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Business A2 > Knowledge > Flashcards

Knowledge Flashcards

1
Q

What is an objective?

A

A target or outcome for a business which allows it to achieve its aims. This is done to monitor performance, motivation, form a basis for allocating resources and to measure success.

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2
Q

What is a vision statement?

A

A statement about the purpose and values of an organisation, outlining what it would like to be in an ideal world.

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3
Q

What is a mission statement?

A

A brief statement written by the business of its purpose and its objectives, designed to encapsulate its present operations.

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4
Q

What are SMART objectives?

A

Specific, Measurable, Achievable, Realistic and Timed - makes it easier to access if targets have been met

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5
Q

What is the objective of employees?

A

They want the business to run smoothly and effectively and want to get paid accordingly.

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6
Q

What are the objective for the community?

A

They want businesses because it provides jobs and will help their local economy

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7
Q

What does a mission statement include:

A
  • purpose of a company
  • guides the actions of a company
  • sense of direction
  • guides decision making
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8
Q

What are the benefits of a mission statement:

A
  • gives them a sense of direction
  • sets a good reputation for the company
  • focuses your energy&clarifies your purpose
  • defines what you’re going to do
  • motivates board, staff, volunteers&donors
  • helps attract people and resources
  • great public relations tool
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9
Q

What are the criticisms of a mission statement?

A
  • not always supported by actions of the business
  • often too vague&general
  • merely statements of the obvious
  • often seen as a PR exercise
  • sometimes regarded cynically by staff
  • sometimes not a true reflection of reality
  • to mean anything they must be supported wholeheartedly by senior management
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10
Q

What is risk in business?

A

A threat that may prevent or hinder the ability to achieve

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11
Q

What is a quantifiable risk?

A

Risks that can be measured

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12
Q

What does unquantifiable mean?

A

Cannot be measured

Eg the adverse effect on the company’s image if a product is not successful

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13
Q

What are the different ways to deal with risk

A
  • ignore it, wait and see
  • reduce profitability of risk
  • reduce the limit the consequences
  • share or deflect the risk (eg. Insurance)
  • make contingency plans-prepare it
  • adapt in order to maintain performance
  • treat it as an opportunity - particularly if it affects other competitors
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14
Q

What is corporate culture?

A

It is a set of beliefs and attitudes held within an organisation that affects how it gets things done or behaves

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15
Q

What is culture gap?

A

This is the difference between the culture that was wanted and what it actually is. It is important to efficiency and morale that everybody knows what the firm is trying to do and how it is trying to do it.

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16
Q

What are the four types of corporate culture

A

Power
Role
Person
Task

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17
Q

What is power culture?

A

Where decision making and power is made or rests with one person. Or a very few people at the top of the organisation.
CENTRALISED MANAGEMENT SYSTEM
AUTOCRATIC

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18
Q

What is role culture?

A

Where decision making and power is linked to a role or function within the hierarchy. Here decision making is slow and business opportunities can be missed.
CENTRALISED OR DECENTRALISED
PATERNALISTIC STYLE OF LEADERSHIP

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19
Q

What is person culture?

A

Is where decisions and power rests with individuals who see themselves as ‘superior’ to the organisation e.g. Often seen in professions such as solicitors
TOTALLY DECENTRALISED
LAISSEZ FAIRE STYLE OF LEADERSHIP

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20
Q

What is task culture?

A

Where decisions and power rests with small teams or groups who work on a particular project
DECENTRALISED
DEMOCRATIC STYLE OF LEADERSHIP

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21
Q

What can culture affect?

A
  • Motivation strategies used
  • customer service
  • innovation
  • react to change
  • efficiency and productivity
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22
Q

What are the benefits of adopting a more ethical approach?

A
  • Improve motivation among employees
  • Reduced labour turnover
  • Improved customer perception
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23
Q

Potential problems of adopting a more ethical approach:

A
  • higher costs
  • problems with suppliers
  • lower profit
  • stakeholder conflict
24
Q

What is an aim?

A

The long-term goals of an organisation; what it is striving to achieve e.g. Survival of maximise profits

25
Q

What are porter’s five forces?

A
  • threat of new entry
  • supplier power
  • buyer power
  • threat of substitution
  • competitive rivalry
26
Q

What are the internal restraints on decision making?

A
  • company policy and procedures
  • availability of finance
  • people’s behaviour
27
Q

What are the external restraints on decision making?

A
  • Economic environment
  • government legislation
  • competitor
  • lack of technology
28
Q

What helps the quality of decision making?

A
  • training
  • quality of information
  • ability to use techniques
  • risk
  • human element
29
Q

What does swot stand for?

A

Strengths
Weaknesses
Opportunities
Threats

The first two are internal,
The second two are external

30
Q

In porters five forces, what is barriers to entry?

A

Factors that prevent new competition entering the market

31
Q

In porters five forces, what is buyer power?

A

In this case we consider the influence of the end user of the product, the buyer.
Higher this is, the lower the potential for setting the price and raising profits

32
Q

In porter’s five forces, what is substitutes?

A

Threat or risk of substitute products or services will limit price setting ability

33
Q

In porters five forces, what is supplier power?

A

This is when there is lack of supplier options so they can set the prices to what they like. Higher supplier power likely to increase costs, lower the potential for profits

34
Q

In porters five forces, what is competitive rivalry?

A

This is where there is lots of competition and they’re very competitive so it means that they can’t determine the price

35
Q

What is a takeover?

A

A takeover is the acquisition of one business or company by another either on an agreed or hostile basis.

36
Q

What is a merger?

A

A merger is the process by which two companies become one. If the companies are listed, the merger may be by agreement or hostile.

37
Q

What is a joint venture?

A

A joint venture is a combined effort between two or more business where they set up a new business entity.

38
Q

What is the benefits of a joint venture?

A
  • Less risk/greater probability of success
  • avoid the cost
  • less capital to raise
39
Q

What are the drawbacks of joint ventures?

A
  • Less control
  • they could have different management styles
  • need to share profits
40
Q

What are the problems of trading in other nations?

A

Cultural and social:

  • language
  • how businesses agree contracts&conduct business
  • traditions, values and culture
  • laws
  • getting the products to another nation
41
Q

What is an interest rate?

A

A % of amount borrowed or invested.

The cost of borrowing money or the reward for saving money.

42
Q

Define inflation

A

The general prices of everything increases

43
Q

What are the three levels of government?

A
  • local government
  • central government
  • European government
44
Q

What does the local government do?

A

Helps the local area, promotes it so that businesses go there

45
Q

What does the national government do?

A

Makes laws, has to abide by European Union directives such as, employment rights, product safety, competition.
Tried to attract foreign businesses to locate in the UK

46
Q

What does the European government do?

A

Makes policies and laws that affect all countries who are part of the EU.

47
Q

What are the advantages of the eurozone?

A
  • Fast and easy transactions with suppliers and customers in other countries
  • No complicated exchange rates
  • Easy to manage accounts/finance
48
Q

What are the disadvantages of the eurozone?

A
  • Loss of independence
  • Loss of sovereignty for country
  • one off costs and time to convert from one currency to another
49
Q

What are the two types of taxation?

A

Direct taxation

Indirect taxation

50
Q

What is direct taxation?

A

Taxation on income

51
Q

What is indirect taxation?

A

Taxation on spending

52
Q

What are the four parts of the business cycle?

A

Boom
Downturn
Recession
Recovery

53
Q

What is a boom in the business cycle?

A

This is where there is low unemployment, increasing interest rates, increasing inflation, high consumer demand, a balance of payments deficit and often a budget surplus

54
Q

What is a downturn in the business cycle?

A

Increasing unemployment, falling demand from consumers, falling investment by firms, decline in levels of inflation and interest rates

55
Q

What is the recession part of the business cycle?

A

Unemployment is relatively high, inflation is low, demand from consumers is low especially in regard to consumer durables, there is very little investment by firms

56
Q

What is recovery in the business cycle?

A

Investment in firms start to increase, unemployment starts to fall, consumers start to spend again

Business A2 (3 decks)

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