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Unit 2 Flashcards

1
Q

Why have an interest in a business?

A

Owners- want to make profits, want business survival
Managers- promotion, high salary
Shareholder-want dividends
Local community-jobs, treat fairly
Employees- secure their jobs, good working conditions, high wages
Customers- good variety, reasonable prices, good customer service

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2
Q

What are private costs and benefits?

A

Costs that a business pays (wages) and the benefit it gets from these activities (profit)

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3
Q

What are social costs and benefits?

A

The true cost of business activities . Taking into account external costs (e.g pollution)

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4
Q

How do you look through an article?

A 
Size
Competition
Ownership and objectives
Resources
External environment
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5
Q

What’s a mission statement

A

Gives a general, visionary idea of what the business exists to do- looks to the future

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6
Q

Purpose of mission statements

A

Immeasurable
Inspire customers and employees
Marketing purposes
Influence corporate objectives

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7
Q

Benefits of mission statement

A

Provides direction
Referred to in times of conflict
Provides framework for decision making

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8
Q

Limitations of mission statement

A

Ambiguous
Unrealistic and over optimistic
Can become out of date if business changes

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9
Q

What’s the order of setting goals

A 
Mission statement
Aim
Objective
Strategy
Tactics
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10
Q

What’s an aim

A

Goals that the business wants to achieve (general) e.g. growth, survival, profits

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11
Q

What’s an objective

A

More specific and can measure against time. Motivates employees and gives them a greater sense of direction

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12
Q

What are the different types of objective

A 
Corporate
Strategic
Tactical 
Functional/operational 
Social 
Communicating
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13
Q

What’s a corporate objective

A

Relate to business as a whole
Set by top management
Satisfying the shareholders- profit dividends

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14
Q

What’s a strategic objective

A

How a business plans to achieve its aims or goals

Often a long term approach

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15
Q

What’s a tactical objective

A

Short term needed to achieve the strategic objectives. Short term activities e.g. advertise within a chosen area for 6 months

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16
Q

Functional/ operational objectives

A

Functional areas of business will set them

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17
Q

Social objectives

A

Environmentally friendly objectives

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18
Q

What is a communicating objective

A

Communicating objectives clearly to all stakeholders through website email newsletter etc.

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19
Q

What is SMART

A 
Useful set of criteria for setting objectives 
SPECIFIC 
MEASURABLE
AGREED
REALISTIC
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20
Q

What’s a strategy?

A

Action plan that the business puts into place to reach its objectives

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21
Q

What’s an internal audit

A

Looks at strength and weaknesses of the business itself

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22
Q

What’s featured on an internal audit

A

People- motivation, productivity , labour turnover
Marketing- sales, advertising, sales staff performance
Financial- cash flow, profitability, budgets and variances
Operations management- productivity, delivery, stock control

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23
Q

What’s an external audit

A

Looks at opportunities and threats in bus. Env.

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24
Q

What’s featured on an external audit

A 
Political
Economic 
Social
Technological 
Competition 
Culture
Ethics
Pressure groups
Environment
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25
What are stakeholder objectives
Employees- want to feel valued so then they’re more productive, and less likely to leave Customers- don’t feel exploited, high quality services/ goods so repeated custom Suppliers- treat like “proper stakeholders” so there’s loyalty to the business Owners- return that is satisfactory so there’s a higher share price over time Local community- wants no social costs so try to do as little as possible so no bad publicity for bus.
26
Stakeholder conflicts
Can lead to trade offs between groups
27
What’s stakeholder influence
The amount of influence stakeholder has. Key stakeholders have most influence
28
What’s the legal situation about making objectives
Companies Act 2006- statuary status of directors duties and responsibilities. Including having regard for employees, suppliers and environment
29
What is the porters five forces model
A system for analysing the level of competition in a market. It can be used to decide whether it is worth going into a particular market
30
What is on the five forces model
``` Threat of new entrants Supplier power Buyer power Threat of substitutes Rivalry among existing competitors ```
31
What does threat of new entrants look at?
The degree of barriers to enter the market. E.g start up costs Do existing firms have loyal customers already
32
What is supplier power
Are there many potential suppliers Would changing supplier be costly or time consuming Would supplier choice matter to customers
33
What is buyer power
Are there many other substitutes for these buyers to go to | Are there many customers?
34
Threat of substitutes
Can people use alternatives to your product. If not then the threat is lower
35
Rivalry among existing competitors
Looks at the extent to which firms within an industry compete with each other.
36
What is the model of strategic choice
Shows how a company can achieve a competitive advantage in its industry
37
What does the model look like
Broad market narrow m. Costs. Cost leadership cost foc. Differ Differ leadership Differ focus Entiation
38
What does cos leadership focus on
Seeking lower costs across whole of business
39
What is cost focus
Lower cost advantage in just one or a small number of market segments
40
What is differentstion leadership
Across the whole of the industry
41
Differentiation focus
Differentiation across a small number of market segments for smaller niche market
42
What’s a business plan
Formal written document that explains in detail how a business is going to achieve its objectives
43
Why are business plans important
- sets direction - motivates - Financial backing impossible without it - helps attract better qualified staff
44
What is included in a business plan
``` Mission statement Business ownership The markey Products/services Finance Target market ```
45
Advantages of business plan
Sense of direction Encourages communication and cooperation between departments and stakeholders Highlights constraints Sets out roles of each department in order to achieve objectives
46
Disadvantages of a business plan
Plan easily disregarded- only useful if actually followed | Opportunity cost- many spend too much time planning
47
What is opportunity cost
The value of giving up the next best alternative when a decision is made
48
What’s a contingency plan
Planning for what will happen if things go wrong- trying to minimise risks
49
What is crisis management
Dealing with a potentially damaging event very quickly after it has happened - contingency plan can help to do so
50
What are some solutions to a crisis
Insurance | Establishing systems to try and spot crisis coming
51
What are some effective ways to respond to crisis
Management response- contact senior personnel , oversee the implementation of contingency plan Operational response- implement contignecy plan- minimise impact on stakeholders Communication response- contact key stakeholders, media briefing if business is large
52
What’s the plan for review process
Make a business plan, do the plan, review it - did all of the progress meet objectives
53
What are risks to accounting and finance sector
Sales levels being below expectation | Products exported being stolen or damaged= loss of revenue and profit
54
Risks for Human Resources
Key employees leaving/absent=less productivity
55
Risks for marketing
Shock to economy- unexpected recession and fall in sales | Emergence of powerful competitor
56
Risks of operations management
Supplier failing to deliver on time | Delivering wrong quantity or quality
57
What is uncertainty
The inability to calculate the benefits and costs of a decision precisely
58
What is external uncertainty
Economic Political Competitive
59
What is internal uncertainty
Organisational +human resource will employees affected by decision be able to implement it? Does culture of business support decision? Stakeholder- how could they react Technological- will the existing tech be able to cope with decision
60
What are the 2 types of risk
Pure risk- event beyond persons personal control | Speculative risk- carries the possibility of gain or loss
61
What are the other 2 types of risk
Quantifiable risk- a predicted risk occurring | Unquantifiable risk- unexpected and unknown
62
What are factors affecting decision making
``` Nature of risk Level of risk Accuracy of forecasts Timescale Volatility of internal / external factors ```
63
What is forecasting
Use of existing data to predict future trends
64
What is the purpose of forecasting
To help businesses plan for the future
65
What can forecasting be used for
Costs Market size Sales
66
Where are some areas to forecast
``` Sales/revenue Costs Profits Employee motivation Cash flows ```
67
What are some different methods of research / forecasting
Delphi technique- qualitative , asks experts their opinions Brainstorming- qualitative Intuition- qualitative Time series analysis-quantitative
68
What are strategic decisions
Long term decisions affecting whole bus. Made my senior management.
69
What are tactical decisions?
Middle management Affects particular part of bus. Medium term E.g decision to increase training in particular department
70
What are operational decisions?
Day to day | Managers of departments
71
What are some decision making tools?
``` SWOTanalysis- qualitative Financial accounts- quantitative Market research info- qualitative + quantitative PEST analysis- qualitative Porters five forces- qualitative Decision trees- quantitative Ansoffs matrix- qualitative ```

Business (4 decks)

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