Understanding Business Flashcards

Question

What is privatization?

Answer 1

The process of selling a public sector organization to the private sector.

Answer 2

Essential services to the public free of charge, funded by taxation and local business rates.

Answer 3

Organizations set up to raise money for the benefit of others, controlled by a board of trustees.

Answer 4

* Exempt from some taxes * Low wage costs due to volunteers * Increased donations from private companies

Answer 5

* Difficulty competing with large marketing budgets * Reliance on volunteers who may leave for paid work

Answer 6

Organizations aiming to provide services for their members and community, funded through membership subscriptions.

Answer 7

Organizations aiming to make a profit to benefit a specific group or cause.

Answer 8

* Attract customers through social aims * Attract good-quality employees * Likely to receive government grants

Answer 9

Businesses that share profit and decision-making among members, aiming for profit without necessarily maximizing it.

Answer 10

Businesses aimed at providing quality service for members and customers, with shared ownership and decision-making.

Answer 11

* Sector of industry * Size of organization * Changing circumstances

Answer 12

Bringing in more money than spent on materials and running costs.

Answer 13

Avoiding going out of business.

Answer 14

Aiming for a satisfactory result rather than the best possible outcome.

Answer 15

To meet customer needs and improve standards of living.

Answer 16

The percentage of total shares in a market that a business holds.

Answer 17

Objectives pursued by managers that may improve their status within the company.

Answer 18

Sticking to an annual budget without overspending.

Answer 19

Focusing on selling as many units as possible, sometimes at the expense of overall profits.

Answer 20

Aiming to act in an ethical manner that benefits society or the environment.

Answer 21

* Ethical responsibilities * Philanthropy * Legal responsibilities

Answer 22

* Good reputation * Attracting like-minded customers * Attracting high-quality staff * Societal and environmental benefits

Answer 23

Making the business larger.

Answer 24

* Reduces risk of failure * Increases profits * Avoids being taken over * Removes competition * Economies of scale

Answer 25

Growing the business independently without involving other organizations.

Answer 26

* Launching new products/services * Opening new branches * Introducing e-commerce * Hiring more staff * Increasing product capacity

Answer 27

Launching products across different markets to spread risk.

Answer 28

When two businesses from the same sector merge.

Answer 29

* Market dominance * Economies of scale * Increased profits due to reduced competition

Answer 30

* Potential breaches of competition rules * Quality may suffer * Higher prices for consumers

Answer 31

When a business merges with another in a later sector of industry.

Answer 32

* Control over supply * Increased profits by cutting out middlemen

Answer 33

When a business merges with a supplier in an earlier sector of industry.

Answer 34

* Guaranteed supply * Lower inventory costs * Quality control of supplies

Answer 35

* Possible mismanagement of new activities * Focus on new activities may harm core activities * Legal repercussions of monopolizing markets

Answer 36

When a business merges with another in the same industry but not in direct competition.

Answer 37

* Target new markets * Complement existing products

Answer 38

* Lack of market knowledge may affect performance * Potential impact on core activities

Answer 39

When businesses in different markets join together.

Answer 40

* Spread risk of failure * Overcome seasonal fluctuations * Larger and more financially secure business * Acquisition of customers and sales

Answer 41

* Potential market unfamiliarity leading to failure * Loss of focus on core activities * Inefficiency due to size

Answer 42

When one business buys another business.

Answer 43

* Gaining market share and resources * Spreading risk of failure * Achieving economies of scale * Reducing competition

Answer 44

* Integration may lead to job losses * Potential negative impact on the taken-over business

Answer 45

A takeover involves one business acquiring control over another business, often resulting in hostility.

Answer 46

* Gaining market share and resources * Spreading risk of failure * Achieving economies of scale * Reducing competition, which can increase sales

Answer 47

* Job losses in the taken over business * Negative impact on local economy if headquarters are moved * Higher prices for customers due to reduced competition * Potential loss of loyal customers due to name change * High costs of acquisition

Answer 48

A merger involves two businesses agreeing to join forces and become one organization, often resulting in a new name or logo.

Answer 49

* Shared market share and resources * Spreading risk of failure * Achieving economies of scale * Combining areas of expertise * Higher likelihood of job preservation

Answer 50

* Customer dissatisfaction with changes * High marketing costs to inform customers * Higher prices for customers due to reduced competition

Answer 51

Retained profits are profits made by the business that are kept for funding growth rather than given to shareholders.

Answer 52

Divestment involves selling off parts of an organization, such as a subsidiary or brand, to focus on more profitable areas.

Answer 53

Deintegration occurs when a business sells off part of its supply chain that it owns.

Answer 54

* Focus on core activities * Increased choice in the vertical chain

Answer 55

* Higher prices for supplies * Risk of competitors acquiring integrated components

Answer 56

Asset stripping is taking over another company to sell off its assets for profit.

Answer 57

A de-merger occurs when a single business splits into two or more separate components, still owned by the same organization.

Answer 58

* Focus on individual activities for growth * Increased operational efficiency * Ability to divest components to meet competition regulations

Answer 59

* Potential customer abandonment * Significant financial costs for rebranding and marketing

Answer 60

A management buy-in is when management from another business takes over the company.

Answer 61

A management buy-out occurs when the management of a business buys the company they work for.

Answer 62

Outsourcing is when an organization arranges for another organization to carry out certain activities instead of doing them in-house.

Answer 63

* Focus on core activities * Reduced need for labor and equipment * High-quality work from specialized businesses * Potential cost savings from economies of scale * Flexibility in using services as needed

Answer 64

* Less control over quality * Need for clear communication * Risk of sharing sensitive information * Potential higher costs due to specialist expertise

Answer 65

Arise from decisions made and actions taken by the government, either at a local or national level This can be changes in laws and legislations or alterations to government’s fiscal policy

Answer 66

The government could include environmental protection laws and policies such as zero waste scotland and by complying, organisations will be seen in good light. this is good PR and can attract potential customers

Answer 67

The government could increase the minimum wage so that organisations have higher wage costs. This will result in a lower profit for the year

Answer 68

The government could reduce taxes, such as income tax. This will give the customers a higher disposable income. This means customers are more likely to buy products

Answer 69

The government could increase income tax. This will give the customers a lower disposable income. This means customers would be less likely to spend money on a business’ products unless it is essential. This will reduce sales overall

Answer 70

The government could lower VAT. This is a tax on goods and services. Reducing the VAT rate will make products more affordable for customers, increasing sales for a business

Answer 71

The government could raise VAT. this will increase the selling price which could put customers off purchasing products and reduce sales

Answer 72

Many types of businesses, such as limited companies, have to pay tax on their profits. The government could lower the rate of corporation tax which would mean less money is taken from the business and given to the government, which would increase profits

Answer 73

The government could raise the rate of corporation tax which means more money would be taken from the business and given to the government which would reduce the profit for the organisation

Answer 74

The government could decide to fund the development of infrastructure. Examples include building new motorways, car parks, tram networks and so on. This will increase the likelihood of attracting customers for businesses in these areas Public spending also creates jobs which gives people wages and enables them to spend money on other goods and services

Answer 75

Public spending is a contentious issues as it only improves certain areas. For example, the edinburgh tram network greatly improved edinburghs infrastructure, however businesses in glasgow saw no benefit. This is known as opportunity cost

Answer 76

Aim to investigate markets and enforce completion policy in order to promote competition for the benefit of consumers This is done to keep prices low for consumers, ensure products and services are high quality, ensure customer service is good, ensure entire markets improve and grow, ensure healthy markets can attract foreign investment.

Answer 77

Cartels- organisation cannot participate in cartels. This means colliding with other businesses to fix prices to make higher profits Mergers- The CMA can block mergers if it is likely to lead to a substantial lessening of competition in any market Anti competitive behaviour - organisations cannot use their dominant position in the market to change drastically low prices, pay lower prices to suppliers or control the supply of goods to the detriment of the market Consumer protection - consumers have rights and are protected from unfair practises such as hidden charges and poor customer service

Answer 78

Economic factors arise from the state of the economy.

Answer 79

GDP and employment levels are very high. Demand for products is very high Businesses can take advantages of the demand for products and the wealth of consumers by increasing prices. This will improve profits for the business. However, a side effect is an increase in inflation. This is a rise in prices over time and often leads to wage rises, so people can afford to keep up with inflation

Answer 80

GDP and employment levels fall. Demand for products falls Businesses have to react to falling demand by making staff redundant, which will cost them redundancy payments and lose them the skills and knowledge of employees. Prices will have to be cut to try and increase demand, which will lower the amount of profit a business can make and may even lead to losses

Answer 81

GDP and employment levels begin to rise. Demand for products increases Businesses can rely on consumers being in a better position to spend money due to rising employment, so therefore sales will increase. Businesses can develop new products and start to increase prices, which will lead to bigger profits for the business

Answer 82

The economic policy of a government can be divided into two areas, fiscal policy and monetary policy 1. fiscal policy- a governments fiscal policy concerns the tax rates it sets and its level of public spending. 2. monetary policy - a governments fiscal policy is the ways in which it controls the supply of money into the economy and therefore affects spending. This can be done by varying interest rates

Answer 83

Determine the percentage that is added to borrowings or savings. The bank of England sets the base rate of interest which is the minimum rate of interest that banks and building societies must apply to loans and savings

Answer 84

customers are more likely to save due to attractive rates as they will earn more money on their savings. This means customers will spend less on businesses’ products as they are saving their money instead

Answer 85

Customers are less likely, or able, to take out loans or to spend using credit cards as they will have to pay back more money on their borrowing. This means customers will be able to spend less on businesses’ products

Answer 86

Customers are less likely to save as interest rates are unattractive, so are more likely to spend money on a businesses’ products

Answer 87

Customers are more likely to borrow money as it is less expensive to pay back loans and credit cards debts, so are more likely to spend money on a businesses’ products

Answer 88

Determines the amount of one currency that can be bought using another currency. The exchange rate of the pound sterling against foreign currencies changes on a daily basis.

Answer 89

If the value of the pound is high compared to the foreign currencies, UK exporters will struggle to sell their product abroad as they will be more expensive than foreign goods and sales will fall

Answer 90

If the value of the pound is high compared to foreign currencies, imports will become cheaper. This will decrease costs for businesses that source materials from abroad which will increase their profits It will also allow a lower selling price to be charged for products made in the UK to attract customers

Answer 91

If the value of the pound is low compared to foreign currencies, UK exporters will be able to sell more goods to foreign countries as their goods will be less expensive for customers outside the UK

Answer 92

If the value of the pound is low compared to foreign currencies, imports will become more expensive. This increases costs for businesses that source their materials from abroad and may lead to an increase in prices

Answer 93

Concern the ways in which society changes and the need for businesses to adapt in the same way. social factors could be either a change in the demographics, the characteristics of the population, or a change in cultural behaviour

Answer 94

This is a vast, and growing, market segment. Businesses that can produce products tailored for this market should succeed. Many potential customers in this segment are retired and well off so there is a potential to offer quality products at high prices

Answer 95

Extensive market research must be carried out which costs time and money

Answer 96

As more women are taking up high profile professions and managerial roles they are waiting longer to have a family. As a result, couples are generally better off when they have their first child so businesses can offer high quality maternity and baby products that sell for a high price.

Answer 97

More women will be taking maternity leave once they are established in their careers which will mean organisations have to consider flexible working arrangements, such as part time or job share. This will result in the organisation having to spend time recruiting and training replacement staff

Answer 98

Fewer employees are working the traditional 9-5 working week. As a result, businesses must cater for the needs of a society that works around the clock for 7 days a week. This has led to a trend of convenience in the UK

Answer 99

Organisations will have to provide more staff to work 24 hours a day, 7 days a week to meet customer needs, which will increase wage costs

Answer 100

Businesses can cater for the latest fashion trends and offer products that customers want, therefore increasing sales.

Answer 101

Businesses have to spend time and money researching and developing new products. Some products also have a very short shelf life

Answer 102

flexible working arrangements means staff will be able to work at a time when they are most productive which will improve quality in the organisation as well as raising morale. Additionally, businesses can save money on renting office space and more employees work from home.

Answer 103

flexible working arrangements can lead to a lack of supervision and direction from staff which can reduce productivity. Organisations may also have to provide staff with equipment such a smart phones and laptop so they can work at home which can be costly.

Answer 104

businesses that practice ethically will be seen in a good light by customers

Answer 105

often unethical practice is carried out purely to keep cost low so operating ethically will increase costs and perhaps reduce overall profits.

Answer 106

concern the quickly evolving technological advancements that can impact on organisations.

Answer 107

Through technology such as onedrive or dropbox, organisations can save money on their own IT hardware. Additionally, they will not require as many IT staff to maintain equipment, saving on wage costs

Answer 108

there is a heavy reliance on the cloud performing. If internet connection is unavailable, the organisation wont be able to access files stored on the cloud, causing production to stop. There are also privacy and confidentiality issues regarding storing information on the cloud

Answer 109

Having a social media presence allows organisations to keep in touch with customers and raise their profile to a potentially worldwide market.

Answer 110

Social media can be used by customers to spread bad reviews about an organisation, leading to a poor reputation that could put customers off and cause them to take their business to the competition

Answer 111

Organisations that provide a free WIFI service are more likely to attract customers who wish to use wifi for work or personal reasons

Answer 112

There is a financial cost of setting up and maintaining wifi

Answer 113

4g will enable organisations’ employees to communicate and download information while on the move much more quickly

Answer 114

Not all areas are equipped with 4g capabilities, which could leave organisations in these areas behind

Answer 115

Arise from the ways in which the natural environment impacts on organisations or the ways that organisations act in an ethical and environmentally friendly manner

Answer 116

A business could be impacted by spells of favourable weather, for example, during prolonged periods of snow the ski industry in Scotland will see an increase of customers

Answer 117

Prolonged spells of adverse weather such as snow can affect the transport networks across the UK. This will make it difficult for deliveries of materials to arrive and for staff to get to work, therefore causing production to slow down or cease entirely

Answer 118

Organisations encourage recycling by their customers in order to impact less negatively on the environment. Retailers discourage plastic bags, which will lower the cost to the retailer of providing the bags and gain the company a favourable reputation for being environmentally friendly

Answer 119

Organisations need to undertake recycling which takes time, effort and money to recycle rather than just disposing of waste

Answer 120

Organisations are encouraged to reduce their carbon footprint. This means to lower the amount of emissions from fossil fuels released into the atmosphere. Businesses that do this, will eventually save money on fuel bills

Answer 121

There is a financial cost associated with investing in renewable energy.

Answer 122

Refers to rival organisations that provide the same or similar product and attempt to take their customers, attract new customers or keep their own customers.

Answer 123

Competition opening up a physical store next to a business can be good as it provides more choice for customers and brings passing trade to the area Competition improves a market as it brings with it more choice, new ideas and keeps prices low, which can benefit all businesses in the market

Answer 124

The competition could lower prices, undercutting another business. Businesses will either have to lower prices too, reducing profits, or risk losing customers to the competition The competition could launch new or improved products. Businesses will have to spend money researching and developing products to keep up with the competition

Answer 125

The organisation may not be able to implement decisions and take courses of action that it wishes to such as expanding the business by developing new products, or offering wage rises to motivate staff The organisation may have to take drastic action to cut costs such as making staff redundant, removing a layer of management.

Answer 126

Level of Risk - sometimes managers go for the safe option which wont necessarily meet the objectives of the business, such as maximising profits. On the other hand some managers take too much risk and when things go wrong, put an organisation into financial difficulties Experience and expertise - A good manager can lead and motivate a team to success, while a bad manager can cause low morale, a high turnover of staff and a drop in productivity

Answer 127

Breakdowns can be catastrophic - contact centre losing wifi so being unable to serve customers Loss of relationships can impact negatively on employee morale and rapport as staff email each other more rather than having face to face conversations Lack of technology can leave the organisation behind its competitors, not selling online misses out on global market Financial cost of installing and replacing technology Staff need to be trained in how to use new technology or new versions of existing technology

Answer 128

Company values - these need to be developed by the founder as values are hard to adopt years down the line. Office layout - an open plan layout can encourage a relaxed environment. it can also encourage better communication and idea sharing among staff Corporate colours - give organisations and their staff a strong corporate identity. colours can also help customers identify the organisation easily Uniformity of layout - Uniformity of branches makes it easier for staff to transfer between branches and encourages customers to feel at ease, no matter what branch they are in Language and jargon - An organisation can invent its own quirky words and phrases that help give employees a sense of belonging and appeal to customers looking to buy from a business which is a bit different. Slogans and logos - Use of brand logos helps give organisations identity that are easily recognisable. Reward culture - many employees respond well to financial incentives such as bonuses, commission or pay rises Flexible working arrangements- Utilise arrangements such as flexitime or working from home, creates culture of trust

Answer 129

Flexible working arrangements mean staff work when and where they are most productive Employees feel part of the organisation through use of uniforms, jargon and so on Customers gain a sense of quality product/service Rituals create a relaxed ethos and can improve employee relations Employee loyalty is increased as they are happy in their jobs and feel sense of belonging to the business High quality staff are attracted to the business as they like the idea of working in the culture A relaxed working environment, empowerment and a flat hierarchy can motivate staff

Answer 130

Culture is hard to introduce unless it starts from the founders Staff have to be made aware of changes to culture and if they aren’t they may resist change Modern office cultures can leave some employees physically and socially distant from others, demotivating them Some cultures can be seen as a bribe to get staff on board Management can lose focus and control if a culture is too loose

Answer 131

An individual or group of people who have an interest in the success of an organisation. Internal stakeholders are from within the organisation. External stakeholders are from outside the organisation.

Answer 132

Owners: profits in order to see a return on their investment. can invest more money and can make important decisions Managers: may be given bonuses or promotions based on performance. Can make decisions Employees: Want job security and perhaps a pay rises. Can affect standard of work, can take industrial action Customers: demand a quality product/service and value for moment. Can take their custom elsewhere, can spread good/bad word to others Suppliers: want continued business and the business to pay its debts. Can change prices, can adjust quality of supplies, can change account terms

Answer 133

Although all stakeholders want a business to succeed, they can often conflict in their individual aims.

Answer 134

Employees vs owners/managers: Employees want a pay rise, whereas owners want to maximise profits Customers vs owners/managers: Customers want low prices and value for money whereas owners want to raise prices to maximise profits and meet their own objectives. Suppliers vs owners/managers: Suppliers want to be paid as soon as possible ideally in cash whereas the owners want trade credit to keep good cash flow in the business Government vs owners/managers: Government may want to introduce legislation to improve society however owners may disagree with the legislation as it will impact negatively on their business

Answer 135

Owners/managers and governments: Owners/managers need governments to make good decisions, such as lowering taxes to improve the spending power of customers and therefore sales, while governments need owners to create jobs Owners/managers and suppliers: managers need suppliers to provide quality raw materials to improve the quality of the finished products while suppliers need managers to keep buying from them and keep them in business Owners/managers and customers: owners need customers to buy their products and customers need a good quality of product and customers service from the owners of the business Owners and employees: owners need employees to perform their best to increase sales and profits through work rate or customer service while employees need owners to make good decisions to keep business profitable and jobs safe Managers and employees : Employees and managers need to work together to help the business to succeed in order to keep their jobs secure

Answer 136

Board of directors/owners Senior management Middle Management Supervisors Employees

Answer 137

Each staff member knows their role and who to report to With many levels come many promotion opportunities There is a narrow span of control which means managers have more time for planning, supervision and decision making.

Answer 138

Communications take time to flow down through the levels, which slows down decision making The organisation can be slow to react to changes in the market The narrow span of control means managers supervise work more closely which can put staff under pressure.

Answer 139

Board of directors Management Employees

Answer 140

Information can be communicated quickly between levels The organisation can respond quickly to external factors such as competition There is a wide span of control which means managers have to delegate tasks to staff which can raise morale as staff feel trusted and also staff are empowered to make decisions themselves

Answer 141

Fewer levels means fewer promotion opportunities so quality staff may leave the organisation to gain promotion in larger organisations As there are fewer management levels, staff may be delegated more tasks which could put them under pressure The wide span of control means managers’ time is at a premium which can lead to snap decisions, less time for planning and subordinates may have no one to seek help from

Answer 142

Removing one or more levels of management from a tall structure to make it flatter

Answer 143

Money is saved on paying the salaries of management levels that are removed Quicker decision making and communication are possible as there is a shorter chain of command The organisation can be more responsive to changes in the market as there are fewer levels for information to pass through There is a wider span of control.

Answer 144

There are fewer promotion opportunities for staff Redundancy payments will cost the organisation a significant amount of money The organisation will lose key members of staff in the restructure There is a wider span of control

Answer 145

Decision making and control is kept at the very top level of a centralised organisation. In organisations with many branches this means important decision making being retained within head office and the senior management, directors or owners that work there.

Answer 146

A high degree of corporate identity and strategy exists as decisions are made for the entire organisation Procedure are standardised which ensures consistency There is a low risk of important information leaking from branches or departments

Answer 147

Less responsibility is given to subordinates which can result in demotivated staff Decisions will not meet the needs of local markets The organisation will react slowly to external factors

Answer 148

Decision making and control is delegated to individual branches or departments. This type of structure is best used in retail chains that need to respond to the needs of their local markets.

Answer 149

The business reacts quickly to external changing factors Decisions are made quickly as local managers dont need to consult senior managers before implementing decisions More subordinates are empowered which encourages creativity Senior management at head office are relieved of the burden of constant decision making

Answer 150

The organisation can lose an overall corporate image if each branch is operating differently Local branches could start to compete with each other if they are allowed to make key decisions Additional training required fir middle management Lower level management can make decisions which could harm the business as a whole

Answer 151

Involves an organisation being arranged into temporary project teams to carry out a particular task, such as developing a new product or service, or a large scale construction operation.

Answer 152

Each team has specialised staff from all functional areas Complex problems can be solved Staff can use their expertise and as such have job satisfaction and motivation

Answer 153

Many managers across all project teams will mean high wage costs Duplication of resources such as administration staff and equipment Staff can be confused as to who to report to

Answer 154

Usually they have one main decision maker, the owner. Other staff can have some input but generally they are rarely consulted and final decisions are made by the owner

Answer 155

Decisions are made quickly as there is little consultation Staff know who they need to report to High quality decisions are made as decision makers are experienced

Answer 156

This structure can create a heavy workload for the main decision maker If the owner is busy or not available, key decision cant be made Other staff dont get a chance to show initiative, stifling creativity and possibly demotivating some staff

Answer 157

Grouping an organisation into departments called functional areas, based on skills and experience. The main functional areas of most organisations are marketing, finance, operations and human resources.

Answer 158

Staff with similar skills and expertise are together, allowing for specialisation Staff know who to report to and can get guidance from more experienced staff in their area of expertise Clear structure, lines of authority and career paths are mapped out for employees

Answer 159

The organisation can become too large to manage if functional departments grow rapidly Functional grouping is often coupled with a centralised structure so communication can take a while to filter through to functional departments, causing slow reactions to external factors Functional departments can be more interested in their own objectives rather that’s the organisations objectives as a whole

Answer 160

Grouping an organisation into geographical divisions. Each division will operate to serve customers in a particular location

Answer 161

Each division can meet the needs of its local market The business can react quickly to changing external factors It is easy to identify a falling area and hold regional managers accountable

Answer 162

Duplication of resources such as administration staff or computer equipment across each group is inefficient Divisions may compete against eachother and forget the overall objectives of the organisation Local knowledge and relationships with local customers are lost if staff leave

Answer 163

This is grouping an organisation into divisions that deal with different products or services.

Answer 164

The business can react to changing external factors that affect each particular group’s market quickly It is easy for management to identify struggling products/services

Answer 165

Duplication of resources can occur A new group needs to be set up every time the business launches a new product meaning more staff, equipment and premises costs

Answer 166

Similar to product/service grouping but involves businesses organising their activities according to the technology or production processes used

Answer 167

High degree of specialisation can occur in production Problems in the production process can be easily identified Capital intensive which can reduce wage costs

Answer 168

High degree of specialised training is required Only an option for very large businesses with different production processes Capital intensive which is expensive

Answer 169

Involves grouping the organisations into divisions that deal with a different type of customer

Answer 170

Each group can tailor its product or service to its own type of customer Customer loyalty can build up to the high level of personal service that can be achieved

Answer 171

Duplication of resources can occur A new This is only suitable for large businesses with many customer types/segments that are of sufficient size. It is inefficient to offer a group for a small customer segment.

Answer 172

This can cut the costs of wages and rent The business is leaner and can become more competitive

Answer 173

This involves an organisation either closing an unprofitable division, such as a location group, altogether or merging two divisions together

Answer 174

Valuable skills and knowledge are lost when redundancies are made Remaining staff feel vulnerable and are demotivated

Answer 175

Long term decision making by senior managers to meet the overall purpose and direction of the organisation High Risk

Answer 176

Medium term decision making by middle managers to achieve the strategic decisions Medium risk

Answer 177

Short term/day to day decisions made by supervisors and all staff to react to situations as they arise Low risk

Answer 178

Centralised decision making is kept at the senior level of the business Decentralised decision making is delegated to branches or outlets

Answer 179

An organisation can use a structured decision making model known as SWOT analysis. This allows it to look at its internal strengths and weaknesses as well as external opportunities and threats.

Answer 180

Identifies strengths and allows a business to build upon them Identifies weaknesses and allows them to be addressed Identifies opportunities and allows them to be exploited Identifies threats and allows them to be turned into opportunities Time is taken to analyse the business’s current position so no rash decisions are made

Answer 181

A SWOT analysis is very time consuming which can slow down decision making A SWOT analysis is very structured process which can stifle creativity and gut reactions from managers A SWOT analysis can generate many ideas; however it doesn’t help pick the right one A SWOT analysis produces a result that reflects the opinions of those who carry it out which could lead to bias A SWOT analysis considers information that is available at a particular moment and may be outdated quickly

Answer 182

Human resources - managers’ ability, training and experience. How much risk the managers will take. Staff resistance to change. Managers ability to handle stress. Technology - spreadsheets can improve accuracy, databases can improve the speed of decision making, email can be used to communicate information, internet sites can be used to find out a vast amount of information, video conferencing can reduce the need for mangers to travel to meetings saving on time and costs Availability of finance - whether finance is available to exploit the opportunities, financial constraints may mean an organisation cannot choose the best solution to a problem

Answer 183

Plan - the function of management is to be looking ahead, seeing potential opportunities, or problems, setting targets and strategies. Organise - management must set tasks for other employees that need to be carried out to achieve set targets Command - managers should issue instructions to employees Co-ordinate - managers must bring together the resources of the business to achieve the overall objectives that have been set Control - managers need to ensure they are measuring and correcting the activities of the organisation.

Answer 184

Delegate - give subordinates the authority to carry out management level tasks. This helps lessen the manager’s workload and achieve the next role Motivate - give his team a reason to enjoy their work.

Answer 185

1. Training - a well trained employee fulfils their role effienctly and is an asset to the company, a badly trained one can be incapable of performing basic functions such as interacting with customers and is detrimental to the organisation 2. Morale - employee morale needs to be high as if morale is low, it could impact on the performance levels of staff, increase staff absenteeism or worse lead to industrial action such as strike 3. Experience - employees need to have experience of doing the job in order to develop the skills and expertise to carry out their jobs effectively 4. Capacity - a business will not be able to perform to its best if it is not fully staffed. Sometimes when a business tries to recruit more staff, labour shortages can prevent success

Answer 186

Measuring sales levels to see if they have increased Analysing profit levels to see if they have improved Interviewing staff to assess their opinion of the decision Monitoring staff morale, absence and turnover following major decisions Finding out from customers about improvements in service Tracking changes in share prices to major decisions Researching customer review sites or social media feedback

Answer 187

Availability of finance Well known brands or products Goods/services that make the most profits Products that are benchmarks in the market which competitors try to copy Assets the business owns such as a large modern factory or outlet in a prime location High quality staff and good staff morale

Answer 188

Lack of finance Lack of technology Poor customer service reputation Faulty products Products or branches that are making losses Assets that are in a state of disrepair, such as a crumbling factory Untrained staff or low staff morale

Answer 189

A competitor going bust so the business could take on its customers A boom period in the economy that the business could exploit Customer tastes and fashions falling in line with an organisations specialism Governments introducing favourable legislation Advancements in technology that the business could exploit

Answer 190

A competitors actions, such as cheaper prices or better quality products A downturn in the economy such as recession Customer tastes and fashions changing away from those the business specialises in Governments introducing legislation that impacts badly on the organisation Advancements in technology that could leave the business behind it’s rivals

Understanding Business Flashcards

(214 cards)