Theme 3 Key terms

Question 1

Mission

Answer 1

an organisation’s aims and long term intentions, its ultimate purpose.

Question 2

Mission statement

Answer 2

sets out the purpose and primary objectives of a business

Question 3

SMART objectives

Answer 3

specific
measurable
achievable
realistic
time related

Question 4

Corporate Objectives

Answer 4

objectives that relate to the performance of the business as
a whole, which for the focus of business strategy decisions

Question 5

strategy

Answer 5

How the business intends to achieve its objectives

Question 6

tactics

Answer 6

Support achievement of specific targets

Question 7

Ansoffs matrix

Answer 7

marketing planning model that helps a business determine its product and market strategy.

Question 8

market penetration

Answer 8

trying to increase your market share in your existing market

Question 9

product development

Answer 9

selling new products to your existing market

Question 10

market development

Answer 10

selling existing products to new markets

Question 11

diversification

Answer 11

selling new products to new markets

Question 12

Porters generic matrix

Answer 12

identifies a competitive strategy based on competitive advantage and the market

Question 13

portfolio analysis

Answer 13

assesses the position of each product or brand in a firm’s portfolio to help determine the right marketing strategy

Question 14

boston matrix

Answer 14

Stars= high market share, high market growth
Cash cows= low market growth, high market share.
Question marks= low market share, high market growth
dog= low market share, low market growth

Question 15

competitive advantage

Answer 15

an advantage over competitors gained by offering consumers greater value

Question 16

Distinctive Capabilities

Answer 16

something a business is good at that other businesses don’t do

Question 17

SWOT analysis

Answer 17

is a method for analysing a business, its resources, and its environment.

Question 18

Market conditions

Answer 18

relate to the attractiveness of the overall market in which a business operates.

Question 19

PESTLE

Answer 19

assesses the external influences on a business: Political, Economic, Social, Technological, Legal and Environmental

Question 20

Business cycle

Answer 20

all about the rate of change in the value of economic activity.

Question 21

Gross Domestic Product (GDP)

Answer 21

The total measured value of economic activity in an economy,
measured over a particular period.

Question 22

boom

Answer 22

high levels of consumer spending and business confidence

Question 23

recession

Answer 23

falling levels of consumer spending and confidence

Question 24

slump

Answer 24

low levels of consumer spending and many business failures

Question 25

recovery

Answer 25

increasing levels consumer spending

Question 26

Inflation

Answer 26

A sustained increase in the average price level of an economy

Question 27

exchange rate

Answer 27

is the price of one currency expressed in terms of another currency.

Question 28

porters 5 forces

Answer 28

analyses competition within an industry and judging how attractive the market is

Question 29

Economies of scale

Answer 29

arise when unit costs fall as output increases

Question 30

average cost per unit

Answer 30

total production costs/ total output x100

Question 31

Internal Economics of Scale

Answer 31

arise from the increased output of the business itself

Question 32

External Economies of Scale

Answer 32

occur within an industry: i.e. all competitors benefit

Question 33

diseconomies of scale

Answer 33

units costs start to rise as output rises

Question 34

Overtrading

Answer 34

when a business expands too quickly without having the financial resources to support such a quick expansion.

Question 35

Organic (Internal) Growth

Answer 35

involves expansion from WITHIN a business, e.g by expanding the product range, or number of business units and locations.

Question 36

sales forecasting

Answer 36

a prediction of future sales based on past data and market research

Question 37

Extrapolation

Answer 37

involves the use of trends established by historical data to make predictions about future values.

Question 38

Correlation

Answer 38

looks at the strength of a relationship between two variables.

Question 39

Payback period

Answer 39

The time it takes for a project to repay its initial investment

Question 40

Average rate of return

Answer 40

Looks at the total accounting return for a project to see if it meets the target return

Question 41

Discounted cash flow (NPV)

Answer 41

Net present value (“NPV”) calculates the monetary value now of the project’s future cash flows

Question 42

decision trees

Answer 42

is a mathematical model that uses tree uses estimates and probabilities to calculate likely outcomes and is used to help managers make decisions.

Question 43

Expected value

Answer 43

The financial value of an outcome is calculated by multiplying the estimated financial effect by its probability

Question 44

Net gain

Answer 44

The expected value of each outcome less the costs associated with the decision

Question 45

critical path analysis

Answer 45

identifies the most efficient and cost effective way of completing a complex project.

Question 46

earliest start time

Answer 46

Identifies the earliest time an activity can begin

Question 47

lastest finish time

Answer 47

Identifies the latest time an activity can finish without holding up the whole project

Question 48

total float time

Answer 48

Total float time = LFT− duration − EST

Question 49

Income statement

Answer 49

This measures the business performance

Question 50

Statement of Financial Position (balance sheet)

Answer 50

A snapshot of the business' assets and its liabilities on a particular day

Question 51

Cash flow statement

Answer 51

Shows how the business has generated and disposed of cash and liquid funds during a specific period

Question 52

Administration expenses

Answer 52

Operating costs and expenses that are not directly related to producing the goods or services

Question 53

Gross profit

Answer 53

The difference between revenue and cost of sales.

Question 54

Operating profit

Answer 54

records how much profit has been made in total from the trading activities

Question 55

Finance expenses

Answer 55

Interest paid on bank and other borrowings

Question 56

Taxation

Answer 56

An estimate of the amount of corporation tax that is likely to be payable on the profits for the period.