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1
Q

Sole traders

A

Exclusively owned by 1 persson who has full control and is entitled to all profit and tax. Unlimited liability.

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2
Q

Partnership

A

Formed by 2 or more people with shared capital investment and shared responsibilities. Unlimited liability

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3
Q

Privately held company

A

Corporation that offers limited liability to owners. Shareholders cannot sell shares without first offering to exsisting shareholders. Shares cannot be traded on the stock exchange.

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4
Q

Publivly held company

A

Corporation offers limited liability to owners. Shares are traded on the public exchange. Because of the large no. of shareholders, must disclose considerable info about the company, including audited financial information

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5
Q

Social enteprises

A

Businesses with social/environemental objectives that reinvests most of its profits into benefiting society, rather than maximising returns to owners.

The objectives of social enteprises have 3 objectives:
- Economic, social, environmental (the triple bottom line)

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6
Q

Cooperatives

A

Groups of people working together to meet the common needs and aspirations of the members, sharing ownership and making decisions democratically.

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7
Q

NGOs

A

NGOs are legally constitued bodies that functions independently of any government and has a specific humanitarian or social/aim purpose

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8
Q

Charities

A

Serves to fulfil social, environemtnal functions not undertaken by state/private businesses

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9
Q

Vision vs mission statement

A

Mission: a statement of the businesses core aims, to motivate employees and stimulate interest from other groups. Targets employees and customers

Vision: a statement of what the organisation would like to achive in the long term. Aims to be inspiring and abstract, providing guiding principles and beliefs. Targets stakeholders

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10
Q

Business objectives

A

short or medium-term goals which must be achieved in order to attain its overall corporate aim. It should be follow the SMART framework

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11
Q

Corporate aims

A

long term goals a company hopes to acheive

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12
Q

Strategic vs tactical objectives

A

Strategic: long-term targets for the whole organisation, designed to achieve the corporate aim

Tactical: short term targets aimed at resolving a specific problem, or meeting a specific part of a strategic objective

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13
Q

CSR

A

The conscientious consideration of ethical and environmental practices related to business activity. A business that adopts CSR incorporates the interest of various stakeholders and the environment in a manner which is deemed to be morally correct and beneficial according to societal values.

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14
Q

Interests of internal vs external stakeholders

A

Internal stakeholders: are those within the company, such as employees, managers

External stakeholders: those outside company, such as customers, suppliers

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15
Q

Methods to resolve stakeholder conflict

A
  1. Third party arbitration
  2. Worker participation
  3. Profit-sharing schemes (gives employees a share in their companies profits based on its quarterly and annual earnings)
  4. Share-ownership schemes (aim to allow all shareholders as well as shareholders benefit from the success of the business)
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16
Q

Economies of scale

A

Economies of scale: decrease in per-unit cost of production as a business grows
IEOS: decrease in per-unit cost of production that a single company experiences as it grows
EEOS: decrease in per-unit cost of production avaliable to all companies in an industry as the industry grows.

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17
Q

Diseconomies of scale

A

Diseconomy of scale: increase in per-unit cost of production as a business grows
IDEOS: increase in a per-unit cost of production that a single company experiences as it grows
EDEOS: increase in a per-unit cost of production thats avalialble to all companies in an industry as the industry grows.

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18
Q

Internal vs external growth (organic vs inorganic growth)

A

Internal/organic growth: the expansion of a business by using its resources to increase its scale of operations and sales revenue.

External/inorganic growth: the expansion of a business achieved by means of merging with or taking over another business from either the same or different industry.

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19
Q

Merger

A

An agreement by shareholders and managers of 2 businesses to bring both businesses together under a common board of directors with shareholders of both businesses owning shares in the newly merged business.

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20
Q

Acquisition

A

When a company buys at least 50% of shares of another company and becomes the controlling owner with the agreement of the exsisting owners/managers.

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21
Q

Takeover

A

An acquisition which is contested. When the predator business publicies the reasons for takeover bid and the high share price offer, the predator business is often successful in encouraging sufficient shareholders to sell their shares

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22
Q

Types of integration

A
  1. Horizontal (same industry, stage of production)
  2. Forward (same industry, acquire the customer)
  3. Backward (same industry, acquire the supplier)
  4. Conglomerate (Different industries)
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23
Q

Joint ventures

A

2 or more business work closely on a project, creating a separate business division to do so.

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24
Q

Strategic alliance

Study These Flashcards
A

Arrangement btwn businesses where both agree to commit resources to achive on agreed set of objectives

25
Franchising
A franchise is a business that uses the name, logo, and trading systems of an exsisting successful business.
26
MNCs
A business organisation that has its headquarters in 1 country but with operating branches, factories in other countries
27
Ansoff matrix
A business tool that helps business to set objectives and plan its growth strategies - market penetration, market development, product development, and diversification, considering the extent of risks.
28
Swot analysis
A form of strategic analysis that identifies and analyses the main internal strengths and weaknesses and external oppotunities and threats that influence the future discretion and successes of a business
29
Marketing mix
The combination of various elements needed to successfully market a product. It is used to review and develop marketing strategies and is at the heard of marketing planning. Elements include Product, Price, Place, Promotion. These elements are independent and must be well coordinated to achieve the marketing objectives effectively.
30
Capital vs revenue expenditure
Capital: the finance spent on fixed assets (assests expected to last for more than one year) Revenue: payments made for the daily running of a business (all other costs and assets other than fixed assets)
31
Internal sources of finance:
1. Personal funds 2. Retained profit 3. Sale of assets - no risk of loss of control - no increase in debts and liabilities - slow down business growth as growth is limited
32
External sources of finance:
Short term: 1. Bank overdraft (an arrangement with a bank that their cusomter can wirhdraw up to an agreed limit for their account as and when required) 2. Trade credit Medium term: 1. Leasing Long term: 1. Sale of shares 2. Business angel 3. Long term bank loans 4. crowdfunding
33
Types of costs
Fixed: costs unchanged by level of sales/output Variable: costs which vary with output Direct: costs that can be identfied with each unit of production Indirect: costs that cannot be identified per unit of production
34
Statement of profit and loss for profit making entity
Statement of profit and loss for _______ For the year ended: Sales rev Cost of sales Gross profit Expenses Profit before interest and tax Interest Profit before tax Tax Profit for the period Dividends Retained profit
35
Statement of profit and loss for non-profit entity
Statement of profit and loss for _____ For the year ended __ Sales rev Cost of sales Gross surplus Expenses Surplus before interest and tax Interest Surplus before tax Tax Surplus for the period Retained surplus
36
Statement of financial position
Statement of financial position for ___ As at ____ NCA Equpment/plant/property Accumulated depreciation Total NCA CA Cash Debtors Stock Total CA Total A CL bank overdraft trade creditors other short term loans total CL NCL Long term borrowings Total NCL Total L Net A Equity Share capital Retained earnings Total E
37
Intangible assets
Assets that are fixed assets that have no physical substance and are not financial instruments e.g. goodwill
38
Cash flow forecast
Cash flow forecast for ____ in the ___ months of _____ Opening balance Cash inflow - - Total cash inflow Cash outflow - - Total cash outflow Net cash flow Closing balance
39
Gross profit margin
GPM = (gross profit/sales rev)
40
Profit margin
PM = (profit before interest and tax/sales rev)
41
return of capital employed + how to improve
ROCE = profit before interest and tax/(NCL+equity) Sell assets and use to reduce debt
42
Current ratio
CR = current assets/current liabilities
43
Acid test ratio
= (current assets - stocks)/current liabilities
44
Methods to improve Gross profit margin and profit margin
GPM: use cheaper materials, reduce wages of workers PM: Reduce promotion costs, move to lower cost sites for cheaper rent
45
Difference btwn profit and cash flow.
Profit is the +ve difference btwn revenue and costs, whereas cash flow is the most liquid type of asset and is a current asset. Profit is made the moment a sale is made, but cash is not always received when the payment is made
46
Strategies to increase cash inflow and decrease cash outflow
Increase cash inflow: Sale of redundant assets, bank overdraft, reduce credit terms to customers Decrease cash outflow: Delay suppliers their payments, lease capital equipment, cut overhead spending
47
Market share
sales of business in a time period/total market sales in time period To increase market share: innovate production, lower prices, promotions to increase brand loyalty
48
Market growth
(total sales in time period - total sales in prev. time period)/total sales in prev time period
49
Market vs product orientation
Market: outward-looking approach, basing product decision on consumer demands through market research. Low chance of failure, focuses on customer and market fashion Product: inward-looking approach, making long-term products and trying to sell them. Focusing more on functionality, quality, and production process. Potential high returns, focuses on customer satisfaction
50
adv disadv of market leader
highest market share = market leader adv: strong bargaining position with suppliers, retailers. Recruitment of high quality employees easier disadv: too much emphasis on market share takes away attention towards profitability. some governments impose regulations and controls on businesses with a dominant market share
51
Market segmentation
identifying different segments within a market and targeting different products/services towards them. Markets are usually divided by demographic, geographic, and psychographic bases
52
Consumer portfolio
A quantified picture of consumer of a firm's product, showing proportions of age groups, income levels, location, gender, and social class
53
Niche vs mass marketing
Niche: identifying and exploiting a small segment of a large market by developing products to suit it (better for small firms, higher risk) Mass: Selling the same products to the whole market without any attempt to target any specific group within it. (EOS, fewer risks)
54
USP
as aspect of a business ,product, or brand that makes it stand out and distinguish them from their competitors in the market, which can be a competitive advantage to attract companies.
55
Importance of market research
Adopting primary market research like customer surveys and focus growth to gain first-hand research on the insights of the target market segment. It is important to get information to justify and explain consumer buying patterns and market trends befor entering the market to gather consumer taste and preference.
56
PLC
Introduction Growth Maturity Decline Extension stratagies: add features, discount price, sell into new market
57
Product portfolio
the collection of all products (goods and services) offered by a business. a BALANCED product portfolio is a product strategy in which a firm maintains an even combintaion of new, growing, and mature products to reduce business risks and provide diversification.
58
Pricing strategies
Cost plus pricing Premium pricing Penetration pricing Loss leader Predatory pricing
59
Types of promotion
Above the line: paid promotional services through mass media, reaching a mass market audience Below the line: non mass-media promotions aimed specifically at targeted segements of individuals that have been identified as potential customers through market research. Through the line: integrated marketing stategy that combines elements of both above the line and below the line promotion

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