Understanding Busness Flashcards
(213 cards)
1
Q
What is a need?
A
Things we must have in order to survive e.g water
2
Q
What is a want?
A
Things we would like to have but aren’t necessarily for survival e.g latest fashion
3
Q
What is a role of a business?
A
To satisfy customers needs and wants
4
Q
Give a benefit of business activity
A
- job creation
- tax revenue to government
- economic growth
-improved standard of living
5
Q
What are the sectors of industry?
A
- primary
- secondary
- tertiary
- Quaternary
6
Q
What is a primary sector ?
A
A business that takes raw materials from the ground, e.g farming, fishing etc
7
Q
What is the secondary sector?
A
A business that uses raw materials and makes something with them, e.g baker
8
Q
What is the tertiary sector?
A
A business in this sector provides a service , e.g a hotel, cleaners etc
9
Q
What is the quaternary sector ?
A
A business that provides knowledge based and informational service, e.g consultant, scientific research etc
10
Q
What is wealth creation?
A
As a product goes though the stages of production and though the sectors of economy, wealth is being created adding value to a product
11
Q
What are ways of adding value ?
A
- processing
- branding
- packaging
- advertising
- selling in a shop
- make a variety of products
- delivery
12
Q
What is the sum to figure out the Gross Domestic profit (GDP)
A
Selling price - raw materials = adding value
13
Q
What is a benefit of creating wealth?
A
- employees learn new skills through training
- job creation: reducing unemployment
- more employment = higher demand for goods/ services
- increases standard of living
- infrastructure is improved
- wealth creations witch encourages business to invest
- employed people pay tax; witch can be spent to help the wider population
14
Q
What are cost of creating wealth?
A
- environmental impact: noise, pollution, traffic, waiste
- animal habitat loss
- volume of non-renuable resources can decrease
- greenfield sites are lost
To mutch demand can cause inflation
15
Q
What is inflation?
A
This is when the price of the product rises and may mean people can no longer afford to purchase some products
16
Q
What does GDP stand for?
A
It measures the size and health of a country’s economy over a period of time
17
Q
What are the sectors of economy?
A
- private
- public
- third
18
Q
What is the private sector?
A
The private sector is owned by and individual (owners or shareholders)
It’s is controlled by owners or shareholders
And are financed by the owner selling shares, bank loans etc
Examples: Tesco, child miner etc
19
Q
What is the public sector?
A
This sector is owned by the Government (on behalf of tax payers)
It is controlled by a manager or a board of directors
And it is funded through tax witch is paid to the government
Example: NHS, police, firefighters etc
20
Q
What is the third sector ?
A
This sector is owned by the member(s) of the organsisation
They are controlled by a comity of paid professionals
And they are finances through grants, donations etc
Examples: charities, volunteer groups etc
21
Q
What are the types of businesses in the private sector?
A
- sole trader
- private limited company (LTD)
- partnerships
- multinationals (MNC)
22
Q
What are the types of business in a public sector
A
- national goverment
- local government organisations
23
Q
What are the types of businesses in the third sector?
A
- charitys
- non- profit organisations
- social enterprice
24
Q
What’s the difference between a private limited company (LTD) and a public limited company (PLC)?
A
Plc sells shares on the stock exchange for everyone to buy whereas a LTD sells shares but only to people they invite
25
What is a private limited company (LTD)?
Are small to medium bussness that sell shares to invited people. These people are called shareholders and receive returns on there investment called DIVIDENED
Shareholders who own the company however the responsibility of running the business is deliogsted to a BOARD OF DIRECTORS
To set up this business 2 legal documents habe to be submitted to company’s house;
- mermandum of assosication
- articles of association
Shares can’t be sold unless ALL other shareholders agree
26
What are some cons a private limited company (LTD)?
- complicated set up process due to legal process
- the rules laid by the law witch must be followed
- financial accounts showing the financial possition goes public
- cost of set up can be higher
27
What are some pros of a private limited company (LTD)?
- limited liability: if a business fails shareholders only lose the money they invested
- finance can be raised by selling shares to existing shareholders or new people
- shareholders and directors can bring experience and skills
28
What is a public limited company (PLC)?
It is owned by shareholders who bought shares in the business on the open market
It is run by a board of directors who have been appointed on behalf of the shareholders to control and manage the organisation
29
What are requirements for a public limited company (PLC)?
- must have SHARE CAPITAL at least £50,000
- they must have 2 shareholders, 2 directors and a qualified company secretary
- they must publicise there annual reports and accounts
30
What is some pros of public limited company’s (PLC)?
- limited liability: if the business fails, only the money the shareholders invested in the business will be lost
- large amount of capital can be raised by selling shares
- can take advantage of the economies scale
31
What are cons of a public limited company (PLC)?
- financial statements have to be produced manually: involves cost to produce them and are available to competitors
- no control over who buys shares: control could be lost to outsiders (threats of takeover)
- company has to abide by the Companies Act
Profits may be lower then when company initality set up due to high set up cost
- high set up cost
32
What is a franchise ?
A bussness model that allows bussness to pay a sum of money to own a branch of a well now’s, existing bussness
The main original ‘parent” of the business ness is the FRANCHER and the owner of the individual branch is now as the FRANCHISEE
33
What will a franchiser provide?
- the band or product(s) being sold
- a store layout where appropriate
- advice and trading required to the franchise
- Marketing on a national scale
34
What is a cost for the FRANCHISEE?
- a considerable amount of money is required to start up
- they may have little control over products, store layout and price
- cannot inject new ideas easily into the business
- some profit has to be given to the franchiser
- ROYALTIES meant need to be payed
- likely to be a long term agreement
35
What is the benefits for the FRANCHISEE?
- well known bussness name creates instant customers and sales (reducing the risk of failure)
- advertising costs are paid for
- franchisers carry out trading that is appropriate, saving costs
- franchiser may limit the number of business in the geographical area
36
What are the cost for the FRANCHISER?
- only % of profit is gained, if the organisation set up its own business it could generate more profit
- a franchisee could damage the reputation of the hole brand and bussness
- publicists is affected by the franchise
37
What are benefits for the FRANCHISER?
- income guaranteed % of profit paid each year
- if the business doesn’t work,m the cost of failure is split (less risk)
- market share of the company increases as more branches are opened
- retain control over the branding and product(s)
- guaranteed income from royalties
38
What is a multinational companies (MNC)
Is a large company that operates in 2 or more countries, it will have a headquarters in a HOME country as well as branches, operations or services in at least 1 other country
39
Why become a multinational company (MNC)?
- to increase market share: companies may find they are at saturation point in the domestic market and need a new outlet
- to secure cheaper premises and labour: cost of land and labour will be cheaper in developing countries
- to avoid or trade barriers: different nations have different legal of CORPORATION TAX and may have different barriers to enter
- government grant: many US companies where attracted to the UK in the 80s due to the government giving money to open an operation there
40
What are pros of a multinational company (MNC)?
- can have economy’s of scale
- can take advantage of different tax regulations
- may have cheaper resources: reducing costs can avoid legal restrictions
- expanding = the company is bigger witch = more sales
- government grants dint need to be payed back
41
What are cons of a multinational company (MNC)?
- country laws need to be followed: possible changes to product/ service
- cultural differences
- language barrier: making trading more difficult and communication could also be misinterpreted
42
What is a public- funded organisation?
There are organisations set up and owned by the goverment to provide a service to the public. These services witch the private sector could not provide very well/ not provide at all
Making a profit is not always important, however keeping in within the budget (money alicated from the goverment) is very important
Examples: royal mint, HM revenues and customs, financial conduct authority
43
What is a public organisations?
There bussness are owned and run by the government for us, for example the BBC (the government appointed a charmant and bord of directors to run them)
44
What is a Government- funded service provider?
They provide things such as the NHS, SOCIAL SECURITY AND DEFENCE
They are financed by the government in order to carry out there policies. Some are dedicated responsibility form wistshirmer for some service.
Each usually has it own apointed goverment minister who has supervised control and provides guidelines to managers on how the serviere should be run.
These mangers then make decision on how the money could be best spent to meet the government objectives
Each year they are given a set amount of money to spend
45
What is a local authority’s - local government organisations
Provide services such as education, housing and street lighting
They are financed by council tax witch the goverment grants and from fees fore things like using facilities at a sport centre
It is run by local authority’s or they will contact out to a private company who get a fee for providing these services
Example: the big issue, RSSPCA, CATS protects etc
46
What are third sector organisation?
They are split into 2 categories:
- non- profit making organisations (charity’s)
- social enterprises and co operatives
47
What is a non-profit making organisation?
There aim is not to make a profit and they are run to help groups or individuals in society
They are owned and controlled by appointed management and run by members or founders
In order to be concierge a charity’s they must follow legal framework
48
What to charity’s need to do get charitable status?
They must follow the lLEGAL FRAMEWORK and do 1 of the following:
-relive poverty
- advanced education
-advanced religion
- advanced community resources
49
What is a social enterprise?
There main aim is SOCIAL or ENVIRONMENTAL, rather then to make a profit
They are run like a bussness and aren’t regulated by the goverment like charity’s
They are financed by shares, loan or government grants
They are contorted by managing directors with shareholders
At least half of the profit MUST be invested into meeting the stated aims of the company
Examples: co-operative and mutual society’s, social firms, credit unions etc
50
What is a business objective?
Is a target, goal or aim set by the business, its the reason for being a bussness
An organisations objectives can depend on:
- type of bussness
- size of bussness
- the competition
- type of goods or services they provide
51
Give a bussness objective
- managerial objectives
-Working within a budget
- provide quality and/or free service
-Growth
- market share
-social responsibility
-survival
- satisfaction
- profit maximisation
52
Why are bussness objective important
It can be used to measure the success of a bussness. It provides a focus fore the organisation that a workforce can work towards
A MISSION STATEMENT sets out the visions/ aims of an organisations, allowing them to plan for the future
53
What is profit maximisations?
Having more income then profit
This is a main objective for any private sector business ess, as bussness can’t survive without a profit
54
What is satisfaction?
Aiming for a satisfactory position, it makes sure that shareholders, owners or customers are happy with the way a business operates
55
What is social responsibility?
Aiming to behave in a responsible way:
- good working conditions and benefits for employees
- environmental considerations
- choice of suppliers, stakeholder and responsibility’s
- community investment (donations)
56
Why is social responsibility important:
- it creates greater customer confidence and therefore loyalty
- it increases revenue and profit
- its attractive to potential workforce
- it creates positive publicity and greater marketing opportunities
57
What is working within a budget ?
An organisation will set a budget witch they must adhere to so the survive, planning ahead an preparing accordingly
58
What is managerial objectives ?
Where manager’s have there own objectives such as :
-max personal sallery/ bonus
-max there department budget
-improve there status and recognition
-max number of employees in there charge
Max fringe benefits such as company cars
It is important for an organisations to ensure mailers don’t allow personal objectives to impact the decisions for the organisation
59
What is growth?
In order to survive in a competitive market a business must change and develop overtime to keep up with market demand
60
What is provide a quality or free service?
This focuses on providing a good quality service to customers, whether its paid indirectly or directly
DIRCECT ORGANISATIONS- private organisations
INDIRECT- public sector
People need to feel happy and satisfied with the level of service provided across all sectors - this may impact the direct success of other objectives
61
Give an example of an objective for a company in a private sector
- max profit
- provide good quality service
- survive
- operate ethically
- max sales
- growth
- comparative social responsibility
62
Give an example of an objective for a public sector company
-provide a service
- work within a budget
- operate ethically
- serve the local community
63
Give an example of and objecting for a third sector organisations
- support a cause
- provide a service
- raise awareness of a cause
- max donations
- operate ethically
- survive
- increase number of supporters
64
What are internal method of growth
- new product/ service
- open an new branch
- introduce e- commeers
- hire more staff
- increase production capacity
65
What is a method of external growth
- Horizontal
- vertical (backwards and forwards)
- lateral
- conglomerate
- diversification
66
What is organic growth (internal growth )?
When a business decides to grow on its own without getting involved in other organisations
67
Give an advantage of organic growth
- no loss of control as outsiders are not involved
- Hireing more staff will bring new ideas
- investing in new equipment will increase production capacity
- opening new branches means the company can reach new markets
- less risky then a takeover
68
Give a disadvantage of organic growth
- can be a slow method of growth
- may be limited by the size of the market
- restricted by the amount of finance available
69
What is horizontal interrogation?
When 2 companies at the same stage of the production process (same sector) become 1 bussness
70
What’s an advantage of horizontal integration
- removes a competitor from the market
- opportunities for greater economy of scale
- business gains a greater market
71
What is a disadvantage of horizontal integrations
- hostility and job loss may occur
- change within the business could impact negatively on customers loyalty
- can be expensive to purchase other customers
72
What is vertical growth
Vertical integration occurs when 2 companies in the same industry but different sector or stage of production merge, cutting down the middle man and saves costs
The types of vertical growths are
- backwards vertical
- forward vertical
73
What is backwards vertical?
Backwards vertical integration occurs when an organisation takes over a supplier
74
What is an advantage of backwards vertical
- guaranteed quality inputs as they control stock
- cuts out the middle man, leading to increase profits
- more limited suppliers to competitors
75
What is a disadvantage of backwards vertical
- entering into as new market may affect core activity’s as research and experience need to be shares
- monopolising markets may have legal reporocusions
76
What is forward vertical?
Forward vertical integration happens when an organisation takes over a customer, or a late stage of production process
77
What’s an advantage of forward vertical?
- Garentees an outlet to sell products
- cuts out the middle man leading to increase profit
- more control over pricing and product display
78
What’s a disadvantage if forward vertical?
- entering into new markets may affect core activity’s as Ressourcen and expertise need to be shared
- monopolising market may have legal repercussions
79
What is lateral growth?
This is when 2 bussness who are in different but relative industry’s comes together
80
What’s an advantage of lateral growth
- spreads risk across different markets
- targets new market increasing customer base
- businesses gain customers and assets from the acquired businesses
- experience/ knowledge can be gained from the acquired bussness
81
Give a disadvantage of lateral growth
- entering into a new market may effect core activity’s as resources and expertise need to be shared
- may not have the knowledge required to sussesfuly run the new bussness
82
What is diversification/ conglomerate
When 2 business that’s provides different good and services different market join together. Diversification can also happen when a business decided to open in a new market
83
What is an advantage of diversification / conglomerate
- spread the risk if 1 market fails
- overcome seasonal fluction in there market being able to have more constant sales throughout the year
- the bussness is larger and therefore more financial secure
- the buyer acquires assets of the other company’s
- the business gains again the customers and sales of the business
84
What’s a disadvantage of diversification/ conglomerate
- 1 business may may take over another market they know nothing and this may cause the bussness to fail
- having to many products across different market can cause the company’s to lose for us on core activity’s, impacting on other products
85
How can a business achieve growth?
- marketing
- increase staff
- merger
- takeover
- product development
- become multinational
- franchising
- acquisition
86
How can a business finance growth?
- cut sourcing
- retained profit
- diverment
- Dietgration
- asset stripping
- Demeter
- buy in
- buy out
87
What are external factors ?
Are things that happen outside the control the bussnes (PESTECC)
88
What are political factors (external)
Can be local or national, its the change of laws, legistrations and public spending in the economy
Example, changing the laws on the minimum wage
It is controlled by the goverment
89
What is the focal policy (political factors)
To do with taxation and public spending
90
What is monetary policy (political & economic)
The way the government controls the supply of money into the economy in response to interest rates
91
What is the competition policy (political factor)
Is an aim to prevent 1 company or small number of company’s domination the market put by the goverment
92
How does the competition policy impact a bussnes
- preventing a bussnes to collide with other organsation to a fixed price
- preventing mergers or takeovers that could lead to to a decrease in the competitive market
- preventing bussnes from making agreements with other firms when tendering for projects
- prenventing monopolising from occurring
93
How does monopolising occur
A monophonic occurs when there is only 1 supplier of a particular product or service
94
Whats an economical factor
Anything that encourages people to spend or not to spend, this can be connected to the goverment - monetary policy
- oval of employment
- recession and bloom, economic growth
- interest rates
- exchange rates
- inflations
95
How can the leval of employment impact a business positively
- high unemployment: more people to recruit from to fill vacancies
- low unemployment: people have more disposable income - result is a greater demand for products/ services
96
How can the level of employment impact the business negatively
- people may be more money conscious when spending money and this could lead to less demand for the product/ service
- may be difficult to require people with the correct skills for the job
97
What is social factors
Social factors are concerned with the way in which society changes, and need the bussnes to adapt in the way way…
- lifestyle
- trends and tastes
- demographic change
- ethical issue
98
What is technological factors
Is when tecnology changes rapidly and can have a huge impact on the bussness if not to date
- ICT
- reasearch and development
- automation
- e-comers
99
How can technological factors effect a business positively
- can make production quicker leadeing to more sales
- can widen the number of customers
- lowers the cost of production
100
How can technological factors effect a business negatively
- its highly competitive
- getting new technology can be expensive
101
What is competitive factors
Most bussness face competition, there competitions could do things that impact the bussnes:
- competition policy
- intimidation - rival company’s producing a similar product
- price wars
- have ‘loss of leader’ products - large organisations
- product differentiation from competition : strong brand, marketing and having a USP
102
What is gdp
Stands for gross domestic product and is a figure that sums up the amount of goods and services, produced and consumed in the company
103
What is interest rates?
It determines the % that is added to borrowing or saving
All banks have interest rates- however the government bank, Bank of England, set the base rate of interest
The base rate is changed to reduce or encourage spending in the economy
104
How can high interest rates affect a business
- bussnes borrow and invest less
- bussnes receive more interest on money they save in the bank
- consumers save more money meaning they can spend more of goods and services
105
How can low interest rates effect a bussnes
- business borrow and invest more
-businesses receive less interest on money they save in the bank
-consumers as less likely/ willing to spend on goods and services
106
What is exchange rates?
Exchange rates deter an how much currency can be bought using another currency
A high value or ‘strong’ pound is caused by high demand for the currency’s. If uk products are selling abroad the pound will be in demand
A low value or ‘weak’ pound is caused by high demand from product purchased from abroad (imports) and lowers the interest rates
107
Whats does the acronym SPICED stand for
Strong
Pound making
Imports
Cheaper but
Exports
Dearer
108
What does the acronym WPIDEC stand for
Weak
Pound makes
Imports
Dearer but
Exports
Cheaper
109
What is an internal factor?
An internal factor is something inside a business that impacts how it operated, but that can be controlled
Examples:
- staffing (hr)
- corporate culture
- finance
- technology
110
What is staffing (internal)
Staffing relatives to the people who work in the bussness. They are paid to carry out a number of tasks related to the job that they perform
The performance of a business is effect by the skills of the people who work for it and the motivation they can have
111
How can staff impact on an organisation for managers
- decisions making and experience
- creating policy’s
- hiring and firing employees
- setting budgets
- conducting appraisals with staff
112
How can staff impact on a organisations for employees
- productivity and availability
- ability to satisfy customers
- absenteeism
- ability to perform there job/ skills
- training
- motivation
- Industrial action
113
What is corporate culture
Corporate culture is usually defined as ‘the way with are done around here’
This means the way in witch the attitude, beliefs, values and norms of the firm are visible and evident and shared by all employees in the organsation
114
What are methods to promote using corporate culture
- uniforms
-rituals
- value and policy’s
- company colours
- trading and company jargon
- symbols, slogans and mottos
- uniforming of layout
- Office layout
- incentives and reward culture
115
What needs to be considered when trying to establish a positive cooperation culture?
- the vision and aim of the organisation
- the opinions and view of employees ; consulting with employees
116
Whats a beinfit of having corporate culture
- flexible working
- employees fell a part of the organisation witch improves efficiency, communication and productivity
-customers get a sense of quality; customer loyalty
- employees loyalty is increased when they are happy
117
Whats a cost of not having corporate culture
- low motivation= low productivity and poor quality
- higher employee turnover
- poor communication can make decision making hard
- work enviromental can creates hostile atmosphere
- culture is hard to introduce
118
What is finance (internal)
The availability of finance will effect how it is able to meet its objective or changing customer demands
Without proper finance, or correctly manage financed a business will be help back from growing organically and will eventual struggle to survive
119
What is current technology (internal)
The technology that a business has can influence how the business operates
120
What is conglomerate?
A conglomerate is usually a MNC that is a parent firm to a range of business in many different markets that has bought over to increase its productivity
121
What is outsourcing?
When part of a business is passed to another more specialist organisation so that part of the business can grow using specialist knowledge
122
What is an advantage of outsourcing?
- specialist
-reduces staff and other needed resources like a workspace
- higher standard of work may be achieved
- the work may be cheaper as they can take advantage of economy of scale
- concentration on core activity’s
123
What is a disadvantage of outsourcing
- Can be more exspensive as suppliers may add on profits
- lose control over outsourced work
- sensitive info may need to be passed onto outsourcing supplier
- need clear communication
- bad publicity if staff are made redundant as a result of outsourcing
- reputation could be impacted
124
What is a stakeholder
A person/group of people who have an interest in the success of the bussness
125
What is an internal stakeholders
Is a person or a group who have a interest INSIDE the business
126
Whats an external stakeholders
A person/ group of people who have and intrest in the bussness but on the OUTSIDE of the bussness
127
Name a type of shareholders
- bank
- owners/ shareholders
- managers
- pressure groups
- employees
- suppliers
- local community
- government
128
Give an interest and influence of owners/ shareholders
Intrests
- want the business to make a profit
- want a good return on the money they have invested
Influence
- can invest more or less capital
- make key decisions
- can vote at AGM
129
What are intrests and influences of employees
Intrest
- want a good rate of pay
- want to be treated fairly
- want good working conditions
- want training and continued professional development. (CPD)
-want to have fringe benifits
Influences
- can take industrial action
- can change the standard of quality of work
130
Whats an interest and influence of banks
Intrests
- want the business to open an account
- want loans to be paid on time
- want mortgages on premises to be taken out and repaid on time
Influence
- can reduce a loan
- can demand repayment
- can vary intrest rates
131
What are the intrest and influences of customers
Interest
- want good quality products/services
- want to pay a reasonable price
-want to receive good customer service
Influence
- can decide to buy or not to buy
- can provide positive or negative feedback
132
What are intrests and influences of a supplier
Intrest
- want to paid on time for materials provided
- want to receive repeated orders
Influence
- can change the price of raw goods
- can refuse to provide credit on materials
- can change delivery time
- can decide to do business with the organisation or not
133
What are the intrests and influences or the local community
Intrests
- want jobs in the local area
- want bussness to be socially responsible to the local area
Influence
- can complain to local council
- can protest
134
What are the intrests and influences of pressure groups
Intrests
- support and promote a specific intrest or cause
- want bussnes to work environmentally or ethically
Influence
-can hold demonstrations and protest to raise awareness of the issue
- can complain to the government
135
What are the Intrests and influences of the government ?
Intrests
- want jobs in local area
-want business to invest money in the local area
- want low unemployment
- want taxes to be paid
- want the laws to be followed
Influence
- can refuse grant planing permission
- can close down a bussness that doesn’t comply with regulations
-can change the amount of tax
- can introduce and change laws
136
What is interdependence
Why stakeholders need other stakeholders e.g a baker need the farmer to produce the milk in order to produce a product
137
What is conflict of interest
The disagreement that can occur between different stakeholders
138
What is an organisational structure or grouping
The way an organisation ORGANISES there bussnes
They organise themselves internally to suit the type of activity’s that the organisation may carry over
139
Name a type of organisation structure
- tall and flat
- centralised and decentralised
- matrix
- entrepreneurial
140
Give an advantage of tall structure
- each member of staff now’s there role
- many promotions can motivation staff
- narrow span of control
141
What’s a disadvantage of tall structure
- communication takes time to flow through the levels
- can be slow to react to changes
- narrow span of control
142
What’s an advantage of flat structure
- info is communicated quickly between levels
- the organisation can respond quickly to external factors
- wide span of control
143
What’s a disadvantage of flat structure
- fewer levels means fewer promotions opportunities
- as there are less management levels, more is put onto workers witch puts them under pressure
144
What is centralised
A key question is whether authority’s should rest with senior management at the Center of a bussness
145
What is decentralised
Where’s it should be delighted further down the hierarchy, away from the Center. It includes move junior managers isn’t the hierarchy as well as individuals bussness and training units
146
Give an advantage of centralised
- easier to implement common policy and practise for the whole bussness
- prevents other parts of the bussness from becoming independed
- easier to coordinate and control from the Center
- economy of scale and overhead savings is easer to achieve
- quick decision making
147
Give a disadvantage of centralised
- heavy reliance on key decision making
- stifles creativity of staff
- lack of authority to make decision down the hierarchy
- prevents organisation form adapting service/ products to local conditions
148
What’s a advantage of decentralised
- designs are make closer to the customer, organisation can be move responsive to local needs and make decisions faster
- those making decisions are closer to customers have a better understanding of there needs
- consistent with aiming for a flatter hierarchy
- good way of training and developing junior management
- should improve staff motivation through delegations and empowerment
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Whats a disadvantage of decentralised
- inexperance managers may make bad decisions with affect the whole business
- harder to ensure consistent practise and policy’s at each location
- may be some diseconomies of scale e.g duplication of roles
- greater supervision required and may need managerial training
- harder to achieve tight financial control- Rist of cost- overfits, high salary’s
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What is matrix structure
When an organisation is arranged into a temporary project teams to carry out a task
Teams are made up from different groups/ functional areas of an organisation
Each staff member has 2 managers; functional area and projects
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Whats an advantage of matrix structures
- each team has specialised staff from all functional areas
- complex problems can be solved
- staff can use there expertise and as such have job satisfaction and motivation
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What’s a disadvantage of matrix structures
- many managers across all projects teams means high wage costs
- duplication of Ressource such as administration staff and equipment
- staff can be confused as to who to report to
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What is entrepreneurial structure
When the manger descisioms are made by 1 or 2 key personnel
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What’s an advantage of entrepreneurial structure
- decisions are made quickly as there is little consultation
- staff know who they need to report to
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What’s a disadvantage of entrepreneurial structure
- can create a heavy workload for the main decision making
- if the owner is busy or not available, key decisions cant be made
-other staff don’t get a chance to show initiative
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What us delayering
Is the removing of a layer of management to
- save money
- improve communication
- wider span of control
But…
- fewer promotion opportunities
- lose key members of staff
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What is span of control
The number of people a manager has directly working for them
The bigger the span = less supervision and control
Span of control is dependent on the skills and ability’s of staff
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Give an advantage of having a wide span of control
- staff delegation as they should be skilled
- empower staff, making there own decisions
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Give a disadvantage of having a wide span of control
- managers time to deal with problems can be at a premium
- subordinates may resent making decisions
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What are things that can influence the structure of the business
- market
- size
- finance available
- technology
- product
- staff knowledge and skill
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How can size influence the structures of a business
As a business grows it becomes harder to control all the staff within the organisation. A more formal structure is needed for large business
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How can technology influence the structures of a business
The introduction of new tech can change the structure of the business it will be easier to communicate over larger destinies
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How can product influence the structures of a business
Having a small number of large customers means a flat structure or matrix structure
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How can market influence the structures of a business
If the market is small and local then the organisation will be small with an entrepreneurial structure
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How can staff knowledge and skill influence the structures of a business
If staff are highly skilled less formal structure can exist
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How can finances availability influence the structures of a business
Additional managers cost money
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What is organisational grouping
These are the different ways an organisation groups the activity’s that they undertake or staff they have:
- functional
- product/ service
- location
- technological
- customer
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What’s the different between organsational structure and organisational grouping
Organisational structure is how an organisation itself to control, give orders and make desisons
Whereas
Organisational grouping is the different ways an organisation can group the activity’s it does or the people/staff trhey have in order to carry out there core activity’s
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Give an advantage of functional grouping
- Specialist department
- staff know who to report to
- staff can get guidance in there area
- less duplication of resources
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Give a disadvantage of functional grouping
- organisation become too large
- communication can take a long time
- department more interested in its own objectives
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Give an advantage of product/ service grouping
- it encourages customers loyalty
- easier to identify products that are performing poorly
- department can response more quickly to change in there specialist area
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Give a disadvantage of product/ service grouping
- there can be duplication of effect and resource
- department based on products may end up competing with each other
- difficult to share expertise and resources across departments
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What’s an advantage of local grouping
- each department can meet the needs of the local market and can reach external factors
- communication is better
- failing department can be easily identified
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Whats a disadvantage of local grouping
- natural high costs due to duplication of effort and resources
- department needs to be created with each other
- new departments need to be created when the bussness wants to trade into a new area
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What is technological grouping
This is where the organisation divides it operation by the type of technology they require
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Whats an advantage of technological grouping
- Specialist are off working together witch may result in a higher quality
- wastage and cost may be reduced does to specialist equipment and staff knowledge
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Whats a disadvantage of technological grouping
- high cost of training
- there can be duplication of effort and resource
- can only be used in very large organisations
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What is customer grouping
This is when an organisation divides it operation by types of customers
It may divide customers into:
- retail (high street sales)
- online operations
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Whats an advantage of customer grouping
- it encourages customer loyalty as customers needs are the main focus of the department
- individual departments are more responsive to changes in customer needs
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Whats a disadvantage of customer grouping
- there can be a duplication of effort and Ressource
- competition between departments may occur
- difficult to share expertise and resource across departments
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What is downsizing
When unprofitable groups are closed by an organisation
Downsizing can happen by closing parts of an organisation or merging groups together
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Give an advantage of downsizing
- it can reduce the costs of wages and rent
- the business is ‘leaner’ and can be more competitive
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Whats a disadvantage of downsizing
- valuable skills and knowledge lost when redundancies are made
- remaining staff fell vulnerable and are demotivated
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What is the role of managers in decision making
Managers have different jobs or roles they undertake in order to be effective and efficient
There are 7 types of functions;
- plan
- organisation
- command
- control
- coordinate
- delegate
- motivate
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What are the types of decisions?
- strategic
- tactical
- operational
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What is strategic decisions
As part of the strategic decision making process, organisations will release a mission statement
This is a written statement outlining the overall aims and objectives of the organisation
It allows the bussness to;
- let customers know the overall aims and objectives
- promote CSR aims
- attracts quality staff
- informs potential investors about the strategies goal of the business
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What is tactical decisions
Tactical is based on how to achieve goals or aim, how to respond to PESTEC
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What is operational decisions
A routine and repetitive decisions making
E.g arranging work rotas
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What is SWOT analysis?
A SWOT analysis is a managerial decision making tool used to identify an organisations, strengths, weaknesses, opportunity’s, threats
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What does the acronym SWOT stand for?
Strengths
Weaknesses
Opportunity’s
Threats
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Whats an advantage of using SWOT analysis
- identify strengths and allow a bussness to built upon them
- identify weaknesses and can help prevent them
- identifies opertuinitys allowing them to take advantage of them
- identify threats and allows the business to turn it into opertuinitys
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Whats an dissadvantage of using SWOT analysis
- time consuming
- very structured process with may stifle creativity
- can generate ideas that don’t work
- can be influenced by the opinions of the people carrying out the task
-the info can become outdated
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What external factors could affect the quality of decision making
- political
- economical
- social
- technological
- enviromental
- competitive
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What internal factors could affect the quality of decision making
- finacial
- employees
- management
- existing technology
- corporate culture
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How can organisations measure the success of there decisions
Can be evaluated through;
- asking employees (survay, staff meeting)
- looking at quantitive info
- looking at employees absentees rates
-measure employee motivation
- asking customers for there opinion by carrying out market research
- examine the number of complaints
- review online customers reviews
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What is the length of decisions for a strategic desisons
Long term
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Who is the desisons maker in strategic desisons making?
Senior management
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Whats the level of risk for strategic decisions
High
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What is the purpose of strategic desisons
To shape objectives
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What is the length of decision making for tactical desisons
Medium term
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Who makes tactical desisons?
Middle manager
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Whats the risk of tactical decision making
Medium risk (usually finacial)
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Whats the purpace of tactical desisons
To achieve the strategic desisons
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Whats the length of decision making for operational decisions
Short term
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Who is the decision maker for operational decisions
Supervisor / all staff
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whats the purpose of operational desisons
To react to situations as they arise
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What is centralised desisons making
Is when most desisions are made by senior management/ head of office
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Whats an advantage of centralised decision making
- desisons made by the most experienced people
- decision made more quickly
- leads to greater uniformity within the organisation
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What is decentralised desision making
When each department within the organisation has the authority to make there own desisions
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Whats a disadvantage of centralised decision making
- staff demotivated from lack of input in desisions
- central team slower to respond to local changes in Markert
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Whats an advantage of decientrgilesed decision making
- staff motivated by opportunity’s to make decisions and be creative
- local teams can respond quickly to changes in n the local market
- can provide better level of customer service
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Whats a disadvantage of decentralised decision making
- decision made by less experienced people
- local decision may be inconsistent with overall strategy’s
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Whats the role of the manager
Managers have different jobs or roles they undertake in order to be efficient and affective
- plan
- organise
- command
- co-ordinate
- control
- delegate
- motivate
