understanding business Flashcards
what are the sectors of industry
primary - natural recourses
secondary - manufacturing
tertiary- service
quaternary- technical services
what are the sectors of economy
private - private business
public - government related
third- charity non profitable organisations
private limited company
small organisations led usually by small shareholders/family
public limited company
its managed by directors and owned by share holders. eg. microsoft/google
public sector
portion of the economy composed of all levels of government and government-controlled enterprises.
third voluntary sector
non-profit organisation. eg cancer research
franchisor
an individual or company that sells or grants a franchise for the sale of goods or the operation of a service.
multi national company
companies that operate in a number of countries around the world.
whats the objective of a public sector company
efficiency they try to use their rescources without wasting
essential services
customer satisfaction
equity- delivering services fairly
what’s a private sector’s objectives
they aim to achieve growth
innovation- aim to grow business
profit maximisation
customer satisfaction
third/voluntary sector objectives
raise funds
to create a social impact
to help a cause
to help improve peoples wellbeing
what are the methods of CSR
coporate social responsiblity
they ensure they are economically responsible
there are ethical and environmenth responsibilities
what r the advantages and disadvantages of CSR
a - positive brand image, cost savings
d - economic burden, time consuming
what are some external methods of growth
- mergers
- takeovers
- horizontal integration
-vertical integration - lateral
-conglomerate
delayering
removing a level of heirachy
a- lowers costs
d- wider span of controls more pressure
functional grouping
organising firms into departments based on their core activities
a - les duplication of recourses
d - lack of coordination
downsizing
closes down or merges aspects of their operation
a - lowered costs
d - conflict between workers
customer grouping
divides its operation by types of customers
a - loyal customers
d - can cause competition between departments
location/geographical grouping
divides its operation by geological areas
a - communication is better
d - high costs due to duplication
technological grouping
divides by type of technology required
a - costs may be reduced
d - high costs of training
chain of command
how many people commands must pass through before reaching the desired person
span of controls
the number of people who report to a manager
flat structure
fewer levels of management
a - quick communication and decision making
d - less promotion opportunities -> may cause staff demotivation
tall structure
many levels of management
long chain of commands
a - staff gain support from line manager
d - many level of hierarchy, slow communication
centralised structure
control and decisions made by the management (HQ)
a - the places will operate the same
d - less responsive to local pressure/ demands
decentralised structure
control and decisions making re delegated to departments
a - effective resources allocation
d - can negatively impact the flow in formation within a business
matrix structure
project team to carry out specific task
employees report to multiple bases rather than one
a - different view points
d - very expensive
what are the types of methods of growth businesses may use
- vertical integration
- horizontal integration
- organic growth
whats forward vertical integration
a company takes over another company at a later stage
a - garauntees an outlet
d - may affect core activities
backward vertical integration
businesses take over a company at an earlier stage
horizontal integration
two companies at the same stage of production process merge/takeover
a - removes a competitor
d - expensive to buy a new company
organic growth
happens naturally
a - less risky
d - slow
what r the objectives of business
- satisfaction
- managerial objectives (ie working within a budget / increasing in salary or position)
- growth
what are the ways to achieve growth
- takeover
- franchising
- internal / organic growth
- become a multi national company
- merger
- takeover
what r the ways to fund growth
- divestment (when a company sells its assets
- asset stripping ( a company is purchased for its assets )
- outscourisng
- retained profit
- buy - out
- buy in
- demerger
whats the different with a buy out and a buy-in
a buy-out is when someones buys the company from the inside such as a manager
a buy-in is when someone buys the company from the outside
what are the external factors that might affect a business
- political
- environmental
- social
- technological
- economic
- competition
what r the internal factors that can affect a firm
staff
finance
technology
corporate culture
what are stakeholders
are people with a key interest in the success of the business
who can be a stakeholder
external - customers, banking, suppliers, investors
internal - owners, management, employees
whats a conflict of interest
when 2 stakeholders want different things from the business
what are the types of decisions
stragetic done by senior management, complex
tactical , done by middle management, less complex
operational, junior management, day to day decisions, simple
what r factors affecting the quality of decisions
human recourses
technology
funding
company policy
time constraints
how to measure how affective a decision was
measuring sale levels
analysing profit values
customer feedback
what is the role of managers
plan
organise
cooperate
command
co-ordinate
delegate
motivate
What factors can be considered when deciding on a method of production
technology
Budget
Staff
Customisation
what are methods of growth
conglomerate
lateral
diversification
horizontal integration
forward vertical integration
backward vertical integration
internal/organic growth
what is conglomerate integration
when two businesses from two SEPERATE industries merge together
what is lateral integration
when two businesses in the SAME industry merge together BUT dont sell the same product
what is diversification
businesses reduces the risk by expanding the number of goods/services they sell
