unit 7

Question 1

what is strategy?

Answer 1

a long-term plan to achieve a business’s overall objectives

Question 2

what is strategic direction?

Answer 2

the path a business takes to achieve its corporate objectives

Question 3

what are corporate objectives?

Answer 3

high-level goals that guide a business’s overall direction

Question 4

what is SWOT analysis?

Answer 4

a tool to assess Strengths, Weaknesses (internal), Opportunities, and Threats (external)

Question 5

give two examples of internal strengths

Answer 5

strong brand loyalty, skilled workforce

Question 6

give two examples of external threats

Answer 6

new competitors, changing regulations

Question 7

what is PESTLE analysis?

Answer 7

a tool analysing external macro-environmental factors: Political, Economic, Social, Technological, Legal, Environmental

Question 8

what does a political factor in PESTLE include?

Answer 8

government policy, taxation, regulation

Question 9

what are the key internal influences on a business’s strategy?

Answer 9

financial resources, HR capability, operations efficiency, corporate culture

Question 10

what are the key external influences on strategy?

Answer 10

market trends, competition, the economy, legal changes, and technology

Question 11

what are financial ratios used for?

Answer 11

to assess the financial health and performance of a business

Question 12

what is the formula for gross profit margin?

Answer 12

(gross profit / revenue) x 100

Question 13

what is the formula for operating profit margin?

Answer 13

(operating profit / revenue) x 100

Question 14

what is the formula for return on capital employed (ROCE)?

Answer 14

(operating profit / capital employed) x 100

Question 15

what does ROCE show?

Answer 15

how efficiently a business uses its capital to generate profit

Question 16

what is the formula for current ration?

Answer 16

current assets / current liabilities

Question 17

what does a current ratio under 1 indicate?

Answer 17

potential liquidity problems - liabilities exceed assets

Question 18

what is gearing?

Answer 18

the proportion of capital financed through debt

Question 19

what is the gearing ratio formula?

Answer 19

(non-current liabilities / capital employed) x 100

Question 20

what does high gearing mean?

Answer 20

business relies heavily on borrowed funds - higher financial risk

Question 21

what are non-financial performance metrics?

Answer 21

measures like customer satisfaction, employee engagement, and market share

Question 22

what is core competence?

Answer 22

a unique ability or advantage that gives a business a competitive edge

Question 23

who proposed the idea of core competencies?

Answer 23

Prahalad and hamel

Question 24

why are core competencies important?

Answer 24

they create long-term competitive advantage and add customer value

Question 25

what is Elkington's triple bottom line?

Answer 25

a framework evaluating performance on 3P's: Profit, People, Planet

Question 26

what does "profit" represent in the triple bottom line?

Answer 26

the traditional financial performance of a business

Question 27

what does "people" represent in the triple bottom line

Answer 27

the environmental impact of business activities

Question 28

what is short-termism

Answer 28

focusing on quick financial results rather than long-term strategy

Question 29

why is short-termism a problem?

Answer 29

it can harm long-term growth, innovation, and stakeholder trust

Question 30

what is corporate culture?

Answer 30

the values, belief, and behaviours that shape how employees interact and work

Question 31

what are the four types of corporate culture according to charles handy?

Answer 31

power, role, task and person culture

Question 32

what is power culture?

Answer 32

control is centralised with a few individuals making key decisions

Question 33

what is role culture?

Answer 33

structured roles and responsibilities; common in bureaucratic organisations

Question 34

what is task culture?

Answer 34

team-based, focused on completing specific projects

Question 35

what is person culture?

Answer 35

individuals are central; often found in professional firms (e.g. law, consultancy)

Question 36

why is organisational culture important?

Answer 36

it affects motivation, communication, innovation, and strategy implementation

Question 37

how can a business assess its strategic position?

Answer 37

using tools like SWOT, PESTLE, financial ratios and performance framework

Question 38

Explain what threat of new entries is:

Answer 38

How easy it is for new competitors to enter the market, dependent on the barriers to entry

Question 39

Explain what bargaining power of buyers is:

Answer 39

The degree of control a buyer has over its suppliers

Question 40

Explain what threat of substitutes is:

Answer 40

How many products are available that offer the same or similar benefits to the buyers of that product

Question 41

Explain what bargaining power of suppliers is:

Answer 41

The degree of control a supplier has over its buyers

Question 42

Explain what competitive rivalry is:

Answer 42

The level of competition within the market place

Question 43

Barriers of entry definition:

Answer 43

Factors that make it difficult for new competitors to easily enter an industry

Question 44

Oligopoly definition:

Answer 44

The type of market that is dominated by a few larger businesses

Question 45

Monopoly definition:

Answer 45

A market situation where one firm controls supply of a good or service

Question 46

Duopoly definition:

Answer 46

Where two firms control all or most of the market

Question 47

Price elasticity of demand definition:

Answer 47

The responsiveness in demand after a change in price

Question 48

What are the five forces of competitiveness founded by who?

Answer 48

Michael porter founded the five forces of competitiveness - threat of new entry - bargaining power of buyers - threat of substitution - bargaining power of suppliers - competitive rivalry

Question 49

Sales revenue formula:

Answer 49

Number of units sold X average price per unit

Question 50

What is an income statement?

Answer 50

Describes the income and expenditure of a business over a period of time, usually a year Shows the profit (or loss) made

Question 51

Examples of cost of sales?

Answer 51

- production line labour - components - warehousing costs

Question 52

Examples of operating costs?

Answer 52

- marketing - admin costs - rent - electricity - heating

Question 53

Operating profit definition?

Answer 53

Profit earned from everyday trading activities minus the costs involved in carrying those activities

Question 54

Effective capacity management definition?

Answer 54

aligns an organization’s resources—people, technology, and infrastructure—with demand to maximize output, reducing costs