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Flashcards in Understanding Business Deck (25)
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State the ownership, control and method of finance used by the public sector.

Ownership: The government
Control: Local government
Finance: Government via tax


What does the quaternary sector consist of?

The quaternary sector consists of organisations that provide information e.g. Research labs and help lines


State the ownership, control and method of finance used by the private sector.

Ownership: Shareholders
Control: A board of directors
Finance: Selling shares, taking out loans or grants


State the ownership, control and method of finance used by third sector.

Ownership: Founder/s
Control: A board of trustees
Finance: Donations and grants


State objectives of the private sector.

- To maximise profit
- To survive
- To satisfy customers
- To grow


State objectives of the public sector.

- To stay within budget
- To provide the best service possible
- To meet government targets


State objectives of the third sector.

- To increase donations
- To increase volunteers
- To make a difference to their specific cause


What is a multinational?

An organisation that operates in more than one country


State 3 advantages of being a multinational organisation.

- Risk of a takeover is lowered as the organisation is very large
- Due to economies of scale production costs are lower and more profit can be made
- Labour may be cheaper in some countries meaning more profit can be made
- Tax may be cheaper in some countries meaning more profit can be made


State 3 disadvantage of being a multinational organisation.

- Legislation differences may require products to be altered in order to be sold, this is a cost meaning less profit will be made
- Products may have to be altered in order to suit different cultures
- Language barrier may require linguists to be employed, this is an extra cost meaning less profit is made


State the interdependence between managers and employees.

Managers require employees to do work for them.
Employees require managers to pay them.


State methods of organic growth.

- Selling more products
- Opening more stores
- Employing more staff
- Entering new markets


What is forward vertical integration?

When the manufacturer takes over the customer. This allows the manufacturer to have full control over distribution and sale of products.


What is divestment?

Divestment is when an organisation sells of assets or smaller parts of the organisation in order to gain finance. Any capital raised is normally put back into the organisation.


What is corporate culture?

Corporate culture is the character of an organisation. Every organisation has a uniques corporate culture which distinguishes it from others. It influences the attitude of staff and the way they treat customers. An organisation may develop a culture with uniorms, mottoes, shop layouts and logos.


What is responsibility?

Responsibility is being answerable to decisions.


What is authority?

Authority is the power to make decisions.


What is functional grouping?

Functional grouping is when activities are grouped into departments based on skills i.e. HR, finance, operations etc.


What is line/staff grouping?

Line/staff grouping is when activities are separated into core and support activities. The core activities are the focus of the organisation and the support activities assist in running the organisation.


What is the chain of command?

The chain of command is based on the number of layers in the hierarchy. If an organisation has many layers of management (tall), it has a long chain of command. I an organisation has few layers of management (flat), it has a short chain of command.


What is the line of communication?

The line of communication is the way information filters through the organisation. Decisions are made by the most senior managers and information then filters down through the layers of management.


What is span of control?

The span of control is the amount of control spread through the organisation. Small organisations and flat structured organisations have a wide span of control. Large organisations and tall structured organisations have a narrow span of control.


Compare a centralised and a decentralised structure.

- In a centralised structure control and decision making lies with the person who had the most authority whereas a in a decentralised structure control and decision making power lies with different departments throughout the organisation.
- In a centralised structure subordinates have little or no authority whereas in a decentralised structure subordinates have more authority
- In a centralised structure employees are demotivated whereas in a decentralised structure employees are motivated
- It is easy to achieve consistency with a centralised structure whereas it is difficult to achieve consistency with a decentralised structure


What is outsourcing?

When an organisation looks externally for a specialist to do a job that the organisation itself cannot do.


Describe the matrix structure.

The matrix structure involves grouping employees around particular projects within the organisation. Groups often consist of employees with expertise in selected areas. Once a project is finished the group is no longer needed e.g. A group of staff working on an oil rig