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Business > Unit 2 > Flashcards

Unit 2 Flashcards

1
Q

Why have an interest in a business?

A

Owners- want to make profits, want business survival
Managers- promotion, high salary
Shareholder-want dividends
Local community-jobs, treat fairly
Employees- secure their jobs, good working conditions, high wages
Customers- good variety, reasonable prices, good customer service

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2
Q

What are private costs and benefits?

A

Costs that a business pays (wages) and the benefit it gets from these activities (profit)

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3
Q

What are social costs and benefits?

A

The true cost of business activities . Taking into account external costs (e.g pollution)

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4
Q

How do you look through an article?

A 
Size
Competition
Ownership and objectives
Resources
External environment
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5
Q

What’s a mission statement

A

Gives a general, visionary idea of what the business exists to do- looks to the future

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6
Q

Purpose of mission statements

A

Immeasurable
Inspire customers and employees
Marketing purposes
Influence corporate objectives

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7
Q

Benefits of mission statement

A

Provides direction
Referred to in times of conflict
Provides framework for decision making

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8
Q

Limitations of mission statement

A

Ambiguous
Unrealistic and over optimistic
Can become out of date if business changes

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9
Q

What’s the order of setting goals

A 
Mission statement
Aim
Objective
Strategy
Tactics
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10
Q

What’s an aim

A

Goals that the business wants to achieve (general) e.g. growth, survival, profits

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11
Q

What’s an objective

A

More specific and can measure against time. Motivates employees and gives them a greater sense of direction

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12
Q

What are the different types of objective

A 
Corporate
Strategic
Tactical 
Functional/operational 
Social 
Communicating
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13
Q

What’s a corporate objective

A

Relate to business as a whole
Set by top management
Satisfying the shareholders- profit dividends

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14
Q

What’s a strategic objective

A

How a business plans to achieve its aims or goals

Often a long term approach

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15
Q

What’s a tactical objective

A

Short term needed to achieve the strategic objectives. Short term activities e.g. advertise within a chosen area for 6 months

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16
Q

Functional/ operational objectives

A

Functional areas of business will set them

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17
Q

Social objectives

A

Environmentally friendly objectives

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18
Q

What is a communicating objective

A

Communicating objectives clearly to all stakeholders through website email newsletter etc.

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19
Q

What is SMART

A 
Useful set of criteria for setting objectives 
SPECIFIC 
MEASURABLE
AGREED
REALISTIC
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20
Q

What’s a strategy?

A

Action plan that the business puts into place to reach its objectives

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21
Q

What’s an internal audit

A

Looks at strength and weaknesses of the business itself

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22
Q

What’s featured on an internal audit

A

People- motivation, productivity , labour turnover
Marketing- sales, advertising, sales staff performance
Financial- cash flow, profitability, budgets and variances
Operations management- productivity, delivery, stock control

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23
Q

What’s an external audit

A

Looks at opportunities and threats in bus. Env.

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24
Q

What’s featured on an external audit

A 
Political
Economic 
Social
Technological 
Competition 
Culture
Ethics
Pressure groups
Environment
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25
Q

What are stakeholder objectives

A

Employees- want to feel valued so then they’re more productive, and less likely to leave
Customers- don’t feel exploited, high quality services/ goods so repeated custom
Suppliers- treat like “proper stakeholders” so there’s loyalty to the business
Owners- return that is satisfactory so there’s a higher share price over time
Local community- wants no social costs so try to do as little as possible so no bad publicity for bus.

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26
Q

Stakeholder conflicts

A

Can lead to trade offs between groups

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27
Q

What’s stakeholder influence

A

The amount of influence stakeholder has. Key stakeholders have most influence

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28
Q

What’s the legal situation about making objectives

A

Companies Act 2006- statuary status of directors duties and responsibilities. Including having regard for employees, suppliers and environment

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29
Q

What is the porters five forces model

A

A system for analysing the level of competition in a market. It can be used to decide whether it is worth going into a particular market

30
Q

What is on the five forces model

A 
Threat of new entrants
Supplier power
Buyer power
Threat of substitutes
Rivalry among existing competitors
31
Q

What does threat of new entrants look at?

A

The degree of barriers to enter the market.
E.g start up costs
Do existing firms have loyal customers already

32
Q

What is supplier power

A

Are there many potential suppliers
Would changing supplier be costly or time consuming
Would supplier choice matter to customers

33
Q

What is buyer power

A

Are there many other substitutes for these buyers to go to

Are there many customers?

34
Q

Threat of substitutes

A

Can people use alternatives to your product. If not then the threat is lower

35
Q

Rivalry among existing competitors

A

Looks at the extent to which firms within an industry compete with each other.

36
Q

What is the model of strategic choice

A

Shows how a company can achieve a competitive advantage in its industry

37
Q

What does the model look like

A

Broad market narrow m.
Costs. Cost leadership cost foc.
Differ Differ leadership Differ focus
Entiation

38
Q

What does cos leadership focus on

A

Seeking lower costs across whole of business

39
Q

What is cost focus

A

Lower cost advantage in just one or a small number of market segments

40
Q

What is differentstion leadership

A

Across the whole of the industry

41
Q

Differentiation focus

A

Differentiation across a small number of market segments for smaller niche market

42
Q

What’s a business plan

A

Formal written document that explains in detail how a business is going to achieve its objectives

43
Q

Why are business plans important

A
  • sets direction
  • motivates
  • Financial backing impossible without it
  • helps attract better qualified staff
44
Q

What is included in a business plan

A 
Mission statement
Business ownership
The markey
Products/services
Finance
Target market
45
Q

Advantages of business plan

A

Sense of direction
Encourages communication and cooperation between departments and stakeholders
Highlights constraints
Sets out roles of each department in order to achieve objectives

46
Q

Disadvantages of a business plan

A

Plan easily disregarded- only useful if actually followed

Opportunity cost- many spend too much time planning

47
Q

What is opportunity cost

A

The value of giving up the next best alternative when a decision is made

48
Q

What’s a contingency plan

A

Planning for what will happen if things go wrong- trying to minimise risks

49
Q

What is crisis management

A

Dealing with a potentially damaging event very quickly after it has happened - contingency plan can help to do so

50
Q

What are some solutions to a crisis

A

Insurance

Establishing systems to try and spot crisis coming

51
Q

What are some effective ways to respond to crisis

A

Management response- contact senior personnel , oversee the implementation of contingency plan
Operational response- implement contignecy plan- minimise impact on stakeholders
Communication response- contact key stakeholders, media briefing if business is large

52
Q

What’s the plan for review process

A

Make a business plan, do the plan, review it - did all of the progress meet objectives

53
Q

What are risks to accounting and finance sector

A

Sales levels being below expectation

Products exported being stolen or damaged= loss of revenue and profit

54
Q

Risks for Human Resources

A

Key employees leaving/absent=less productivity

55
Q

Risks for marketing

A

Shock to economy- unexpected recession and fall in sales

Emergence of powerful competitor

56
Q

Risks of operations management

A

Supplier failing to deliver on time

Delivering wrong quantity or quality

57
Q

What is uncertainty

A

The inability to calculate the benefits and costs of a decision precisely

58
Q

What is external uncertainty

A

Economic
Political
Competitive

59
Q

What is internal uncertainty

A

Organisational +human resource will employees affected by decision be able to implement it? Does culture of business support decision?
Stakeholder- how could they react
Technological- will the existing tech be able to cope with decision

60
Q

What are the 2 types of risk

A

Pure risk- event beyond persons personal control

Speculative risk- carries the possibility of gain or loss

61
Q

What are the other 2 types of risk

A

Quantifiable risk- a predicted risk occurring

Unquantifiable risk- unexpected and unknown

62
Q

What are factors affecting decision making

A 
Nature of risk
Level of risk
Accuracy of forecasts
Timescale
Volatility of internal / external factors
63
Q

What is forecasting

A

Use of existing data to predict future trends

64
Q

What is the purpose of forecasting

A

To help businesses plan for the future

65
Q

What can forecasting be used for

A

Costs
Market size
Sales

66
Q

Where are some areas to forecast

A 
Sales/revenue
Costs
Profits
Employee motivation 
Cash flows
67
Q

What are some different methods of research / forecasting

A

Delphi technique- qualitative , asks experts their opinions
Brainstorming- qualitative
Intuition- qualitative
Time series analysis-quantitative

68
Q

What are strategic decisions

A

Long term decisions affecting whole bus. Made my senior management.

69
Q

What are tactical decisions?

A

Middle management
Affects particular part of bus.
Medium term
E.g decision to increase training in particular department

70
Q

What are operational decisions?

A

Day to day

Managers of departments

71
Q

What are some decision making tools?

A 
SWOTanalysis- qualitative
Financial accounts- quantitative
Market research info- qualitative + quantitative
PEST analysis- qualitative
Porters five forces- qualitative 
Decision trees- quantitative 
Ansoffs matrix- qualitative

Business (4 decks)

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