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Higher Business > Understanding Business > Flashcards

Understanding Business Flashcards

1
Q

maximising profit meaning?

A

making as much profit as possible

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2
Q

survival meaning?

A

survival means to avoid going out of business and having to cease trading

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3
Q

satisficing meaning?

A

satisficing means to aiming for a satisfactory or adequate result rather than the best possible outcome

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4
Q

what does it mean to increase market share?

A

market share is the percentage of total sales in a market that a business has. businesses aim to improve their products and services to ensure that existing customers return.

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5
Q

market leader meaning?

A

the business that has the most sales in a market is known as the market leader

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6
Q

what are the two categories of decisions?

A

centralised and decentralised

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7
Q

role of a manager (plan)

A

looking ahead, seeing threats and opportunities, problem solving etc

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8
Q

role of a manager (organise)

A

arranging resources, getting people to the right place at the right time

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9
Q

role of a manager (co-ordinate)

A

ensure everyone working towards one goal, nobody duplicating efforts

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10
Q

role of a manager (command)

A

issuing instructions, motivating staff and leading staff

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11
Q

role of a manager (control)

A

check what has been done and the quality of work done, makes necessary adjustments

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12
Q

what does it mean to motivate and delegate?

A

motivate - encouraging staff, involving them in decision making
delegate - pass tasks to staff, responsibility cannot be handed over though!

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13
Q

what are the objectives of a business in the private sector?

A
  • maximise profits
  • survive
  • operate ethically
  • growth
  • corporate social responsibility
  • providing a good quality service/good
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14
Q

what are the objectives of a business in the public sector?

A
  • provide a service
  • operate ethically
  • serve the local community
  • work with a budget
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15
Q

what are the objectives of a third sector business?

A
  • support a cause
  • raise awareness for a cause
  • provide a service
  • maximise donations
  • operate ethically
  • survival
  • increase number of volunteers
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16
Q

what is corporate social responsibility?

A

Corporate social responsibility (CSR) is when a company aims to act ethically and responsibly to ensure the public perceive them in a positive light.

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17
Q

what are examples of corporate social responsibility?

A

Reducing carbon footprint can improve a company’s reputation as they are seen to be eco-friendly. It may also attract new customers.

Creating new safety measures can lead to a business gaining quality and safety awards, which can be used as an effective marketing tool and give the company a competitive advantage.

Improving the working conditions of employees will motivate existing staff and attract new staff to the organisation.

Recycling, reducing waste and minimising packaging can reduce costs for an organisation and improve their reputations.

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18
Q

satisfying meaning?

A

A company who aims to satisfice will be looking to be just good enough to achieve their other objectives but no more than that. They do not aim to be the best possible but to do the best they can to satisfy stakeholders such as shareholders and customers. This may be due to external pressures such as low economic growth or internal factors such as a lack of finance.

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19
Q

growth meaning?

A

Most businesses within the private sector will aim to grow. In order to survive in a competitive market, a business must change and develop overtime to keep up with market demand.

growth means that a business gets bigger

The larger a business becomes, the more opportunities become available and the more profit they make. Larger companies are at less risk of being taken over by competitors.

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20
Q

examples of corporate culture?

A
  • staff uniforms
  • the corporate logo and colour scheme
  • the mission statement
  • company policies
  • incentives and rewards for staff
  • training and development of staff
  • teambuilding for employees
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21
Q

what are the benefits of a growing business

A

have more influence over market price and are big enough to be price setters

often enjoy economies of scale

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22
Q

how can taxes as an external factor affect a business? (political)

A

Governments can raise or lower corporation taxes. They can also affect businesses by increasing value-added tax on products or business rates. This can impact profits. If the rate of VAT has raised a company will need to increase its selling price which may reduce sales

23
Q

how can economic factors effect a business?

A

Economic factors are all concerned with the so called ‘levers’ of the economy.

such as:
economic growth
unemployment rate
interest rates
inflation
exchange rates
24
Q

what happens when economic growth is increasing?

A 
more jobs will be created
more tax will be paid
higher levels of employment
people have more disposable income to spend on goods and services
this is known as a boom
25
Q

what happens when economic growth decrease?

A

higher levels of unemployment
people will have less money to spend of goods and services
this is known as a recession

26
Q

what are social factors?

A

Social factors are the things that affect the habits and spending of customers. These include:

demographics
lifestyles
tastes and trends
ethical

27
Q

how can ethics affect a business? (social factors)

A

There is increased pressure on businesses to operate ethically:

  • reducing waste
  • paying fair wages
  • providing goods and services that are ethically produced and marketed

It may cost businesses more to operate ethically but it will improve the image of the organisation which may result in greater sales. it may attract customers who only wish to shop from businesses that source ethically.

some customers are willing to pay a higher price

28
Q

how can lifestyles impact a business?

A

Lifestyles are changing too. Society is more health-conscious so healthy foods and habits are becoming more important to customers.

  • food packaging lists nutritional information
  • more electronic products such as pedometers and fitness trackers are being used

Businesses will need to adjust their product portfolios and marketing strategies to ensure they are taking into account the lifestyle trends and fashions or they will start to lose customers.

29
Q

how can tastes and trends impact a business?

A

Tastes and trends are changing constantly and businesses need to adapt to them in order to stay in business.

for example:
loom bands became the biggest selling toy of 2014 but fell from popularity the following year
fidget spinners grew rapidly in popularity over a matter of months in 2017

30
Q

how can technology impact a business (external factors)?

A

Technological factors refer to the ways new practices and equipment can affect businesses. for example faster wifi or better hardware/machinery.

31
Q

how can environmental factors impact a business?

A

The physical conditions that a business has to deal with, such as:
climate change
weather (e.g many products are seasonal)

or

The green credentials of global business, including:
recycling and pollution (e.g recycling attracts customers who want to shop from environmentally friendly businesses)

32
Q

how can competitors externally affect a business?

A

Competitive factors cover how businesses who offer similar products or services affect each other. This includes:

imitators
price wars
product differentiation

33
Q

what are the advantages of the tall structure?

A

more opportunities for promotion which can lead to greater staff motivation

staff gain more support from their line manager

there is a higher degree of supervision as each line manager has a limited number of people they are responsible for

34
Q

what are the disadvantages of the tall structure?

A

many levels of hierarchy

longer lines of communication can make the firm less responsive to change

can be expensive to run due to high wage costs

35
Q

advantages of the flat structure?

A

few levels of hierarchy

lines of communication are short, making the firm responsive to change and decision-making quicker

staff working in a flat management structure can be empowered to work independently and take on more responsibility

36
Q

what are the disadvantages of the flat structure?

A

wide span of control means that tasks must be delegated, which can lead to employees feeling stressed and managers feeling overstretched

less promotion opportunities within a flat structure, which may lead to the company losing staff to other organisations

37
Q

m

A

m

38
Q

mission statement?

A

A mission statement is a formal written statement of the objectives and aims of a company.

39
Q

how can finance affect decision making?

A

There may not be finance available to the business to make the decisions they would like to.

For example, a business may wish to invest in new machinery to increase production but they do not have enough capital to allow them to do this.

40
Q

how can HR effect decision making?

A

The quality of decisions made by managers can be affected by:

managers’ ability, training and experience to make decision making

how much risk a manager is willing to take when making a decision

managers’ ability to handle stressful situations

the likelihood of overpowering managing decisions or owners overturning decisions made by middle managers

41
Q

how can technology impact decision making?

A

Lack of the correct equipment or technology may restrict the decision-making process.

42
Q

what is the primary sector?

A

The primary sector of industry is concerned with the extraction of raw materials or natural resources from the land. Any business that grows goods or extracts materials from the land would be classed as a primary sector business.

Examples of businesses that operate in the primary sector would be farming, mining, fishing or oil production.

43
Q

what is the secondary sector?

A

The secondary sector of industry is concerned with manufacturing. This would involve taking the raw materials from the primary sector and converting them into new products.

Examples of businesses that operate in the secondary sector would be car manufacturers, food production or building companies.

44
Q

what is the tertiary sector?

A

The tertiary sector of industry is concerned with providing a service. Services are activities that are done by people or businesses for consumers.

Examples of businesses that operate in the tertiary sector would be hairdressers, banks, supermarkets or cinemas.

45
Q

what is the quaternary sector?

A

The quaternary sector consists of those industries providing information services, such as computing, ICT (information and communication technologies), consultancy (offering advice to businesses) and R&D (research, particularly in scientific fields).

The quaternary sector is sometimes included with the tertiary sector, as they are both service sectors.

46
Q

what are public sector organisations?

A

Public sector organisations are owned and controlled by the government. They aim to provide a service to the public and are funded by taxes. Public sector organisations function in areas such as health, education, housing and social work.

47
Q

m

A

m

48
Q

what is outsourcing?

A

Outsourcing is when a company hires another business to do some work for them. Many firms outsource cleaning or IT operations to smaller, more specialist companies.

49
Q

definition of working within a budget?

A

Working within a budget – managers will be given a set budget to which they have to adhere. This may prevent them from meeting some of the objectives of the organisation.

50
Q

how can change in laws and legislation affect a business? (political)

A

Government can implement new laws like the National Minimum Wage - Which impacts on profits as the wage costs of the business will rise

51
Q

how can the introduction of new legislation affect a business? （political)

A

Governments can introduce new health and safety legislation - This means that a business may have to change the way it works, for example by training its staff or upgrading its machinery or safety equipment

52
Q

what are the advantages of outsourcing?

A

allows the business to concentrate on what it is good at rather than getting bogged down on additional services

less labour and equipment are required for outsourced activities

high-quality work from the outsourced business as they have better experience and specialist equipment

the business can use the service when it is required and therefore saving costs on staff and machinary

53
Q

what are the disadvantages of outsourcing?

A

the business has little control over the outsourced work and therefore the work may not be of good quality

communication must be very clear to make sure exact specifications are met

the business may have to share information with the service provider which may get into the hands of a competitor

outsourcing may be more expensive as expertise and specialists are expensive

Higher Business (5 decks)

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