Flashcards in CHAPTER 1 ALL Deck (43)
Loading flashcards...
0
Define PEST
an acronym for political, economic, social, and technological that looks at opportunities and threats of the external environment within which businesses operate
2
what is the purpose of PEST?
to use at the start of a strategy review process, such as assessing the feasibility of an overseas investment project
3
what are the elements of Political?
-government legislation
-government intervention
-applying government policies to control business behavior
4
what are the elements of Economic?
-government policies
-attitudes/actions of foreign countries
-levels of business
-consumer confidence in the economy
5
what are the elements of Social?
-attitude of society towards a wide range of different issues (such as business ethics, social welfare, women, religion, animals)
6
what are the elements of Technological?
expected gains in efficiency (as measured by productivity, flexibility, communications)
-profits
7
Define SWOT.
useful decision-making tool
8
What is the purpose of SWOT?
to assess the current and future situation of a brand, product, company, proposal or decision
9
What's the internal and external factors for SWOT?
internal: strengths, weaknesses
external: opportunities, threats
10
What are the factors of Strengths?
-unique selling point
-brand recognition/loyalty
-experience
-market share
-corporate image/reputation
-product qualities
-geographical location
-value for money
11
What are the factors of Weaknesses?
-limited source of revenues
-escalating costs of production
-higher prices than competitors
-unproductive workforce
-limited source of finance
-lack of spare capacity
-restricted product range
12
What are the factors of Opportunities?
-economic development
-trade liberalization
-weakening exchange rate
-upswing in the business cycle
-technological developments
-new markets/locations
-mergers/acquisitions of rival firms
13
What are the factors of Threats?
-new entrants in the marketplace
-outbreak of infectious diseases
-pressure group actions
-social/environmental/legal constraints
-media coverage/publicity
-unfavorable changes in seasons/weather
-changes in fashion/tastes
-price/non-price competition from rivals
14
Define Mission statement.
the declaration of an organization's overall purpose
15
Define Vision statements.
an organization's long-term aspirations, i.e. where it ultimately wants to be
16
What are advantages of sole traders?
-Few legal formalities
-Receives all profits, being your own boss, personalized service
-Enjoy privacy
17
What are disadvantages of sole traders?
-Unlimited liability
-Limited source of finance
-High risks
-Workload and stress
-Lack of continuity
-Higher costs of production
18
What are advantages of partnerships?
-Financial strength
-Division of labour and specialization
19
What are disadvantages of partnerships?
-Unlimited liability
-Decisions making taking longer
-Lack of continuity
-Must having a huge amount of mutual trust
-Faces difficulties in raising capital
20
What are advantages of private limited companies?
-Owners have greater control of the business and being cheaper to set up a private limited company than a public limited company
21
What are disadvantages of private limited companies?
-They do not tend to be able to raise as much finance as public limited companies
22
What are advantages of public limited companies?
-They're able to advertise and sell its share to the general public via the stock exchange
23
What are disadvantages of public limited companies?
-It allows the general public to buy shares in the public company when there's dilution of control (more shares = company has more owners, thereby wakening its ability to control the business), public companies are expose to takeover bids from other investors that seek to purchase a majority stake in the company
24
What's the order of the business cycle?
-Boom
-Recession
-Slump
-Recovery
25
What's boom?
-Consumer
-Expenditure
-Investment and export earnings are high
-Unemployment is low
26
What's recession?
-Declining aggregate demand
-Lower investment expenditure
-Falling export sales
-Rising unemployment
27
What's slump?
-High level of unemployment along with low levels of consumer spending, investment and export earnings
28
What's recovery?
-National income begins to increase again, consumption, investment, exports and employment will all gradually rise
29
What's ANSOFF matrix?
-Market penetration
-Product development
-Market development
-Diversification
30
What's market penetration?
-A low-risk strategy; focuses on selling exiting products in existing markets
i.e. to increase their market share of current products.
-This might be achieved by improving a firm's marketing mix, such as using better advertising to enhance the desirability of the product or by offering more competitive prices.
31
What's product development?
-A medium-risk growth strategy ; businesses aiming to sell new products in a existing market
-It is suitable for products that reached the saturation or decline stage of their product life cycle
32
What's market development?
-A medium-risk growth strategy
-Businesses selling existing products in new markets
-i.e. an established product that is marketed to a new market segment. This might be done by using new distribution channels to sell the product in a different location or overseas, although this could be quite risky if the business is unfamiliar with local market conditions and cultures.
33
What's diversification?
-A high risk growth strategy
-Business marketing new products in new markets
-It is suitable for firms that have reached saturation in their markets and are seeking new opportunities for growth
34
What is tactical (operational)?
-Short-term objectives that affect a segment of the organization
35
What is strategic?
-Longer term aims of a business organizations
36
What is ethical?
-The more principles that guide decision-making and strategy
37
What are objectives of tactical?
-Strive toward survival
-Sales revenue maximization
38
What are objectives of strategic?
-Profit maximization
-Growth
-Image/reputation
-Market standing
39
What are objectives of ethical?
-Improving corporate image
-Staff motivation
-Staff morale
-Increasing customer loyalty
-Cost cutting
40
What are factors of private limited companies?
-Share are sold to private family members/friends
-Shares in a private company cannot be traded without the prior agreement from the Board of Directors
-Shares cannot be traded via the stock exchange
-More cheaper to set up than a public limited company
41
What are factors of public limited companies?
-Able to advertise and sell its shares to the general public via the stock exchanges
-The general public are allowed to buy shares in the public company (dilution of control_
-Raise more finance
42
What are factors of mission?
-Medium/long term objectives
-Updated more frequently than vision
-Have actual targets
-Outline/highlight the values of the business
-Sets the tone for how mangers/employees behave on a day-to-day basis
43
