Unit 1 Flashcards
Mission statement
A qualitive statement of an organisations aims that uses language intended to motivate employees p
Corporate bjectives
Goals of the whole organisation rather than different elements
Why do business set objectives
Specific-easily and defined
Measurable-quantifiabel
Agreed-nanages and subordinates are involved in setting targeted
Realistic-achievable and not in conflict with other objectives
Time bound-based on an explicit timescale
Examples of business objectives
Profit growth survival
Cash flow
Social and ethical objectives
What is revenue also known as
Turnover or sales turnover
What is the effect of changes in sale volume on total revenue
Selling price remains unchanged
Importance of profit
Seen as a reward
Motivator
Measure of success
Private sector organisations
Owned, financed and rub by private individuals
Includes non profit organisations like charities
Public sector organisation
Own by government essential services or education
Unlimited liability
Owners are liable for all debts that the business may incur
Limited liability
Don’t have to pay for debt and the shareholders pay
Ltd
Keep it’s affairs private
Owners can determine objectives without pressure of short term profit
They are funded by shares
Soletrader advantages
Easy and cheap to set up
Few legal normalities
Owner takes all profit
Disadvantages of soletrader
Unlimited liability
Limited capital for investment and expansion
Advantages of private limited company
Limited liability
More privacy
More flexible
Disadvantages of private limited company
Shares are less attractive as cannot be traded on the stock exchange and hence could be difficult to sell
If expansion needs finance more difficult to raise than for plc
Advantages of public limited ckmpany
Limited liability
Gain positive publicity
Suppliers tend to be more willing to offer credit to plcs
Disadvantages of plcs
Must publish a lot of financial info
Founders lose control of these shareholding falls below 51 percent
Ordinary share capital
Money given to a company by shareholders in return for a share certificate that gives them part ownership of the company
No guarantee level or dividend
Market capitalisation
The value of outstanding shares in a public limited company
Shareholders function
Provide finance for business’s
Must have at least 51 percent of ordinary shares
Have a right to receive dividends
Influences on share price and significance of share price changes
State of economy
Performance of company
Competition in the market
PESTLE stand for
Political
Economic
Social
Technological
Legal
Environmental
Factors influencing demand. For a product
Price of product
Tastes and fashion
Technology
Marketing and advertising
Seasonal factors
Determinants of competitiveness and their impact on costs and demand
Investment in new equipment and technology
Financial planning and control
Quality procedures
Staff skills, education and training
Gearing
Measure what proportion of capital is funded by long term loans
Efficiency ratio
Assess the internal management of a business
Efficiency ratio
Assess the internal management of a business
