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Flashcards by emmac.luke, updated more than 1 year ago
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Created by emmac.luke
almost 8 years ago
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| Question | Answer |
| Corporate Objectives | A well defined and realistic goal set by a company that often influences its internal strategic decisions. |
| Mission Statement | Formal summary of the aims and values of a company. |
| CSR | Business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders. |
| Corporate Culture | Beliefs and behaviours that determine how a company's employees and management interact. |
| How is Corporate Culture formed? | Develops organically over time from the cumulative traits of the people the company hires. |
| Portfolio Analysis | Portfolio analysis is a systematic way to analyse the products and services that make up an association's business portfolio. |
| Corporate Strategy | The overall scale and direction of a corporation and the way in operations will work together to achieve particular goals. |
| Porter's Strategic Mix | Considers how a business can attain competitive advantage - cost differentiation or focus. |
| PLC's in relation to corporate objectives | Profit-centric, key owners are shareholders. E.g. - Maximising shareholder value -Growth -Diversification |
| Sole-traders, Private Limited in relation to corporate objectives | Will vary depending on mission statement. |
| Conglomerate | Corporation made up of a number of different, seemingly unrelated businesses. One company owns a controlling stake in a number of smaller companies, which conduct business separately. |
| Corporate Aims | Vague statement of what a business wants to do without any specific or measurable progress plan through which it can be achieved. Corporate Objectives aid to realise Corporate Aims. |
| Content of Mission Statement | Purpose, Values Standards and Behaviour, strategy and inspiring to those who read or hear it - should be memorable. |
| Diseconomies of Scale | Occurs when the Average cost/cost per unit of a product/service begins to rise |
| Why may Diseconomies of Scale occur with expansion | Fixed Costs ^ Employees lose motivation as the brand moves away from its roots Slows Down Communication Managers Lose Control |
| Advantages of Stakeholder Approach | Quality applicants due to attractive employment policies. Consumer care, ^sales and customer loyalty. Supplier Co-operation=value for money. Helping communities = better reputation and PR. Reducing waste could reduce costs. |
| Disadvantages of Stakeholder Approach | Likely cause less return on capital employed (detracting investors) Pressure from Shareholders. Criticism for having stakeholder approach but still behaving unethically - e.g. Nike and Gap |
| Classification of Company Cultures | Power Culture Role Culture Task Culture Person Culture |
| Boston Matrix | Allows a business to consider the position of a product and what to do next (better corporate strategies) |
| Competitive Advantage | An advantage that a business has that enables it to perform better than its rivals |
| According to Porter's Strategic Matrix, what are the 5 forces that determine the profitability in an industry? | Suppliers, Buyers, New Entrants, Substitutes, Rivals |
| Definition of Backward Integration | When a firm buys a company who previously supplied raw materials to the firm. e.g. am ice-cream company that buys a dairy farm. |
| Definition of Forward Integration | business activities are expanded to include control of the direct distribution or supply of a company's products. e.g. retail clothing outlets owned by the manufacturer. |
| Strategic Decision | A decision that is made in a situation of uncertainty Medium - long term effect for the business |
| Tactical decisions | Decisions that affect the business on a day-to-day scale - often in response to an event. Mistakes in tactical decisions are unlikely to have a major impact on the business. (Short-Med Term) |
| 2 Examples of Strategic Decisions | Should we expand our business into China? Should we focus on strengthening delivery services to regain a competitive advantage? |
| 2 Examples of Tactical Decisions | Should We replace our old computing systems with new ones? Should we consider changing opening times so that they are earlier in the morning ? |
| Ansoff's Matrix | Helps people choose what strategy they should use in order to successfully develop their product - marketing strategies for growth in new products and new markets |
| Market Penetration | One of the four alternative growth strategies in Ansoff's Matrix. Market penetration strategy involves focusing on selling your existing products or services into your existing markets to gain a higher market share. |
| Market Development | Market development is a growth strategy that identifies and develops new market segments for current products. |
| Diversification | When a business tries to market new products in a completely different market |
| Investment Appraisal | The evaluation of an investment project to determine whether or not its likely to be worthwhile |
| Payback Period | Time taken for a firm to cover its costs. |
| Average Rate of Return | The profit an investment will give over the period of its lifetime |
| Average Rate of Return Formula (ARR) % | ARR%=(Net Profit per annum/ Current Liabilities (cost)) x100 |
| Annual Profit as a % of the initial investment | ARR= (Average Annual return/ Initial Investment) x100 |
| What are the four parts to a decision tree | Decision points Outcomes Expected Values Expected Value |
| Network analysis/Path | A model that helps to identify the critical path, which shows the activities that require the most careful management scrutiny |
| Float Time Calculation | Float Time = LFT - EST (LFT = Latest Finish Time) (EST -= Earliest Start Time) |
| Acid Test Ratio | Liquidity ratio that measures the ability of a company to pay its current liabilities when they come due with only quick assets. |
| Acid Test Ratio Formula | Total Current Assets - Inventory - Prepaid Expenses/ Current Liabilities |
| What would a business consider when receiving a contribution and special order | Capacity (sufficient machinery/labour?) |
| Contingency Planning | The creation of plans of how particular crisis might affect a business will be dealt with should it arise |
| Substitutes | Two goods that could be used for the same purpose. If price of one good increases, then demand for the substitute is likely to rise. Therefore, substitutes have a positive cross elasticity of demand. |
| Ratio Analysis | Most important technique of financial analysis in which quantities are converted into ratios for meaningful comparisons, with past ratios and ratios of other firms in the same or different industries. Ratio analysis determines trends and exposes strengths or weaknesses of a firm. |
| Cost of Sales | Costs directly related to production - e.g. wages for labour and overheads for rent, fuel etc. |
| Gross Profit Formula | Sales Revenue (turnover) - cost of sales |
| Gross Profit Margin Formula | (Gross Profit Margin / Sales Revenue (turnover)) x 100 |
| Net Profit | Total profits taking expenses, costs and sales into account before tax. |
| Net Profit Margin Formula | (Net Profit / Sales Revenue (turnover)) x 100 |
| ROCE Formula | (Net Profit/Capital Employed) x100 |
| Working Capital (net assets) Formula | current assets - current liabilities |
| Net Assets Formula | Fixed Assets + (current assets - current liabilities) |
| Capital Employed | The value of all the assets employed in a business and can be calculated by adding fixed assets to working capital or subtracting current liabilities from total assets. By employing capital, you make an investment. |
| ROC (RETURN ON CAPITAL) | Measures the profitability of a business - if a business invests into a project it will want to know how profitable it will be. ROC=(Net Profit/Capital Invested) x 100 |
| Current Ratio | Raio between business' current assets and current liabilities current ratio = current assets / current liabilities |
| Window Dressing | Legal Manipulation of company accounts by a business to present a financial picture which is to its benefit |
| Labour Productivity Formula | Labour Productivity = Total Output (per period of time) / average number of employees (per period of time) |
| Labour Turnover Formula | Number of staff leaving during period / Number of staff during period |
| Organic Growth | When the business expands by setying up new outlets, factories or offices |
| Inorganic Growth | Methods of growth that involve combining with or taking over other businesses which happens in the form of takeovers or mergers. |
| Mergers | When two businesses combine in order to form a bigger business with both businesses having mutual control. |
| Takeover | When businesses buy 51% of the shares in another business. |
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