what is business 3.1

Question 1

what is a business objective

Answer 1

SMART target which a business sets to help it achieve its aims

Question 2

what are the main functions of business objectives

Answer 2

• state what needs to be achieve
• a focus for all activity
• targets for individual groups
• measurement of -performance

Question 3

Common corporate business objectives

Answer 3

• increased sales revenue
• profit increase
• growth
• increased market share

Question 4

What is the hierarchy of objectives in business

Answer 4

1. Aim
2. mission statement
3. Corporate/strategic objectives
4. functional objectives
5. team objectives
6. individual objectives

Question 5

corporate objectives (functional)

Answer 5

increased market share (marketing)
reduce unit costs (operations)
increase cash flow (finance)
Improve customer satisfaction (HR)

Question 6

What is a mission statement

Answer 6

the overriding purpose of the business. The reason for its existence. A good statement must give a clear sense of business purpose, excite employees, differentiate business from competitors.

Question 7

Who is the mission statement intended for

Answer 7

• employees
  customers
  investors
  society

Question 8

Criticism of mission statements

Answer 8

• not always supported by actions of the business
• often too vague
• are they just for PR

Question 9

What are fixed costs

Answer 9

Costs that the business incurs that do NOT change as output changes (rent, electricity)

Question 10

What are variable costs

Answer 10

Costs that change in relation to output change (raw materials, wages)

Question 11

How to calculate total costs

Answer 11

TC= FC + VC

Question 12

What is limited liability

Answer 12

Where the owners of a business isn’t personally responsible for the debts in which a business incurs. (incorporated businesses, private limited company, public limited company)

Question 13

What is unlimited liability

Answer 13

Where the business owners are personally responsible for the debts and liabilities of the business. The owner and the business are viewed as one legal entity. (unincorporated business, sole traders, partnerships)

Question 14

what is a sole trader

Answer 14

An individual owning the business on their own. 
They can employ people 
unlimited liability 
\+ quick and easy to set up 
\+simple to run 
- unlimited liability 
- harder to raise finance

Question 15

What is a partnership

Answer 15

Where a business is started and owned by more than one person.
Unlimited liability
+ partners can combine experience
+greater potential to raise finance
- unlimited liability
- poor decisions by one partner can lead to damages for the other partner

Question 16

What are private sector organisations

Answer 16

businesses that are operated by private people

goal is usually to earn profit

Question 17

what is the public sector organisations

Answer 17

business that are owned by the government or ran on behalf of the government (NHS

Question 18

what is a company

Answer 18

A company (incorporated business) is a separate legal entity from the owners, of whom are known as shareholders

Question 19

what is a private limited company

Answer 19

common incorporated business
privately owned
share CANNOT be traded publicly
quick and cheap to set up

Question 20

Public limited companies

Answer 20

Minimum share capital of 50k
Shares are traded on the public stock exchange
Usually many shareholders (who typically aren’t involved in the everyday running of the business)

Question 21

what is a share

Answer 21

An individual part of the issued share capital of a company (source of finance)
Ordinary shares:
- voting rights
- shareholding- the percentage of shares of which a person owns in proportion to the number of shares in the business
- qualify for dividends

Question 22

What is a dividend

Answer 22

A monetary payment per share from the reserves or profits of a business

Question 23

what is capital growth/gain

Answer 23

Where the share price increases overtime - share trading buying shares for cheap and selling them at a higher price.

Question 24

What is a share price

Answer 24

Determined by the interaction of supply and demand.
If demand for a share is higher than the supply then the share price should rise
if the share price is falling this indicated an excess of shares

Question 25

Factors that influence A public limited company Share price

Answer 25

INTERNAL
- financial performance 
- dividend policy 
- management reputation
EXTERNAL
- state of the economy 
- general market sentiment
- alternative investments

Question 26

what is a profits warning

Answer 26

where the businesses expected profits aren’t going to be reach in reality warnings indicating that market expectations will not be met.

Question 27

what is market capitalisation

Answer 27

represents the total market value of the issued share capital of the company
latest share price x number of shares in issue

Question 28

what is the difference between strategy and tactics

Answer 28

strategy is the medium to long term plan which an organisations aims to attain its objectives
tactics- the way in which the strategy is carried out, a range of different tacts can be used to achieve the strategy

Question 29

define strategic decision making

Answer 29

strategic decision making concerns the general direction and overall policy of an organisation. they have significant long term impacts and so should be considered carefully.

Question 30

define functional decision making

Answer 30

tends to be short to medium term and o concerned with a specific functional area of a business (marketing, finance, hr etc)