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Flashcards in CHAPTER 1 ALL Deck (43)
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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

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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

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What's recession?

-Declining aggregate demand
-Lower investment expenditure
-Falling export sales
-Rising unemployment

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What's slump?

-High level of unemployment along with low levels of consumer spending, investment and export earnings

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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

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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

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What is strategic?

-Longer term aims of a business organizations

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What is ethical?

-The more principles that guide decision-making and strategy

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What are objectives of tactical?

-Strive toward survival
-Sales revenue maximization

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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

What are factors of vision?

-Long term objectives
-Do not have actual targets that must be realized
-Allows people to see what could be the actual target