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A LEVEL BUSINESS > unit 7- strategic position > Flashcards

unit 7- strategic position Flashcards

1
Q

what does the mission and corporate objectives set out

A

what the business aims to achieve

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2
Q

what does a mission statement set out

A

the purpose of a business existing

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3
Q

what are the 5 things the mission statements tend to focus on

A
  • values of the business
  • long term aim of the business
  • impact the business tends to have on society
  • importance of different stakeholder groups
  • scope of the business (the areas in which it operates)
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4
Q

what are the 5 influences on missions

A
  • the values of the founders
  • the industry the business is in
  • the views of society
  • the size of the business and the type of ownership
  • the culture of the business
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5
Q

what do the corporate objectives quantify

A

the mission of a business and set specific and measurable targets for the whole organisation

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6
Q

what are the 7 focuses of the corporate objectives

A
  • growth
  • shareholder value
  • social responsibility
  • profitability
  • market standing
  • innovation
  • sustainability
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7
Q

what are the 5 external factors that affect corporate objectives

A
  • economic conditions
  • social change
  • technological change
  • global prices
  • actions of competitors
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8
Q

what are the 5 internal factors that affect corporate objectives

A
  • poor performance
  • new leadership
  • business ownership
  • business culture
  • business growth
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9
Q

what is short termism

A

the pressure on achieving short term gains over long term sucess.

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10
Q

what is a strategy

A

long term plan (A) or approach that a business will take to achieve its objectives (B)

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11
Q

what do strategies involve

A

a major commitment to resources

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12
Q

what are tactics

A

day to day decisions taken by middle managers

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13
Q

what is SWOT analysis

A

a strategic tool that a business can use to analyse its current position and the external factors that might affect it

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14
Q

what does the S in SWOT stand for

A

strengths

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15
Q

what does the W in SWOT stand for

A

weaknesses

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16
Q

what does the O in SWOT stand for

A

opportunities

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17
Q

what does the T in SWOT stand for

A

threats

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18
Q

what are the 3 benefits of SWOT analysis

A
  • assists strategic thinking in a structural way
  • low cost, simple approach
  • can be combined with other decision making models
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19
Q

what are 3 limitations of SWOT analysis

A
  • subjective- depends on opinions of manager
  • does not offer clear solutions
  • classification may depends on perspective
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20
Q

what does an income statement communicate

A

the revenue generated by a business and then the profit at various levels

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21
Q

what are the costs of goods sold

A

the direct costs associated with the production and sale of the product or service

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22
Q

what is gross profit

A

the profit after direct costs have been deducted. gives a broad indication of the success of a business’ trading activity

23
Q

what is admin/rent/ salaries

A

operating costs are then deducted from gross profit

24
Q

what is operating profit

A

the profit left after other indirect operating costs have been deducted

25
Q

what are exceptional expenses and income

A

these could be expenses or incomes not associated with the direct activity of the business. they may be one off items. they are kept separate in order to give an indication of the quality of the profit

26
Q

what is net profit

A

what a business has left to re invest or return to shareholders/owners after tax has been deducted

27
Q

what is a balance sheet

A

a financial document that records the assets and liabilities of a business

28
Q

what are non current assets

A

used to operate the business and include land and machinery and brands and patents

29
Q

what are current assets

A

assets that the business expects to use or sell within the year. these can be converted into cash to pay of liabilities

30
Q

what are current liabilities

A

payments due within a year

31
Q

what are net current assets

A

current assets-current liabilities= the working capital a business has available

32
Q

what are non current liabilities

A

debts that a business doesn’t expect to pay within a year

33
Q

what are net assets

A

total assets-total liabilities = the value of the business

34
Q

what is total equity

A

it represents how a business has been financed

35
Q

what is a profitability ratio

A

provides a key measure of success for a business comparing profit to revenue and investment

36
Q

what is efficiency ratio

A

provides an indication of how well an aspect of a business has been managed

37
Q

what is liquidity ratio

A

assesses the ability of a business to pay its debt

38
Q

what is gearing ratio

A

assesses the extent to which a business is based on borrowed finance

39
Q

how to calculate gross profit

A

revenue - costs of good sold

40
Q

how to calculate gross profit margin

A

gross profit / revenue x 100

41
Q

how to calculate operating profit

A

gross profit - overheads (operating costs

42
Q

how to calculate operating profit margin

A

operating profit / revenue x 100

43
Q

how to calculate net profit

A

total revenue - total expenses

44
Q

how to calculate net profit margin

A

net profit/ revenue x 100

45
Q

how to calculate return on capital employed (ROCE)

A

operating profit/ capital employed

46
Q

what is capital employed

A

it is the total equity plus any non current liabilities

47
Q

how to work out the current ratio

A

current assets / current liabilities

48
Q

how to work out gearing ratio

A

non current liabilities / total equity + non current liabilities x 100

49
Q

what are highly geared business vulnerable to (50% or more)

A

increases in interest rates

50
Q

what is the benefit of being a low geared business

A

might have the opportunity to borrow funds in order to expand

51
Q

how to calculate the inventory turnover ratio

A

cost of goods sold / average inventories held

52
Q

how to calculate receivable days ratio

A

receivables / revenues x 365

53
Q

how to calculate payables days ratio

A

payables / cost of sales x 365

A LEVEL BUSINESS (5 decks)

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