Mock Revision (Theme 2&3)

Question 1

what are 5 problems with growth?

Answer 1

1. coordination and control
2. communication
3. motivation
4. internal politics
5. overtrading

Question 2

what are 5 things that can be done to prevent overtrading?

Answer 2

1. invest in capital intensive systems
2. fully assess financial health (Gearing, ROCE, acid tests)
3. lease rather than buying equipment or use hire purchase
4. manage growth strategy carefully
5. manipulate receivables/ payables

Question 3

what is the definition of overtrading?

Answer 3

when a business grows too quickly they may experience cash flow problems

Question 4

what is the formula for productivity?

Answer 4

total output/ no. of employees

Question 5

what is organic growth?

Answer 5

internal growth

Question 6

what is inorganic growth?

Answer 6

external growth (using takeovers/ mergers)

Question 7

what are some examples of growing using organic growth? (3)

Answer 7

1. open more stores
2. employee more staff
3. franchising

Question 8

what are some examples of growing using inorganic growth? (3)

Answer 8

1. takeover
2. merger
3. acquisition

Question 9

what is a takeover?

Answer 9

1 business purchases a controlling interest in another 50% + 1 share

Question 10

what is a merger?

Answer 10

2 businesses agree to join to form a larger business

Question 11

what is an acquisition?

Answer 11

a company buys most, if not all, of another firm’s ownership stakes to assume control of it

Question 12

what are 3 advantages of organic growth?

Answer 12

1. can control growth (so lowers the risk of overtrading)
2. easier to sustain culture
3. maintain quality

Question 13

what are 3 disadvantages of organic growth?

Answer 13

1. can be slow - if competitors are growing fast you can lose market share
2. don’t have financial buying power
3. could become introspective (can’t see whats wrong with the business)

Question 14

give 2 positives of takeovers?

Answer 14

1. quick and can have positive impact quickly

2. eliminate a competitor

Question 15

give 2 negatives of takeovers?

Answer 15

1. conflicts can occur - hard to get cultural cohesion

2. resistance from staff

Question 16

give 2 positives of mergers?

Answer 16

1. less resistance (synergies and expertise)

2. agree how control will work

Question 17

give 2 negatives of mergers?

Answer 17

1. can cause confusion

2. duplicate roles - may have to reapply for job

Question 18

what is the definition of growth?

Answer 18

increase in size/ status of a business

Question 19

what are 4 benefits of growth?

Answer 19

1. increases profitability
2. gain market share
3. increase brand recognition
4. achieve economies of scale

Question 20

what is economies of scale?

Answer 20

factors which cause the acpu to decrease as output increases

Question 21

what is the definition of capacity utilisation?

Answer 21

outline to the extent to which assets and resources are being used in relation to the maximum possible output

Question 22

capacity utilisation formula:

Answer 22

current capacity level/ total capacity x100

Question 23

what are 3 issues with high capacity utilisation?

Answer 23

1. no spare capacity for repair/ maintenance
2. impact on staff - overworked/ stressed (could lead to high labour turnover)
3. may need to outsource

Question 24

what are three issues with low capacity utilisation?

Answer 24

1. if demand increases there may not be enough stock
2. high waste
3. unit costs increase

Question 25

what is the best thing about a merger?

Answer 25

synergies

Question 26

what are three reasons business objectives are useful?

Answer 26

1. provides direction/ purpose 2. efficient allocation of resources 3. measure performance

Question 27

what are corporate objectives?

Answer 27

objectives for the whole business

Question 28

what are functional objectives?

Answer 28

objectives for each department/ function

Question 29

what are the 8 categories of objectives? *

Answer 29

1. social objectives 2. employee welfare 3. survival 4. market share 5. cost efficiency 6. profit maximisation 7. sales maximisation 8. customer satisfaction

Question 30

what are social objectives:

Answer 30

the business focuses on social/ environmental objectives

Question 31

what is employee welfare objectives/?

Answer 31

considering impact of business activity on staff wellbeing - motivation, high retention, low absenteeism

Question 32

what are survival objectives?

Answer 32

business sets a target to maximise resources to ensure survival

Question 33

what are market share objectives?

Answer 33

increase the proportion of sales one business has in a market

Question 34

what is cost efficiency objectives?

Answer 34

minimise costs is the sole focus

Question 35

what is profit maximisation objectives?

Answer 35

many profits as quickly as possible

Question 36

what is sales maximisation objectives?

Answer 36

many sales as quickly as possible

Question 37

what are customer satisfaction objectives?

Answer 37

ensuring customers stay loyal

Question 38

give 4 internal factors which influence whether or not objectives are fulfilled?

Answer 38

1. leadership 2. stage of lifecycle 3. leadership change 4. finances available

Question 39

give 4 external factors which influence whether or not objectives are fulfilled?

Answer 39

1. competition 2. tastes/ trends 3. unforeseen events 4. economic climate

Question 40

what is profit satisficing?

Answer 40

lifestyle business/ social enterprise

Question 41

what is a stakeholder?

Answer 41

any individual/ organisation who has vested interest in the activities/ decision making of the business

Question 42

what are the two types of stakeholders? and then give brief description:

Answer 42

1. internal. employed within the organisation/ invested in it 2. external. organisation outside the business

Question 43

are shareholders long termist or short termist?

Answer 43

short termist

Question 44

are stakeholders long termist or short termist?

Answer 44

long termist

Question 45

what are often shareholders objectives? (3)

Answer 45

1. return on investments 2. share value increases 3. profit maximisation

Question 46

what is the stakeholder approach to business?

Answer 46

where a business tries to satisfy as many different stakeholders as possible

Question 47

what are 2 advantages to the shareholder approach to business?

Answer 47

1. quick return on investment | 2. can secure additional investment in the form of share capital to fund expansion to get profit maximisation

Question 48

what are 2 disadvantages to the shareholder approach to business?

Answer 48

1. hard to develop a customer base/ staff recruitment | 2. short termist and could sell their shares rapidly

Question 49

what are 2 advantages of a stakeholder approach to business?

Answer 49

1. more motivated workforce - staff welfare massively improves 2. customer loyalty

Question 50

what are 2 disadvantages of a stakeholder approach to business?

Answer 50

1. long termist approach takes much longer | 2. very costly

Question 51

what 3 things do leaders do?

Answer 51

1. inspire staff 2. build relationships 3. take risks

Question 52

what 3 things do managers do?

Answer 52

1. manage resources 2. official position of responsibility 3. delegate the work out

Question 53

what are the four leadership styles?

Answer 53

1. authoritarian 2. paternalistic 3. democratic 4. laissez-faire

Question 54

what leadership styles regard staff as a cost?

Answer 54

authoritarian

Question 55

what leadership styles regard staff as an asset?

Answer 55

paternalistic democratic laissez-faire

Question 56

What are 3 internal causes of change?

Answer 56

1. change in structure 2. change in leadership 3. moral/ change in staff wellbeing

Question 57

what are 3 external causes of change?

Answer 57

1. economy changes 2. competitors actions 3. changes in tastes/ trends

Question 58

what is a transformational leadership?

Answer 58

a leader who transforms the business which they work for

Question 59

what are 5 features of strong cultures?

Answer 59

1. high morale 2. vision 3. communication effective 4. consistency 5. culture usually based around history/ tradition

Question 60

what are 4 features of weak cultures?

Answer 60

1. poor HR performance 2. diseconomies of scale 3. confusion from staff - demotivation 4. very bureaucratic and lack flexibility

Question 61

what are hands four classes of culture?

Answer 61

power role person task

Question 62

what are 4 factors which influence a culture?

Answer 62

- CEOs - normal routines - type of business - working practice/environment

Question 63

what is a power culture? (4)

Answer 63

1. central figure who makes decisions 2. power is concentrated among a few 3. quick decisions are possible 4. few rules and procedures

Question 64

what is the leadership style in a power culture?

Answer 64

autocratic leadership style

Question 65

what is a role culture? (3)

Answer 65

- decisions are made through established roles and procedures - power to make decisions comes from job title - clearly delegated authorities

Question 66

what is the leadership style in a role culture?

Answer 66

bureaucratic leadership

Question 67

what is task culture? (4)

Answer 67

- the focus is a project which needs to be completed - power comes from those who can accomplish the tasks and have the expertise - involves teamwork on a project, team of experts working together - no single power source

Question 68

what is person culture? (4)

Answer 68

- grouping of similarly skilled people to share expertise and knowledge - work on a client by client basis - not project by project - people believe themselves superior to the business - power lies in each group of individuals