspires to go.
What are organisation’s values?
Core principles which outlines the way the organisation does business.
Explain the importance of organisational aims and objectives
Assist with decision making
Increase chance of success
Improve employee motivation and productivity
What is a business aim?
A business aim is the long-term goal of the business
What are business objectives?
Measurable targets of how an organisation plans to achieve its aims
How are business objectives measured?
SMART objectives
What are all the SMART Objectives
Specific
Measurable
Achievable
Relevant
Time-bound
What 4 areas does the Wider Economy cover?
- Inflation
- Labour Market
- Financial Markert
- Global Market
What is inflation?
Inflation is an increase in the average price level of goods and services in an economy over a period of time
Effects of inflation
- This rising price for goods and services
- Reduces the purchasing power of each unit of currency
- As prices rise, money buys less.
What is the Labour Market?
- The place where workers & employees interact with each other.
- Refers to the supply of and demand for labour, in which employees provide the supply and employers provide the demand
What is the Financial Market?
Refers to any market where the buying and selling of securities take place.
E.g. Stock market, currencies
How can the Financial Market affect businesses
Dictate interest and borrowing rates
Currency rates affect how much money is spent and earnt
Share prices can change
How can the Financial Market affect businesses
Dictate interest and borrowing rates
Currency rates affect how much money is spent and earnt
Share prices can change
What is the Global Market
The market in which goods and services are traded to people of other countries
How does the Global Market affect the Wider Economy?
It affects the wider economy through cultural differences such as:
- language/values: what things mean in one country may not be valued the same way in another.
- Currency: as there can be fluctuations that will affect the price of goods that are exported and imported.
- trade restrictions applied to certain countries
Examples of External Factors
- Market Forces
- Policy and regulatory change
- Supply chain
- International and global market
- Political environment
How can Policy and Regulatory changes affect a business?
It can take:
Time
Money
Resorces
Why would policy and regulatory change occur?
Changes in legislation
