Unit 1. Introducion to business management Flashcards
What is a business? AO2
A decision making organization, that combines human, physical, and financial resources to provide goods and services.
What are the inputs of a business? AO2
- Land
- Labour
- Capital
- Enterprise
What are the main business functions? AO2
- Human resources
- Finance
- Marketing
- Operation
What are the functions of Human Resource Management? AO2
Function of using, managing, and developing an organization’s worforce to meet the companie’s obajectives.
What’s the function of finance? AO2
Managing the organization’s money and assests and recording financial documentation.
(Informs the stakeholders about the companie’s fiancial position)
What is the function of marketing? AO2
Identifying and meeting the needs and wants of the customers in a profitable manner.
What is the function of operations? AO2
Providing the right goods and services of the right quantity and quality in a cost-effective way.
What are the business sectors? AO2
- Primart
- Secondary
- Tertiary.
- Quaternary.
What’s the primary sector about? AO2
Extraction, Harvesting, and conversion of natural resorces.
What’s the secondary sector about? AO2
Manufactiuring or construction of products.
What’s the tertiary sector about? AO2
Prioviding services and retail.
What’s the quaternary sector about? AO2
Knowledge bassed and innovation based activities
What is sectoral change? AO2
Shift in relative share or national output and employment to the business sectors.
What are the impacts of sectoral change? AO2
- More potential.
- Increases standard of education.
- Increases job opportunities.
- Greater focus on customer service.
- Higher household income.
What is an entrepreneur? AO3
Infividual who plans, organizes and manages a business, taking financial risk.
(Rewarded with profit)
What is an Intrapreneur? AO3
The same as an entrepreneur but as an employee of an organization.
( Rewarded with pay and remunaration)
What are the reason to start a business? AO2
- GET CASH
- Growth.
- Earnings.
- Inheritance.
- challenge.
- Segurity.
- Hobby.
- Autonomy.
What are the steps to start a business? AO2
- Find niche markets.
- Write a business plan.
- Obtain start up capital.
- Register.
- Market yourself and your products.
What are the problems new businesses face? AO2
- Lack of finance (cash flow problems)
- Lack of menpower.
- Complex legal system.
- High production cost.
- External issues in the economy.
What is a private sector business? AO2
Owned and controlled by private individuals and businesses
(Goal: Profit-maximaxation)
what is a public sector business? AO2
Provission of essential goods and services that would not be provided efficiently by private sectors.
What is a sole trader? AO3
- Business controlled by one person.
- Simplest form of business.
- Single owner takes all profits and liabilities.
what are the advantages and disadvantages of a sole trader? AO3
Advantages:
- Little legal requirements.
- All profits to the owner.
- Fast decision making.
- Personalized service.
- Privacy.
Disadvantages:
- Limited sources of finance.
- Limites economies of scale.
- Lack of expertise.
- Pressure of responsability.
What is a partnership? AO3
- Business run by two or more individuals who form a partnership.
- the owner shares responsabilities and raise finance collectively.
what are the advantages and disadvantages of a partnership? AO3
Advantages:
- Financial strength.
- Specialization and division of labour.
Disadvantages:
- Unlimited liability.
- Slower decision making.
- Disagreement and conflict.
What is a company/coorporation? AO3
A business owned by shareholders.
What are the cahracteristics of a Company? AO3
- Legal difference between owners and business’ identity.
- Limited liability
- More bureaucracy.
What is a private limited company (LTD)? AO3
- Shareholders are usually related or friends.
- Shares can’t be traded on public stock exchange.
What are the advantages and disadvantages of private limited companies? AO3
Advantages:
- Limted liability.
- Higher capital and expansion capacity.
- Continuity
Disadvantages:
- More legal requirements.
- Coorporate taxes.
- Less privacy.
What’s a public limited company (PLC)? AO3
- Shares can be traded on a public stock exchange
- Required to publish financial accounts and reports to the public.
What are the advantages and disadvantages of a public limited company? AO3
Advantages:
- Limited liabilities.
- More capital raised.
- Continuity after death.
- Higher credibility.
Disadavantges:
- Possible hostile takeovers.
- More restrictions.
- Coorporate tax.
- Have to pay more dividends.
What are the types of for-profit social organizations? AO3
- Cooperatives
- Microfinance.
- Public private parterships.
What is a Cooperative? AO3
Jointly owned and run by members who sare profits and benefits.
What are the advantages and disadvantages of a Cooperative? AO3
Advantages:
- Shareholder help run the organization.
- Equal voting rights among all share holders.
Disadvantages:
- Very slow decision making.
- Profits are spread out among all.
What are Microofinance providers? AO3
Small-loam providers to poor businesses and businessmen who have no access to conventional baking services.
What are the advantages and disadvantages of a microofinance provider? AO3
Advantages:
- Job creation.
- Social well-being.
Disadvantages:
- Limited finance.
- Limited eligibility.
What are the Private-Public partnerships? AO3
Government jointly works with the private sector companies.
What are the advantages and disadvantages of a public-private company? AO3
Advantages:
- More prodcutove while providing merit goods.
Disadvantages:
- Government must subsidize when coast of production increases.
Confluct between public and pricate sector interests.
What are the types of non-profit social organization? AO3
- NGO’s
- Charities
What are the characteristics of NGO’s? AO3
- Exist in the private sector.
- Participate in humanitarian projects.
What are the characteristis of charities? AO3
- They are exempted from taxes.
- They have charitable objectives.
What are the advanatges and disadvanatges of charities? AO3
Advantages:
- Social benefits.
- Taxes exemption.
- Pubtylic recognition.
- Limited liability.
Disadvantages:
- Charity faruds.
- Ineffciency.
What is a vision statement? AO3
A statemet that outlines the desired position of the company in a distant future.
What is a mission statement? AO3
Statement that outlibes the purpose of an organization.
What are the aims of a company? AO3
The long terms goals of what it wants to achieve.
- Vague.
- Unquantifiable.
What are the objectives of a company? AO3
Short-term goals that are specific and measurable.
What are the stratgies of a business? AO3
Plans of action to achieve the organization’s long term objectives.
What are the tatics of a buisness? AO3
Short term plans of action to achieve the short-term objectives.
What are the intenal fators that can change the organization’s obejectives? AO3
- Coorporate culture.
- Type and size of organization.
- Age of the business.
- Finance.
- Risk profile of shareholders.
- private and public sectors.
What are the external factors that can change the organization’s objectives? AO3
- State of Economy.
- government constraints.
- New technologies.
- New laws.
What is CSR?
Corporate social responsability is a concept where organizations consider the interests of society and take responsabilities for the impact of their activities on other stakeholders
What are thge advantages and disadvantages of CSR?
Advanatges:
- Better employee recruitment and less turnover.
- Better reputation.
- Relaxes preassure groups.
- Brand differentiation.
- Customer loyalty.
Disadvantages:
- High compliance costs lower profits.
- Forced to use ethically produced raw material.
- Ethics are no universal.
- Lower profits demotivates employess.
What is a SWOT analysis?
Decison making tool used to assess current and future implications of a business decision, based on internal and external business factors.
Internal factors:
- Strengths.
- Weaknesses.
External factors:
- Opportunities.
-Threats
What is the ANSOFF matrix?
Tool to help managers choose and devise growth strategies for products and markets.
What’s market penetration?
Existing market + Existing product (low risk)
What’s product development?
New product + Existing market (medium risk)
What’s market development?
Existing product + New market (medium risk)
What’s diversification?
New product + New market (high risk)
What are stakeholders?
People who can be affected by the business and therefor have an interest or stake in the company.
Internal:
- Employees
- Managers
- Directors.
- Shareholders.
External:
- Customers.
- Suppliers.
- Pressure groups.
- Competitors.
- Government.
What is the stakeholder conflict resolution?
Arbitration: both sides agree to an indeoent party’s decision.
- Decision is binding.
- Neither stakeholder will likely recieve what they want.
What is the stakeholder mapping?
Tool that helps to analyze which stakeholder to prioritize for a given issue.
What is STEEPLE analysis?
- Tool for understanding a business external enviroment by analyzing opporunities and threats.
- It looks at social, technological, enviromental, Ethical, political, legal and Economic.
What’s economies of scale?
As a business becomes larger and more efficient, the average cost of production decresases, allowing to have lower prices and be more competitive.
What are the types of economies of scale?
Internal: achieved by organizatio itself
- Bulk buying economies.
- Technical economies.
- Financial economies.
- Managerial economies.
- Marketing economies.
External: achieved by the industry.
- Improved infrasturcture.
- More trained worforce.
- Technological achievement.
What’s diseconomies of scale?
When the peak of economies of cale is passed, diseconomies of scale is experienced by the overexpansion of industries.
What are the consequences of diseconoies fo scale?
- Poor communication.
- Overworked laborers.
- Slower decision-making
- Alienation of workforce demotivates workers.
What are the advantages of small businesses
- Not or little bureaucracy
- Owner has control.
- Ability to offer personalized services.
- Better employee-worker relationships.
- Faster decision making.
What are the disadvantages of small businesses?
- No benefit of division of labour.
- No economies of scale-
- Lower access to financial sources.
- Can’t afford R&D.
What are the adavantages of Large businesses?
- There’s division of labour.
- Economies of scale.
- Access to various sourcs of finance.
- Diversify risks.
- Can afford R&D.
What are the disadvantages of large businesses?
- Difficult to manage.
- Diseconomies of scale.
- Can’t offer persobalized services.
- Poorer employee-manager relationships.
- More bureaucracy.
- Slower decision making.
What’s internal (organic) growth?
When businesses use their own resources to increase sales and profits.
How is internal growth achieved?
- improving products and services.
- Better marketing.
- Investment in R&D
- Improve worforce training.
- Expand number of offices, factories, ot outlets.
What’s external (inorganic) growth?
When a businnes growths by merging or taking over another business.
What are the types of external growth?
- Mergers and acquisition.
- Joint ventures.
- Strategic alliances.
- Franchising
What’s mergers and acquisition?
Merge: Two firms decide to merge to form a new company.
- Horizontal merge: firms in the same industry
- Vertical merge: firms in different sectors.
Acqusition: when one form buys the other either voluntary ot hostile (takeover)
What’s joint venture?
Two or more companies make a deal to work together on a particular project
What’s strategic alliances?
Collaborative agreement between companies to work on a project together
What’s franchising?
An inidividual buys the rights to operate under another business name.
- Can be offer to individuals of karge business.
- Frnachisee pay a franchise fee and it is given a license to operate.
- Franchise provides marketing and production equipment.
What are the adavantgaes of a franchisor?
- Growth cheaper and quickly.
- Less menpower to manage.
- Income from royalty
What are the disadvantages of a franchisor?
- Less control over quality and performance.
- Conflict in prfit vs. Volume.
- Franchisee can steal the business model and create a competition.
What are teh advantages of a Franchisee?
- Known brand leads to start-up sales.
- Franchisor support and guidelines.
- Lower cost od suplies due to economies of scales.
What are the disadvantages of a franchisee?
- Little freedom.
- Franchise loyalty fee.
- Still no guarantee success.
What’s the role of gloablization on business?
The spread of ideas and tech over the world led to grater integration between businesses and countries.
What are multinational coorporations (MNC’s)?
Businesses with operation in two or more countries.
What are the advantages of MNC’s?
Advantages:
- Exapnd customer base
- Grater economies of scale
- Cheaper material and labour
- Spread risks through diversification
What are the impacts of MNC’s on domestic businesses?
- Increase of competition
- Dominate the market and leave small businesses outside.
+ Allow local businesses to acces to foreign capital and shareholders.
+ Can provide R&D and technological advacements.
What are the impacts of MNC’s on the host country?
+ Foreign investment.
+ Balance of trade.
+ More option for the customers.
+ Job creation.
- Threats local businesses.
- Degradation of the nature.
- Increase of waste
