Unit 3 Flashcards
What are functional objectives?
A quantifiable statement of a department’s goals which should enable it to contribute to the achievement of the business objective
What is a corporate objective?
A quantifiable statement of a business’s goals which should include measurable targets
What is a functional strategy?
The plan by which the department intends to achieve its functional objectives on a day-to-day basis.
What are SMART targets?
- specific
- measurable
- agreed
- realistic
- time based
What are cash-flow targets?
A financial objective focuses on maintaining a healthy cash balance
What is cost minimisation?
The process by which businesses attempt to maximise profits by keeping costs low
What are ROCE targets?
The minimum percentage return a business wants to achieve from the capital employed in business activities
What are shareholder’s returns?
The financial rewards to a shareholder in return for their investment; this can include dividends and increased share value
What is satisficing?
Aiming to achieve a satisfactory level of profit
What is an executive director?
A member of the board of directors who also holds a position of responsibility in the business on a day to day basis, for example a marketing director
What is a Non-executive director?
A member of the board of directors who does not work for the business on a day to day basis but sits on the board in an advisory role
What is an income statement?
A financial document that summarises a business’ trading activity and expenses to show whether it has made a profit or a loss
What is gross profit?
Profit after cost of sales has been deducted
What is operating profit?
Profit after all other expensive a have been deducted, also referred to as net profit
What is a gross profit margin?
Gross profit expressed as a percentage of sales revenue
What is an Operating profit margin
Operating profit expressed as a percentage of sales revenue
What is profit quality?
The sustainability of profit
What is profit utilisation?
How profit is being used, i.e whether it is being ploughed back into the business or distributed to shareholders
What is a balance sheet?
A financial document that summarises the net worth of a business - it balances total assets with total equity and liabilities
What are inventories?
The IFRS term for stocks
What is total equity?
The total amount of money being utilised in the business from share capital and retained profit
What are no-current assets?
Items of value owned by the business that are likely to be kept for more than one year
What are current assets?
Resources owned by the business whose value varies as a result of daily business activities, e.g cash, inventories
What are intangible assets?
Assets without physical form such as goodwill or brand names
What are current liabilities?
Financial obligations of the business payable within 12 months
What are Non-current liabilities?
Debts that the business has more than one year to repay
What are net current liabilities?
Current liabilities minus current assets
What are net assets?
Total assets minus total liabilities
What are net current assets?
Current assets minus current liabilities
What is working capital?
A measure of a firm’s ability to meet day-to-day expenses
What is depreciation?
An accounting practice which allows the value of a fixed asset to be spread over its useful life
What are trade receivables?
Amounts owed by debtors to the business
What is a debtor?
Someone who owes the business money, i.e a customer who has not yet paid
What are trade payables?
Amounts owed by the business to creditors
What is a creditor?
Someone the business owes money to, i.e a supplier who has not yet been paid
What is liquidity?
A business’s ability to meet short-term cash payments on time
What is a current ratio?
A measure of the ability of a business to meet short-term debts from current assets
What is the acid test ratio?
A measure of the ability of a business to meet short-term debts from liquid assets
What is profitability?
The relationship between business’s profits and sales revenues
What is ROCE?
a measure of how efficiently a business is using its capital to generate profits
What is asset turnover?
A measure of how effectively a business is using its assets to generate sales
What is capital employed?
The total capital invested in the business from long-term sales
What is inventory turnover?
A measure of how many times per year a business turns over its stock through sales
What are payable days?
A measure of the average number of days taken to pay suppliers
What are receivable days?
A measure of the average number of days taken by a business to collect its debts from customers
What is a gearing ratio?
The percentage of capital employed that comes from non-current liabilities
What are shareholder ratios?
Ratios that help measure the value of the return received by shareholders
What are dividends per share?
The number of pence per share received by shareholders
What is a dividend yield?
A measure of the return received on an investment, expressed as a percentage of the current market price of the share
What is a financial strategy?
The long-term financial plan of action to achieve the financial objectives of the business
What are sources of finance?
The range of options available to firms to fund business operations including banks, venture capitalists and share capital
What are rights issues?
Selling new issues of shares to existing shareholders in a company so that their control over the business is not changed
What are profit centres?
A section of a business for which costs and revenues and therefore profit can be identified
What is capital expenditure?
The purchase of assets that will remain in the business in the medium to long term, accounted for in the balance sheet
What is investment appraisal?
The process of analysing the financial merits of a possible future investment
What is payback?
How long it will take to recoup the cost of an initial investment
What is ARR?
Average annual profit expressed as a percentage of initial investment
What is NPV?
The total net return of an investment stated in today’s monetary value
What is a discount factor?
The rate by which future cash flows are reduced (discounted) to reflect current interest rates
What is time value money?
Recognition of the fact that £1 today is worst more than £1 in the future due to a fall in its purchasing power
What is investment criteria?
A pre-determined target against which to judge an investment
What are marketing objectives?
The goals of the marketing function which come from, and are designed to help achieve, the corporate objectives
What is market analysis?
A detailed examination of the features of a market such as market size and sales used to predict future trends
What is a moving average?
A technique for identifying an underlying trend by smoothing out fluctuations in data
What is a trend?
A general direction in which something tends to move e.g sales are increasing
What is an extrapolation?
A prediction of a future trend based on an identified current trend
What is a correlation?
An apparent (statistical) relation between two factors (variables) which can be either positive or negative
What is marketing data?
Information gathered about the response to the marketing activities of a business
What is a test market?
Launching a product in a relatively small, well-defined segment or region of the market to test sales levels before a full-scale launch
What is ansoff’s matrix?
A way of classifying marketing strategies in terms of existing and new products in existing and new markets
What is market penetration?
When a firm increases the sales of its current products to existing customers or attracts new customers from its competitors in the market
What is product development?
Offering new and improved products to existing markets
What is market development?
Finding new markets for existing products either by selling abroad or by identifying a new segment of the domestic market
What is diversification?
Offering a new product in a new market
What is a marketing plan?
Written details of the activities to be used to carry out the marketing strategy
What is SWOT analysis?
A method of analysing the current situation by examining the internal strengths and weaknesses of the business and the opportunities and threats of the external environment
What is situation analysis?
An assessment of the business, its customers, competitors, and the market environment
What are marketing tactics?
The marketing mix activities (price, place, product, promotion) undertaken to achieve a chose marketing strategy
What are operational objectives?
Targets set in relation to the production process or provision of a service within a given financial year
What are quality, cost and volume targets?
Operational objectives which set a minimum acceptable standard of provision measured by cost, quality or volume
What is innovation?
The launch of a new product or process, an invention, onto the market for commercial gain
What are efficiency targets?
Operational objectives which set a minimum acceptable standard of provision in relation to efficiency
What are environmental targets?
Operational objectives which set a minimum acceptable standard of provision in relation to the environment
What is benchmarking?
A management tool which aims to increase performance by identifying, investigating and adopting aspects of best practise from other firms
What are economies of scale?
The benefits enjoyed by a firm as a result of operating on a large scale, leading to a fall in average costs
What are diseconomies of sale
The disadvantages experienced by a firm as a result of operating beyond optimum output, leading to a rise in average costs
What are purchasing economies?
Benefit of buying on a large scale leading to lower average costs from suppliers
What are technical economies?
Ability of larger firms to buy technically advanced equipment and spread the cost over a larger number of units
What is specialisation?
The ability to employ specialists, e.g accountants, and for staff to focus on one particular area of function
What is an average cost?
Total cost divided by the number of unites produced to give cost per item
What is a communication dis economy?
The breakdown in effective communication resulting from an increase in size of operations
What is a coordination diseconomy?
the breakdown in effective coordination resulting from an increase in size of operations
What is a resource mix?
The combination of capital and human resources utilised within a business to achieve the required output
What is an optimum resource mix?
The combination of capital and human resources which allows for the greatest efficiency
What is capital intensive?
Businesses that rely more heavily upon capital equipment, e.g machinery and computers rather than labour
What is labour intensive?
Business that rely more heavily upon labour, i.e the workforce rather than capital equipment
What is research and development?
The scientific research and technological development of a new product or process
What is idea generation?
The process of identifying a wide range of possible new ideas
What is idea screening?
The process of streamlining all the ideas generated to shortlist those worthy of further consideration
What is concept testing?
The process of pitching potential ideas to consumer panels to assess their reactions
What is business analysis?
The process of investigating the economic and practical viability of an idea
What is innovation?
The launch of a new product or process, an invention, onto the market for commercial gain
What is optimal location?
A business location that gives the best combination of quantitative and qualitative factors
What are quantitative factors?
These are measurable in financial terms and will have a direct impact on either the costs of a site of the revenues from it and it’s profitability
What are qualitative factors?
Non-measurable factors that may influence business decisions
What is a stakeholder?
Any person or group that has an interest in the activities of a business, e.g community, workers, suppliers, customers, government
What are multisite locations?
A business that operates from more than one location
What is off-shoring?
The relocation of a business process done in one country to the same or another company in another county
What is multinational?
A business with operations or production bases in more than one country
What are trade barriers?
Taxes (tariffs) or other limitations on the free international movement of goods and services
What is lean production?
The adoption of techniques that help to reduce waste
What is just-in-time?
A lean production technique which aims to minimise stock holdings
What is kaizen?
A lean production technique which aims to improve efficiency by making small but frequent improvements, also know as continual improvement
What is time based management?
Managing resources effectively to ensure products are fit for market in the shortest time possible
What is critical path analysis?
A technique for planning complex projects to allow them to be completed in the shortest time possible by identifying activities that can be carried out simultaneously
What is a critical path network?
A visual representation of the sequencing and timing of all the activities involved in completing a complex project
What is EST?
The earliest start time an activity can start in a project upon the completion of a preceding activity
What is the LFT?
The latest finish time an activity must be completed by to avoid any delay to the project
What is a critical path?
The route which outlines all those activities that cannot be delayed, i.e have zero float time, of the project is to be completed on time
What are critical activities?
Those activities with zero float time, i.e if it takes four weeks to complete, there is only four weeks to complete, there is only four weeks between the EST and LFT
What is float time?
The amount of time by which a non-critical activity could be delayed without having an effect on the whole project
What are non-critical activities?
Those activities with float time, i.e if it takes four weeks to complete, there may be six weeks between the EST and LFT
What is human resource management?
Making the best use of all employees to achieve corporate goals
What are HR objectives?
Targets the HR management hopes to achieve by implementing HR strategies, so that the business can achieve its corporate objectives
What is ‘soft’ HR management?
Concerned with communication and motivation, people are led rather than managed. They are involved in determining and realising strategic objectives
What is ‘hard’ HR management?
Emphasises costs and places control firmly in the hands of management. Their role is to manage numbers effectively, keeping the workforce closely matched with requirements in terms of both bodies and behaviour
What is workforce planning?
Getting ‘the right number of people with the right skills, experiences, and competencies in the right jobs at the right time.’ A comprehensive process that provides managers with a framework for making staffing decisions based on an organisation’s corporate objectives, strategic plan, budgetary resources, and a set of desired workforce skillsl
What are workforce plans?
Details of how the business will implement its HR management policies
What is centralisation?
Where the decision-making authority is concentrated amongst a small number of senior managers at the top/centre of the organisational structure
What is decentralisation?
Where the authority for decision-making is delegated to subordinates in the organisational structure
What is delayering?
Removing levels in the organisational structure
What are peripheral workers?
Part-time, temporary and self-employed workers brought into the business as and when needed
What is a flexible workforce?
Where a significant percentage of employees are on part-time and temporary contracts rather than the vast majority being on permanent, full-time contracts, and/or where employees are multiskilled and work wherever needed in the organisation
What are core workers?
Full time, permanent employees, with business-specific skills and knowledge, performing tasks key to the success of the business, often rewarded with high salaries and excellent working conditions
What is outsourcing?
Where business functions are provided by external specialist organisations rather than provided in house
What is home working?
Where employees can perform their job from home, increasingly linked to their employer via the Internet
