Business Internal Operations, Finance, Production, and Corporate Responsibility

Flashcards testing knowledge of internal business operations including policies, procedures, financial decision-making tools, production processes, and corporate responsibility.

What is the definition of a policy in business?

Policies are defined as principles or guidelines that state the rules and expectations of how a business expects to conduct its operations.

What is the definition of a procedure in business?

Procedures are the ways or methods a business uses to follow its rules and expectations when conducting operations, specifying who does what, the required steps, and forms or documents to use.

What are the five steps required when creating business policies and procedures?

1) Decide on goals or principles to follow, 2) Draft up a fair and reasonable policy outline, 3) Consult with staff, 4) Finalise the policy, and 5) Publish the policy.

How can up-to-date and effectively communicated policies protect an employer legally?

They can be used by employers to defend against unfair dismissal applications.

What are five potential disadvantages of a business not having policies and procedures in place?

Mistakes can occur, lack of accountability, misunderstandings causing conflict, limited ability to measure performance, lack of clear processes for issues, and compromised quality.

What are the three main types of budgets used by businesses?

Income budgets (forecast revenue coming into the business), Expenditure budgets (predict total costs for the year), and Profit budgets (calculate expected profit or loss using income and expenditure totals).

What is a budget and over what time period is it typically prepared?

A budget is a financial plan for the future that forecasts earnings and spending, usually over a $12$-month period.

What is variance analysis in management accounting?

Variance analysis is a tool that managers use after a period is over to compare actual operational, cost, and sales figures against budgeted estimates to identify differences.

What is a cost report?

A weekly report compiled by a firm detailing costs to date, costs for the current week, and estimated future costs, which are then compared with expected costs to find variances.

What is Job Production and what are three examples of it?

Job production involves producing a one-off product for a specific customer. Examples include building a house, repairing a computer for a customer, making flower arrangements for a specific event, or designing an advertising campaign.

What is downtime in the context of batch production?

Downtime is the idle time when production is not occurring because equipment must be stopped and restarted again for a different batch.

What formula is used to calculate productivity?

Productivity is the rate of output per unit of input, calculated using the formula $\text{Productivity} = \frac{\text{Output}}{\text{Input}}$

What formula is used to calculate Average Cost in relation to economies of scale?

Average Cost is the cost per unit of output, calculated as $\text{Average Cost} = \frac{\text{Total Cost}}{\text{Output}}$

What are the six main internal economies of scale?

Purchasing, Marketing, Managerial, Financial, Technical, and Risk-Bearing economies of scale.

What is the difference between under capacity and over capacity in a production facility?

Under capacity occurs when fewer products are produced than the factory can handle (leaving machines and staff idle), whereas over capacity occurs when the facility cannot keep up with production demand, leading to strain, staff burnout, and equipment breakdowns.

How does Corporate Philanthropy differ from Corporate Social Responsibility (CSR)?

Corporate Philanthropy is the act of corporations donating profits, resources, or time to non-profit organizations, whereas CSR is a broader commitment to act ethically, go beyond legal minimum requirements, and balance impacts across society.

What three elements does Corporate Social Responsibility (CSR) aspire to honour, and in what order?

CSR aspires to honour people, planet, profits…in that order.

What are the four dimensions of corporate responsibility?

Economic (responsibility to earn profit), Legal (responsibility to comply with the law), Ethical (acting justly and fairly beyond profit), and Voluntary/Philanthropic (promoting human welfare and goodwill).