a level business > theme 3 > Flashcards

theme 3 Flashcards

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1
Q

what is a corporate influence?

A

the factors which will have an impact on business decisions

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2
Q

what is a corporate timescale?

A

the expectation on when a business will achieve a return on investment

after costs have been repayed

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3
Q

what is short termism?

A

where a business is only interested in a quick financial return

may be critical in the long term

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4
Q

what is long termism?

A

where ethics and long term goals are considered in decision making

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5
Q

give 2 pros of evidence based decision making

A
  1. less liable to error
  2. options can be tested
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6
Q

what are 2 cons of evidence based decision making?

A
  1. analysis of data can be biased
  2. time consuming
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7
Q

give 2 pros of subjective based decision making

A
  1. senior skills may be a better source of data than history
  2. quicker
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8
Q

give 2 cons of subjective based decision making

A
  1. may not be up to date or relevant
  2. emotions can cloud decision making
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9
Q

what is a corporate culture?

A

the norms and values of a business

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10
Q

give 3 features of a strong culture

A
  1. good communication with employees
  2. core values orientated
  3. interviews for a cultural fit
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11
Q

give 3 features of a weak culture

A
  1. demotivated workforce
  2. inconsistent customer service
  3. poorly managed
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12
Q

what are the 4 handys company cultures?

A
  1. power
  2. person
  3. role
  4. task
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13
Q

give 3 features of power culture

A
  1. strong manager at heart of business
  2. main decision maker
  3. growth may cause delegation struggle
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14
Q

give 3 features of person culture

A
  1. considerable freedom
  2. skilled individuals
  3. client basis over work basis

supports the people within the business

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15
Q

give 3 features of role culture

A
  1. paperwork system
  2. formal culture with clear rules
  3. clear hierarchy
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16
Q

give 3 features of task culture

A
  1. a series of teams in a large organisation
  2. focus on 1 project
  3. power comes from good work
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17
Q

give 3 ways corporate culture is formed

A
  1. role of founders
  2. nature of business
  3. environment
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18
Q

what is a mission statement?

A

a formal summary of the aims and values of an organisation

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19
Q

give 2 pros of mission statements

A
  1. can be used to communicate a businesses nature to stakeholders
  2. can be used to focus strategy and energy of a business
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20
Q

give 2 cons of a mission statement

A
  1. can be biased
  2. PR tools are ineffective for corporate objectives
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21
Q

give 3 uses of a mission statement

A
  1. focuses employees
  2. increases motivation and productivity
  3. shows company incentives
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22
Q

what is a corporate strategy?

A

the overall scope and direction of a business and the way its operations work together

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23
Q

what are ethics ?

A

moral principles that govern the behaviour of a business

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24
Q

what are morals?

A

standards of behaviour, principles of right and wrong

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25
what is a trade-off?
when having more of one thing potentially results in having less of another
26
what are ethical decisions?
where businesses make decisions to appear they are doing something the right way to the media | may impact profitiability or consume capital
27
what is corporate social responsibility?
conducting business in an ethical way and balancing conflicts
28
give 3 advantages of corporate social responsibility
1. happy customers 2. happy staff 3. good PR
29
give 2 disadvantages of CSR
1. not neccessarily obtaining competitive advantage 2. customers don't neccesarily care making it a waste of money
30
what is ratio analysis?
a quantitative method of gaining insight into a company | operational efficiecny, profitability etc
31
what is the formula for a current ratio?
current assets/ current liabilities
32
what is the ideal ratio of the current ratio?
1.5-2
33
what is the formula for the acid test ratio?
(current assets-inventory) / current liabilities
34
what is the ideal ratio for the acid test ratio?
1-1.5
35
what is the gearing ratio?
a ratio that looks at long term finance and where it comes from | over 50% is risky as most capital is a loan
36
what is the ratio for gearing ratio?
(non current liabilities/ capital employed) x 100
37
what is capital employed?
the total funding invested into a business which is the businesses own
38
what does the ROCE ratio show? | return on capital employed
how hard invested money works, often showing ROI | compared to bank savings plans
39
what is the formula for the ROCE ratio?
(operating profit/capital employed) x 100 | 5% + is good
40
what is the formula for operating profit?
gross profit-operating expenses
41
give 2 limitations of the ROCE ratio
1. the ratios are only as good as the information provided 2. data can be outdated in a dynamic market
42
what are the 4 titles in Ansoffs matrix?
1. existing p or s 2. new p or s 3. existing market 4. new market
43
what are the 4 sub titles in ansoffs matrix?
1. market development 2. diversification 3. market penetration 4. product development
44
what is a statement of comprehensive income? | soci
a document which shows whether a business has made a profit or a loss that year
45
give 5 things the statement of comprehensive income shows
1. sales revenue 2. cost of sales 3. gross profit 4. expenses 5. operating profit
46
what are expenses?
costs to a business which have no correlation with production
47
what is the formula for operating profit?
GP- expenses
48
what does the statement of financial position show?
what the business owns and owes on a given day | aka balance sheet
49
give the 3 current assets
1. stock 2. debtors 3. cash | as long as they are within a year
50
give 2 examples of current liabilities
1. creditors 2. investor debt
51
what is the formula for capital employed?
total assets-current liabilities
52
what is labour productivity?
the output per worker in a time period
53
what is the formula for labour productivity?
total output / number of workers
54
what is labour turnover?
the number of employees which leave a business within a years period
55
what is the formula for labour turnover?
(number of employees that left / average number of employees ) x 100
56
what is absenteesim?
the habitual non-presence of an employee at their job | caused by job satisfaction, medical issues etc
57
what is the formula for absenteeism?
(number of days lost / possible number of days worked) x 100
58
What is quantitative sales forecasting?
using data to make predicitions about possible future sales | uses time series analysis ## Footnote limitations include SWOT
59
what is time series analysis?
using historical data to predict production and purchasing needs
60
what does the 3 period moving average show?
sales trends once the data is smoothed out | caluclate the average over the last 3 years and repeat one year up.
61
what does the 4 quarter moving average show?
a smoothed out quartely sales to schedule production
62
what is investment appraisal?
a system which compares projects to determine which one meets the business objectives
63
what are the 3 methods of investment appraisal?
1. Payback 2. ARR 3. NPV
64
how do you calculate payback?
the return of each year until roi , as well as the months required if needed
65
what is the formula for average rate of return?
(((total inflows-outflow) / number of years ) / cost of project) x 100) | over 5 % is good
66
how do you work out NPV?
1. times all inflows by the discount 2. add all present inflows 3. minus outflows from inflows
67
what is critical path analysis?
a planning method which allows a business to identify how to complete a project in the shortest period of time
68
what is float for CPA?
the amount of time an activity can be delayed without affecting the entire project's completion date | The critical path has 0 float, meaning it will take the least time
69
what are the 4 golden rules of CPA?
1. Calculate EST first left to right 2. Where 2 activites meet, EST is the highest number 3. LFT is calculated after EST right to left 4. Where 2 or more activites meet, LST is the lowest figure (minus highest number from est)
70
what is the formula for the CPA float?
LFT-EST-duration
71
give 3 uses of CPA
1. minimise project time 2. plan and organise resources 3. prioritise tasks
72
give 3 objectives of human resources
1. minimise absenteeism 2. minimise labour turnover 3. increase labour productivity
73
give 3 ways to reduce absenteeism
1. increase challenge in job roles 2. financial incentives 3. empowerment strategies
74
define trade payables
the amounts owed to suppliers which are not yet paid.
75
what is capital employed?
the amount of capital invested within a business
76
define trade receivables
the amount owed by customers which are not yet paid
77
give 3 ways to reduce a business' gearing
1. issue shares 2. retain profit 3. paid debts
78
give 2 ways a business can increase their ROCE
1. increase levels of profit without investing new capital 2. maintain profit levels while reducing capital within a business
79
what is labour retention?
the number of employees remaining within a business over a time period
80
what is consultation?
gathering the opinions of employees around decision making
81
what does porters 5 forces show?
a measurement of the attractiveness of an industry
82
give internal causes of change
1. poor performance 2. new ownership 3. change in leadership
83
give 3 external causes of change
1. changes in the market 2. political change 3. economic change
84
what is portfolio analysis?
evaluating a range of products to identify appropriate business strategys
85
what is strategic decision making?
medium to long term planning to achieve corporate goals and functional objectives
86
what is SWOT analysis?
an analytic tool of internal strengths + weaknesses and external opportunites + threats
87
give 2 examples for each factor of SWOT
strengths = skilled staff, effective leadership weaknesses = capital limitations, lack of a usp opportunities = developing markets, tech innovation threats = emerging competitors, negative economy
88
what does PESTLE examine?
the external factors which are likely to impact business activities
89
what does PESTLE stand for?
Political Economic Social Technological Legal Environmental
90
give 4 things which will change a market structure
1. entering and leaving of a firm 2. globalisation 3. internet growth 4. changes in regulation
91
give 3 reasons why a business wants to grow
1. economies of scale 2. increased market share 3. increased brand recognition
92
what are the 6 internal economies of scale?
1. risk bearing - diversified risk 2. financial - cheaper loans as a firm grows 3. managerial - afford specialist managers to raise output 4. technical - machine cost spread out more 5. marketing 6. purchasing power - bulk buy
93
what is external economies of scale?
an increase in the size of the industry a firm operates in
94
give 4 sources of external economies of scale
1. geographic cluster - suppliers move closer to reduce costs 2. transport links - transport developing around growing industries 3. skilled labour - an increase in skilled labour lowers its cost 4. favourable legislation
95
what is a merger?
2+ companies combine to make a new one
96
what is a takeover?
one company purchases another - often against its will (purchasing 50% of its shares)
97
give 4 reasons why firms integrate with eachother
1. strategic fit - expand into new markets, new tech, diversify product range 2. economies of scale 3. synergies 4. elimination of competiton
98
what is a synergie?
benefits from the combination of 2+ companies | e.g increased revenue
99
what is horizontal integration?
a merger or takeover of a firm at the same stage of the production process
100
give 3 pros for horizontal integration
1. a rapid increase in market share 2. economies of scale 3. reduce competiton
101
give 2 cons for horizontal integration
1. diseconomies of scale 2. regulators may block the merger
102
what is vertical integration?
a merger or takeover of a firm in a different stage of the supply chain
103
what is forward vertical integration?
merging with a firm closer to the end product
104
what is backwards vertical integration?
merging or taking over a firm closer to the supplier
105
what are 2 pros of vertical integration?
1. reduces cost of production as middleman costs are eliminated 2. controlled quality of raw materials
106
what are 2 cons of vertical integration?
1. diseconomies of scale as costs increase e.g duplication of managers 2. cultural clash
107
give 3 financial risks of inorganic growth
1. overpayment meaning investment takes a while to recoup 2. reducing productivity with a cultural clash 3. debt may be be brought on from the bought firm
108
give 3 financial rewards of mergers and takeovers
1. increased market share 2. synergys 3. access to new markets
109
give 5 problems of rapid growth
1. increased management complexities 2. quality control issues 3. customer service issues 4. cultural clash 5. strain on cash flow
110
what is organic growth?
growth driven by internal expansion using reinvested profits or loans
111
give 3 methods of internal expansion
1. product diversification 2. opening a new store or website 3. investment in new tech or machinery
112
give 3 advantages of organic growth
1. lower risk as it is more controlled 2. keeps the company culture 3. easy to finance
113
give 3 disadvantages of organic growth
1. slow growth 2. limited resources 3. over reliance on the existing market
114
give 3 reasons for a business to stay small
1. maintain a usp e.g handmade 2. lower costs through e-commerce 3. owners objectives
115
give 2 ways the ROCE can be improved
1. increase profits without new capital 2. maintain profits while reducing capital
116
give 2 features of a highly geared business
1. over 50% of capital employed is loans 2. faces difficulties in obtaining further loans
117
give 2 features of a low geared business
1. less than 50% of capital employed is loans 2. more likely to get approved loans
118
give 2 steps to reduce gearing
1. issue more shares 2. retain more profit
119
give 2 steps to increase gearing
1. obtain more loans 2. buy back ordinary shares
120
give 2 limitations of ratio analysis
1. inputs may be inaccurate 2. only 1 snapshot in time - not whole picture
121
what are the 4 main things HR monitors?
1. labour productivity 2. labour retention 3. labour turnover 4. absenteeism
122
give 3 ways to improve employee performace
1. financial rewards 2. empowerment 3. consultation
123
what is consultation?
the act of obtaining employee views
124
what is continuity planning?
a plan to continue operation after a serious incident
125
what is succession planning?
developing employees who have potential to move into key roles
126
define divestment
selling assets or discontinuing investment
127
give 2 pros and cons of the payback method
1. easy to calculate and understand 2. easy to identify where the outflows have been paid off but 1. provides no insight into investment profitability 2. other positive investments may be ignored if they take longer to pay back
128
give a pro and con of ARR
1. easy to calculate and understand 2. doesnt account for opportunity costs
129
give 2 pros and cons of NPV
1. accounts for the forecasted future values 2. considers the opportunity cost of money but 1. hard to accurately calculate future inflation 2. more complicated to calculate
130
give 2 limitations of using decision trees
1. doesn't account for external factors in estimates 2. requires skill and large periods of time
131
give 2 limitations of using CPA
1. often relies on estimates and forecasts 2. hard to calculate on complex projects
132
give 2 methods to measure labour productivity
1. count number of output per worker 2. count number of sales
133
what are the 2 methods to calculate capital employed?
1. total assets - current liabilities 2. equity + non current liabilities
134
what is equity?
funds belonging to shareholders (assets - liabilities)
a level business
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