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Higher Business Management > Understanding Business > Flashcards

Understanding Business Flashcards

1
Q

What is a need?

A

A need is something necessary for survival. E.g, food, water, shelter, and clothing.

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2
Q

What is a want?

A

A want is something you would like to have, but is not necessary for survival. E.g, a TV, a car, a games console, and an iPad.

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3
Q

What is a good?

A

A good is a tangible, physical object you can touch.

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4
Q

What is a service?

A

A service is something that can be done for you, but is intangible - it cannot be touched.

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5
Q

What is meant by “durable goods”?

A

Goods which last for more than a year.

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6
Q

What is meant by “non-durable goods”?

A

Goods which last for less than a year.

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7
Q

What is meant by “capital goods”?

A

Goods which are used to make a product.

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8
Q

What is meant by “consumer goods”?

A

Goods that are bought day to day by consumers.

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9
Q

(Sectors of Industry)

What is the Primary Sector?

A

Industries that extract natural resources from the ground. E.g, farming, mining, and fishing.

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10
Q

(Sectors of Industry)

What is the Secondary Sector?

A

Industries that use primary resources to produce their product. E.g, manufacturers.

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11
Q

(Sectors of Industry)

What is the Tertiary Sector?

A

Industries that provide a service. E.g, hairdressers, plumbers, and mechanics.

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12
Q

(Sectors of Industry)

What is the Quaternary Sector?

A

Industries that provide information. E.g, call centres, consultancy.

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13
Q

(Factors of Production)

What is meant by “capital”?

A

Machinery used to produce or the money used to start up a business.

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14
Q

(Factors of Production)

What is meant by “enterprise”?

A

The person who combines all the factors of production together (entrepreneur).

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15
Q

(Factors of Production)

What is meant by “land”?

A

Natural resources.

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16
Q

(Factors of Production)

What is meant by “labour”?

A

Human resources.

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17
Q

(Sectors of the Economy)

What is the Private Sector?

A

Individuals who run businesses to make a profit.

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18
Q

(Sectors of the Economy)

What is the Public Sector?

A

Organisations owned by the government which aim to break even. Funded through taxation. E.g, NHS, Firefighters, and Police.

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19
Q

(Sectors of the Economy)

What is the Third Sector?

A

Organisations that aim to help people in need. E.g, Oxfam, Dog’s Trust, and British Heart Foundation.

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20
Q

Who makes the decisions in a Public Limited Company?

A

Board of Directors.

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21
Q

Who owns a Public Limited Company?

A

Shareholders.

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22
Q

How is a Public Limited Company funded?

A

By selling shares on the stock market.

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23
Q

What requirements does a Public Limited Company need to meet?

A

Plcs need at least two shareholders and £50,000 in the bank.

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24
Q

Advantages of a Public Limited Company

A
  • Shareholders have limited liability
  • Raise huge amounts of money by selling shares on the stock market
  • Plcs dominate the market
  • Can raise vast sums
  • Due to size they benefit from Economies of Scale
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25
Q

Disadvantages of a Public Limited Company

A
  • No control over who buys shares, therefore a risk of takeover
  • Prospectors have to be produced
  • Must abide by the Companies’ Act
  • Have to publish their accounts
  • Separation of ownership and control
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26
Q

Who owns a Private Limited Company?

A

Shareholders (normally family and friends).

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27
Q

How are Private Limited Companies funded?

A

By selling shares to chosen shareholders.

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28
Q

Who makes the decisions in a Private Limited Company?

A

A Board of Directors.

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29
Q

Advantages of Private Limited Companies

A
  • Shareholders have limited liability
  • Easy to raise finance
  • No limit to number of shareholders
  • Control of the company is not lost
  • Large amount of experience can be gained from shareholders and directors
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30
Q

Disadvantages of Private Limited Companies

A
  • Set up costs are expensive and time consuming
  • Accounts have to be published
  • Profits are shared out among a larger group of people (lower dividends)
  • Shares cannot be sold to the public which makes it difficult to raise finance
  • Have to meet the requirements of the Companies’ Act
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31
Q

What is a Franchise?

A

An agreement where a business sells the rights to another business allowing them to sell the products or use the company name. E.g, McDonalds, The Body Shop, Subway.

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32
Q

What is a Franchisee?

A

The person buying the rights for the company.

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33
Q

What is a Franchiser?

A

The company selling the rights.

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34
Q

Advantages of being a Franchiser

A
  • Allows market shares to increase without much effort
  • Has the power to withdraw the franchise if rules and conditions are not being met
  • Finance for business is provided by the Franchisee
  • Risks are shared between franchisee and franchiser
  • % of profits are achieved
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35
Q

Disadvantages of being a Franchiser

A

Image and reputation depends on the Franchisee’s.

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36
Q

Advantages of being a Franchisee

A
  • Franchiser will advertise nationally
  • Franchiser carries out administration and training
  • Begin trading with an established name
  • Customers are familiar with the products
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37
Q

Disadvantages of being a Franchisee

A
  • Franchisee’s reputation and profitability depend on Franchiser and the performance of other Franchisees
  • Strict rules may be set by the Franchiser and they may pose restrictions
  • A % of profits have to be paid to Franchiser
  • The franchiser has the power to withdraw the contract
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38
Q

What is a Multinational Company?

A

A company that owns production/service facilities outside the country in which it is based. Normally Plcs and have budgets larger than some countries.

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39
Q

Advantages of being a MNC

A
  • An organisation may be given grants from governments to locate in that country and won’t be required to pay it back
  • Organisations will become larger which makes them safer from takeovers
  • Can allow organisations to increase their sales/profits
  • Take advantage of economies of scale and reduce unit costs of products
  • Employ cheaper staff - greater profitability
  • May help to avoid legal restrictions in the organisation’s own country which could allow them to sell/produce their products abroad
  • Could allow for tax advantages which will increase profitability
  • Avoidance of tariffs/quotas imposed by governments
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40
Q

Disadvantages of being a MNC

A
  • Legislation may be different in other countries which may require the organisation to alter its product/service
  • Legislation may exist on how a product/service is marketed and may result in some marketing techniques having to be charged
  • Cultural differences mean that organisations have to be sensitive to different countries’ cultures
  • Different languages will exist and this may mean that organisations have to employ specialist linguists to work with the organisation (new menus, packaging)
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41
Q

Advantages of being a Host Country

A
  • Creation of employment
  • Reduction in balance of payments
  • Introduction of technology
  • Improved standards of living
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42
Q

Disadvantages of being a Host Country

A
  • Exploitation of workers/resources
  • Profits go back to MNC of origin
  • MNCs become too powerful and exert a strong influence on governments
  • Social responsibility - damage to the environment - use up non-renewable energy
  • Low prices of MNC can force local businesses out of business
  • Increased competition for local companies
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43
Q

Who owns a National Government Organisation?

A

Owned by Central Governments/Tax payers

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44
Q

Who runs a National Government Organisation?

A

Controlled by elected politicians/MPs/civil servants

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45
Q

How are National Government Organisations financed?

A

Funded through National Insurance, VAT and Income Tax

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46
Q

What are National Government Organisations?

A
  • Health/Hospitals
  • Education
  • Defence
  • Royal Mint
  • HM Revenues & Customs

Public Sector

(Scottish Governments have delegated responsibility from UK Governments for education, health and transport).

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47
Q

What are Local Government Organisations?

A

Public Sector

  • Refuse collection
  • Local education
  • Housing
  • Recreation
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48
Q

Who owns Local Government Organisations?

A

Owned by Central Government or general public

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49
Q

Who runs Local Government Organisations?

A

Controlled by elected councillors/civil servants

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50
Q

How are Local Government Organisations funded?

A

Financed by:

  • Council tax/business rates
  • Money from Central Government
  • EU grants
  • Charges for services
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51
Q

Who owns a Public Corporation?

A

Owned by the government

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52
Q

Who runs a Public Corporation?

A

Controlled by chairperson/board of directors

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53
Q

How are Public Corporations financed?

A

Funded by government grants, selling merchandise, TV license

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54
Q

An example of Public Corporations

A

The BBC

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55
Q

An example of Voluntary and Charitable Organisations

A
  • RSPCA
  • Oxfam
  • Girl Guides
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56
Q

Who owns a Voluntary/Charitable Organisation?

A

Owned by members/sponsors/founder

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57
Q

Who runs a Voluntary and Charitable organisation?

A

Controlled by volunteers or an elected volunteer

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58
Q

How are Voluntary and Charitable organisations funded?

A

Financed by:

  • Donations/appeals
  • Lottery grants
  • Sports councils
  • Selling items
  • Local authority grants
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59
Q

Who owns a Social Enterprise?

A

Owned by Founder

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60
Q

Who runs a Social Enterprise?

A

Controlled by Manager

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61
Q

How are Social Enterprises funded?

A

Financed mainly by selling goods and services - however can also receive donations and grants

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62
Q

What’s a Social Enterprise’s main aim?

A

Main aim is social or environmental issues. Their main aim isn’t to make a profit, although they do.

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63
Q

What is needed for a Social Enterprise to be qualified?

A

At least half of their profits must go to their main aim

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64
Q

Advantages of being a Social Enterprise

A
  • Help to solve issues whilst making a profit
  • Media attention for the social issue provides publicity for your business
  • Attracts customers who support the issue
  • Can sell shares to raise finance if they are a limited company
  • Grants are available specifically to Social Enterprise businesses
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65
Q

What are the objectives of a business in the Private Sector?

A
  • Survival (not plc)
  • Growth
  • Provide a service
  • Maximise profits (sales increase and keep costs down)
  • Dominate the market (plc)
  • Maximise sales
  • Satisfying (not plc), running own business to make a living
  • Become more environmentally friendly/ethical/socially responsible
  • Improve its image/reputation
  • Managerial objectives (plc):
  • Company car
  • Expensive account
  • Mobile phone
  • Private health care
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66
Q

What are the objectives of a business in the Public Sector?

A
  • Provide an improved service
  • Breakeven, when profit and loss is equal
  • Make best use of taxes
  • Keep within a budget
  • Be socially responsible (ethical) - i.e become more environmentally friendly
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67
Q

What are the objectives of a business in the Third Sector?

A
  • Increase awareness
  • Increase volunteers
  • Open more shops
  • Maximise donations
  • Help people/animals
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68
Q

What are the three types of decision?

A
  • Strategic
  • Tactical
  • Operational
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69
Q

What are Strategic Decisions?

A
  • Long term
  • Made by senior managers
  • Outline objectives of the organisations

E.g, improve profits, to expand into US, to merge with another company or to change the business structure

70
Q

What are Tactical Decisions?

A
  • Medium term
  • Made by middle managers
  • Help achieve strategic decisions
  • Involves the movement of resources

E.g, to reduce staffing levels, to replace machinery, to find a cheaper supplier, or create a new advertisement campaign

71
Q

What are Operational Decisions?

A
  • Short term (day to day)
  • Made by staff or department managers

E.g, to organise cover for absent staff, to arrange a repair or decide upon order of who is going when for lunch

72
Q

What are the stages of the Structured Decision Making Model?

A
  1. Identify the problem
  2. Identify what you want to do
  3. Gather information from primary sources or secondary sources, internal and external
  4. Analyse the information - compare, adjectives and disadvantages
  5. Devise alternative solutions
  6. Select the best solutions
  7. Communicate the solution to staff and customers
  8. Implement the decision
  9. Evaluate the decision - is it working?
  10. If no, start the process again
73
Q

What is the DMM?

A

The Structured Decision Making Model provides decision makers with a framework/guideline to assist them making quality decisions

74
Q

Internal Constraints on DM

A
  • Lack of finance
  • Policies and procedures used in the business
  • Information available (quantity and quality)
  • Lack of technology
  • Management:
  • Ability
  • Use of DM tools
  • Employees:
  • Ability
  • Amount
  • Training required
  • Resistance to change
75
Q

Advantages of Using DMM

A
  • Time is taken to gather and analyse the info
  • No snap judgements can be made
  • Time is taken to identify possible alternative solutions which enhances innovation
  • The decision is shared with all stakeholders which ensures every employee is kept fully informed
  • Forces the decision maker to consider every stage which means decisions are likely to be of higher quality
  • Decisions made are evaluated, therefore the problem will eventually be solved
76
Q

Disadvantages of using DMM

A
  • The time scale required
  • The ability to collect all information - time consuming and expensive
  • The problem of generating alternative solutions
  • Lack of creativity/no gut reactions
  • Results of solution are not seen until the process is finished
77
Q

How are decisions evaluated?

A
  • Employee absence/attendance
  • Level of employee motivation
  • Ethos
  • Customer opinion (questionnaire)
  • Quantitative information (numbers):
  • Production levels
  • Sales/profit figures
78
Q

What is SWOT analysis?

A
  • Strengths - internal/current/positive
  • Weaknesses - internal/current/negative
  • Opportunities - external/future/positive/internal
  • Threats - external/future/negative/internal
79
Q

Examples of Strengths/Weaknesses

A
  • Corporate culture
  • HRM
  • Finance
  • Marketing
  • Sales
  • Structure
  • Product/product range
  • Management
  • ICT
80
Q

Examples of Opportunities/Threats

A
  • Political
  • Economic
  • Social
  • Technology
  • Environment
  • Competition
  • Suppliers
81
Q

Purpose of SWOT analysis

A
  • Proactive rather than reactive
  • Builds on strengths
  • Fixes weaknesses
  • Grasps opportunities
  • Avoid/limit the impact of threats
82
Q

What is a Stakeholder?

A

An individual or group of individuals who have an interest or an influence in the success or failure of an organisation

Competitors are NOT stakeholders!

83
Q

Examples of Stakeholders

A
  • Customers
  • Employees
  • Owners
  • Managers
  • Local community
  • Trade Unions
  • Tax payers
  • Shareholders
  • Government
  • Media
  • Suppliers
  • Inland Revenue
  • Banks/lenders
84
Q

What is a conflict?

A

The interest of any one stakeholder can conflict within another

85
Q

What is interdependence?

A

A reason why one stakeholder needs another

86
Q

Internal/Organic Methods of Growth

A
  • New employees
  • Purchase new machinery
  • Open new stores/retail outlets
  • Expand product range
87
Q

Advantages of Internal Growth

A
  • Less risky than being bought over by other businesses
  • Financed from own funds
  • Building upon existing strengths
88
Q

Disadvantages of Internal Growth

A
  • Slow method of growth

- Dependant on increased demand

89
Q

(External Growth)

What is a merger?

A

When two or more businesses join together on equal terms

90
Q

(External Growth)

What is a takeover?

A

When a business buys over another business

  • can be friendly or unfriendly
  • a business loses its identity
91
Q

(External Growth)

What is Horizontal Integration?

A

When a company takes over or merges with another organisation at the same stage of production

E.g, Wal-Mart and Asda, Halifax and Bank of Scotland, Lloyds and TSB

92
Q

What are the advantages of Horizontal Integration?

A
  • More profit/sales/market share
  • Economies of scale
  • Reduce competition
  • Acquire the firm’s assets
  • To become stronger and reduce the chance of takeover
93
Q

What is Backward Vertical Integration?

A

When a company merges with or takes over another business at the previous stage of production.

E.g, Tesco and Heinz, and Ford and Michelin.

94
Q

What is Forward Vertical Integration?

A

When a company takes over with another business which is at the next stage of production.

E.g, Tate & Lyall and Cadbury

95
Q

What are the advantages of Forward/Backward Vertical Integration?

A
  • Less expensive raw materials
  • No middle man so increased profits
  • More control over supplier
  • Guaranteed stock
  • Processes can be linked easier
  • More control over distribution
96
Q

What is a Conglomerate (diversification)?

A

When a business merges with or takes over an organisation which operates in a different market.

E.g, Pepsi & Walkers, Pepsi & Quaker, Kiwi & Sara Lee

97
Q

What are the advantages of a Conglomerate?

A
  • Reduces the chance of failure?
  • Spread the risk
  • Firm becomes larger and more secure
  • If it fears loss of market share
  • If it fears heavy competition
  • Gains the assets of the firm
  • Ability to overcome seasonal fluctuations
98
Q

What is a De-merger?

A

Splitting 1 firm into 2 separate firms

99
Q

Advantage of a de-merger?

A

Can concentrate on the business’ core activity

100
Q

What is a de-integration?

A

Selling non-profitable/minor areas

101
Q

An advantage of de-integration?

A

Can concentrate on the business’ core activity

102
Q

What is a Divestment?

A

When a business sells some of its assets (or subsidiaries businesses) to another company

103
Q

An advantage of a Divestment

A

Can raise finance which is re-invested into the business

104
Q

What is asset stripping?

A

Buying a business and selling it off bit by bit

105
Q

An advantage of asset stripping

A

The parts which are making a loss are closed down

106
Q

What is a Management Buyout?

A

When current managers buy the business from its current owners

107
Q

What is a Management Buy in?

A

When managers from outside the business buy it from its current owners

108
Q

What is Outsourcing?

A

Hiring another company to perform your non-core activities rather than doing them yourself.

E.g, Catering, cleaning and accountancy

109
Q

Advantages of Outsourcing

A
  • You can concentrate on your core activities
  • Less equipment and labour needed
  • Outsourced staff should have greater expertise
  • Only use them when required
  • More efficient therefore cheaper than doing the activity yourself
110
Q

Disadvantages of Outsourcing?

A
  • Difficult to keep confidential information confidential
  • Less control over the work
  • Employees often unsure of loyalty
111
Q

(External Factors)

What is PESTEC?

A
  • Political
  • Economic
  • Social
  • Technological
  • Environmental
  • Competition
112
Q

What are some Political Factors?

A
  • Change in the law/legislation
  • Change in taxation levels
  • Government spending - eg new road network
  • Local government planning permission
  • Reduced/increased trade restrictions
113
Q

What are some Economic Factors?

A
  • Unemployment
  • Rate of inflation
  • Recession
  • Change of interest rates
  • Change in exchange rates
114
Q

What are some Social Demographics Factors?

A
  • Ageing population

- Family size (smaller)

115
Q

What are some Socio-cultural Factors?

A
  • Changes in trends and fashions
  • Animal and environment welfare
  • Health conscious
  • Increased car and home ownership
  • More women work
  • Late motherhood
  • More leisure time
  • Change in attitude about marital status
116
Q

What are some Technological Factors?

A
  • Advancements in technology:
  • E-mail
  • Internet/e-commerce
  • S-commerce
  • Software
  • Transportation
  • Production
117
Q

What are some Environmental Factors?

A

More care taken to protect the environment

  • More recycled goods - recycling bins/raw materials
  • No animal testing
  • Less car parking available
  • Electric cars

-Storms and floods

118
Q

What are some Competition Factors?

A

New competition enters the market which forces change

  • New improved products are produced
  • Lower price
  • Increased promotions
  • Improved quality
119
Q

What are some Internal Factors?

A
  • Finance (or lack thereof)
  • Staff ability
  • Information available
  • Changes in costs (wage rises/stock theft)
  • Availability of ICT
  • Management ability
  • Corporate Culture
  • Resistance to change
120
Q

What are the Organisational Structures?

A
  • Hierarchical (tall)
  • Flat
  • Entrepreneurial
  • Matrix
  • Decentralised
  • Centralised
121
Q

What is a Hierarchical/Tall Structure?

A

An organisation which has many levels of management

122
Q

What are the key features of a Hierarchical Structure?

A
  • Long chain of command
  • Narrow span of control
  • Easy to put procedures in place
123
Q

What are the advantages of a Hierarchical Structure?

A
  • Each employee has one manager to whom he or she is responsible
  • Easier to check everyone’s work because there is a narrow span of control
124
Q

What are the disadvantages of a Hierarchical Structure?

A
  • Slow response to market and consumer demands
  • Length of communication time, both up and down
  • Length of time to make decisions
  • Expensive to staff
  • The system is rigid and inflexible
  • People’s position in management is often seen as a status symbol with clear divisions between the managers and the workers
125
Q

What is a Flat Structure?

A

An organisation which has few levels of management (add photo)

126
Q

What are the key features of a Flat Structure?

A
  • Short chain of command

- Wider span of control

127
Q

What are the advantages of a Flat Structure?

A
  • Faster lines of communication
  • Faster response to change
  • Less expensive wages
  • Employees have more responsibilities - more tasks
  • Staff are motivated due to experience gained and prospects for promotion
128
Q

What are the Disadvantages of a Flat Structure?

A
  • Increased stress for managers and employees
  • Increased workload
  • Reduced promotion
  • Some staff are unmotivated
129
Q

What is an Entrepreneurial Structure?

A
  • One or two key people own and run the organisation

- Used by small businesses (Sole Traders, Partnerships)

130
Q

What are the advantages of an Entrepreneurial Structure?

A
  • Decisions are made by a senior manager
  • Decisions made quickly
  • Staff know who they’re accountable
131
Q

What are the disadvantages of an Entrepreneurial Structure?

A
  • Little input from staff - no consultation
  • Heavy workload for manager
  • Key person has to be an expert in all areas of running a business
  • Demotivating for employees
  • Do not benefit from the initiative and creativity of the employees
132
Q

What is the Matrix Structure?

A
  • People with specialist skills are put together to form a team to complete a specific task/project
  • The team is made up of staff from different functional areas
133
Q

What are the advantages of a Matrix Structure?

A
  • Increased experience- different angles
  • Increased motivation as staff always have new projects to work on - no time to get bored
  • Increased job satisfaction as employees get the opportunity to use their expertise
134
Q

What are the disadvantages of a Matrix Structure?

A
  • Expensive to have teams working on different projects
  • Confusion over who reports to who
  • Difficult to co-ordinate all the activities of the employees from the different functional departments
135
Q

What is a Centralised Structure?

A
  • Control and decision-making lies with the most senior directors/managers (HQ)
  • Associated with Hierarchical Structures
  • Subordinates/each branch don’t have much power at all
136
Q

What are the advantages of a Centralised Structure?

A
  • Organisation benefits from strong leadership
  • Only those at the top have control of finance
  • Decisions are made for the whole organisation and not just a department/branch
  • Decision makers are experienced and make better quality decisions
  • All orders and storage is standardised -economies of scale can be gained
  • Easier to promote a corporate image as all external communications can be done in a standardised format
137
Q

What are the disadvantages of a Centralised Structure?

A
  • Unmotivational for staff as no consultation takes place
  • Thoughts and ideas for those working on the shop floor are lost
  • Decisions made may not represent the local market
138
Q

What is a Decentralised Structure?

A

Decision-making and control are delegated to the managers of each branch which gives senior managers a lighter workload as they have longer to make day-to-day decisions

139
Q

What are the advantages of a Decentralised Structure?

A
  • Branch managers are better informed to make decisions
  • Decision-making is quicker which allows for a quicker response to local changes in the market
  • Delegation is said to be a greater motivator for branch managers
  • Groomed for a senior position when it comes along
  • Delegation allows for a proactive approach to be adopted, and a greater flexibility of roles
140
Q

What are the disadvantages of a Decentralised Structure?

A
  • Branch managers may lack expertise
  • No economies of scale gained for bulk buying
  • Decisions made may not benefit the whole organisation
141
Q

What is Delayering?

A

Removing the middle management from a Tall Structure to make it a Flat Structure

142
Q

What are the advantages of delayering?

A
  • Improved communication
  • Empowers staff
  • Speeds up DM
  • Fewer management salaries to pay
  • Organisation can adapt quickly to market changes
  • Prepares employees for promotion
143
Q

What are the disadvantages of Delayering?

A
  • Remaining stuff have to take on extra work
  • Fewer promotion opportunities
  • Managers have responsibility for a wider span of control - increased stress and workload
  • Causes redundancies
144
Q

What is Downsizing?

A

Removal of areas of the organisation that are NOT linked to the core activities

145
Q

What are the features of Downsizing?

A
  • Any employee can be made redundant
  • Stripping out excess capacity within the organisation
  • Reducing scale of operations to meet demand
  • Causes unrest in the workplace
  • Empowers more staff as responsibilities are being shared out amongst more people
146
Q

How can Downsizing reduce costs?

A
  • Saves cost of wages (all staff)

- Cost of premises is lower if it’s smaller

147
Q

What factors influence the type a structure a business has?

A
  • The size of the organisation
  • The technology used
  • Staff knowledge and skills
  • Ability of the manager
  • The products sold
  • The finance available
148
Q

What does the word “responsibility” mean in business?

A

When an employee is answerable for their own actions and the actions of others

149
Q

What does the term “span of control” mean?

A

The number of employees a manager controls in an organisation

150
Q

What does the term “chain of command” mean?

A

The communication of information up and down through the organisation’s structure

151
Q

What does the word “delegation” mean?

A

Giving the responsibility and the authority to a subordinate to carry out a task or duty

152
Q

Why do managers delegate?

A
  • Reduces manager workload

- Employees will gain experience for a promotion

153
Q

What is an Organisational Grouping?

A

The way in which a business can organise its staff and the activities they undertake

154
Q

What are the different types of Grouping?

A
  • Functional
  • Customer
  • Place/Territory
  • Product/Service
  • Technology
155
Q

What is Functional Grouping?

A

Departments are grouped based on similar skills, expertise and resources used

156
Q

Name 5 common Functional Departments

A
  • Marketing
  • Operations
  • Finance
  • Human Resource Management
  • Administration
157
Q

What are the advantages of Functional Grouping?

A
  • Organisation has a clear structure
  • Staff expertise is contained in one department which encourages specialism
  • Staff can help each other with problems
  • Easy to identify who has answers to problems and who performs particular activities
158
Q

What are the disadvantages of Functional Grouping?

A
  • Difficult structure to manage as organisation expands
  • Slow at responding to change
  • Department objectives become more important than organisation’s strategic objectives
  • Department rivalry
  • Communication between departments is poor
159
Q

What is Place/Territory Grouping?

A

When are organisation organises its activities and resources by geographical location and sell to a broad customer base

160
Q

What are the advantages of Place/Territory Grouping?

A
  • Can meet the needs of customers in different countries exactly - in terms of language
  • Can become familiar with local customs and cultures
161
Q

What are the disadvantages of Place/Territory Grouping?

A
  • Expensive to produce products in different languages - marketing
  • Communication can be difficult between branches
  • Expensive to staff
  • Duplication of admin activities
162
Q

What is Customer Grouping?

A

When an organisation organises its activities and resources by different types of customers. E.g, Domestic and Business, Private and Public, Home or abroad

163
Q

What are the advantages of Customer Grouping?

A
  • Customer loyalty due to highly personal service they receive
  • Highly responsive to the needs of the customer
  • Each type of customer receives its own service, price, and promotion suited to their needs
164
Q

What are the disadvantages of Customer Grouping?

A
  • Very expensive staffing costs
  • If a new group of customers exist, a whole new group of staff have to be employed and trained
  • Duplication of marketing activities and admin activities
165
Q

What is Product/Service Grouping?

A

When the activities of the organisation are divided according to the different products and services which are produced. E.g, Virgin, Warner.

166
Q

What are the advantages of Product/Service Grouping?

A
  • Increased responsiveness to change
  • Staff become experts on the product/service
  • Staff can easily see the results of their efforts - increased motivation
  • Allows management to identify poorly performed products/services
167
Q

What are the disadvantages of Product/Service Grouping?

A
  • Competition between products and services

- Duplication of equipment, admin and staffing

168
Q

What is Technology Grouping?

A

Organisations group their activities according to the technological processes involved in providing the good or the service. E.g, Tesco.

169
Q

What are the advantages of Technology Grouping?

A
  • Highly suitable for large organisations with different production processes
  • Specialisation within the workforce
  • Training is given in only one area
  • Easy to pinpoint problems in production
170
Q

What are the disadvantages of Technology Grouping?

A
  • Duplication of resources in each production process
  • Departments compete against eachother
  • Department aims more important than organisational aims
171
Q

What is Corporate Culture?

A

“The values, beliefs, and norms related to the organisation that is shared by all its members”

  • Set of beliefs and behaviours which managers and employees adopt to enable the business to achieve its aims
  • Consists of everything to do with the organisation including its values, emotions, beliefs, and language used
  • Grows organically over time and becomes the unwritten ruled and values of the business
  • Culture will be reflected in every part of the business including dress codes, layout, décor, policies and procedures used, symbols, terms and conditions of employment, and employee incentives
  • Management style will also influence the culture
172
Q

What are the advantages of Corporate Culture?

A
  • Employees feel they belong to the organisation and are part of it which can provide them with a sense of security and will improve motivation
  • This motivation can in turn lead to improved efficiency and higher productivity
  • Employee loyalty can increase which will decrease the staff turnover and staff absence rates
  • Can create positive relationships within the organisation that will enable better communication and decision-making
  • Image and identity of the organisation can be improved which will be visible to all stakeholders

Higher Business Management (1 decks)

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