couple left Flashcards
(20 cards)
Why give employees shares and how does this link to stakeholder theory?
Boosts motivation via ownership.
Reflects stakeholder approach (balance interests), not just shareholder primacy (max profit).
✅ Increases loyalty
❌ May dilute ownership, limited if poorly understood.
What are the main types of business funding and inflows?
Internal: Retained profit, asset sales
External: Bank loans, overdrafts, share issues, venture capital
Crowdfunding: Small contributions from many people online
Also: grants, revenue, pre-orders
What is debt factoring and why is it used?
Selling invoices to a third party for quick cash.
✅ Improves cash flow, lowers risk of bad debts
❌ Lose % of revenue, may signal poor credit control
What is STP and how is it used in marketing?
Segmentation: Divide market by age, income, etc.
Targeting: Choose which to pursue.
Positioning: How the product is perceived.
Helps tailor the marketing mix for competitive advantage.
What’s the difference between stakeholder theory and shareholder primacy?
Shareholder primacy: Maximise returns to owners.
Stakeholder theory: Balance needs of all affected groups (Freeman).
Used to assess decisions like CSR, redundancies, pay gaps.
What is short-termism and how does it affect strategy?
Short = cutting R&D, squeezing suppliers for quick profit.
Long = invest in innovation, staff, CSR for sustainability.
Over-focus on short-term may harm long-term survival.
What’s the difference between mission, aims, objectives, strategy, and tactics?
Mission: Purpose of the business
Aims: Broad goals
Objectives: SMART, measurable targets
Strategy: Long-term plan
Tactics: Short-term actions to implement strategy
What are the types of external growth methods?
Merger: Two firms combine
Takeover: One firm buys another
Joint Venture: Shared ownership of a new entity
Strategic Alliance: Collaboration without ownership
What are Kaizen and benchmarking, and how do they support improvement?
Kaizen: Ongoing small improvements led by employees
Benchmarking: Compare to industry best to spot gaps
Both raise efficiency, quality, and employee involvement
What is ARR and how is it calculated?
ARR = (Avg annual profit ÷ Initial investment) × 100
✅ Simple, % return over investment lifespan
❌ Ignores cash flow timing
What is NPV and how is it used?
NPV = Present value of inflows – Initial cost
Uses discounting to reflect time value of money
Positive NPV = viable project
✅ Accurate, time-sensitive
❌ Sensitive to discount rate
What is the payback method and how is it calculated?
Time to recover investment from cash inflows
✅ Simple, risk-aware
❌ Ignores returns after payback or timing of cash flow
What is PED and how is it interpreted?
PED = %Δ in QD ÷ %Δ in price
Elastic (>1): responsive → lower price increases revenue
Inelastic (<1): unresponsive → raise price to increase revenue
Used for pricing strategy and revenue forecasting
What is YED and how is it interpreted?
YED = %Δ in QD ÷ %Δ in income
Positive YED = normal/luxury good
Negative YED = inferior
1 = income elastic, <1 = income inelastic
Used to forecast demand in booms/recessions
How does culture affect strategic change success?
Supportive cultures (task/person) = smoother adoption
Role/power cultures = may resist, slowing change
Leaders must align change with existing values or reshape culture
What is the Boston Matrix?
Portfolio tool based on market growth vs market share
Star: Invest
Cash Cow: Milk
Question Mark: Selectively grow
Dog: Divest or reposition
How do firms balance ethics and profit?
Ethical choices may raise costs short term but build long-term trust and reduce risk.
CSR, fair pay, and sustainability attract loyal consumers and talent.
What is working capital and why is it important?
Working Capital = Current Assets – Current Liabilities
Ensures day-to-day liquidity.
Too little → cash flow crisis
Too much → underused assets
What are the stages of the product life cycle and why does it matter?
Development, Introduction, Growth, Maturity, Decline
Each stage informs pricing, promotion, and investment strategy…. extension strategies - new packaging, improvments = stay in maturity phase.
What’s the difference between mechanistic and organic structures?
Mechanistic: Rigid, centralised, suited to stable environments (e.g. mass production)
Organic: Flexible, decentralised, ideal for fast-changing sectors (e.g. tech)
Impacts communication, innovation, and response to change.
