Business Studies – Finance, Operations, Marketing & HR

200 fill-in-the-blank flashcards covering key concepts from Finance, Operations, Marketing and Human Resources as presented in the lecture notes.

financial

The strategic role of financial management is to ensure a business can operate, grow and achieve its goals through managing resources.

What is Profitability?

Profitability refers to the ability of a business to maximise its profits by increasing revenue and minimising costs.### Positive Aspects:- Ensures long-term viability and growth.- Attracts investors and provides funds for expansion.### Negative Aspects:- Over-emphasis can lead to unethical practices or compromise quality.- May encourage aggressive cost-cutting impacting morale.

Gross

The ratio Gross Profit ÷ Sales is known as the Profit Ratio.

What is Growth?

Growth describes a business’s ability to increase its size and value, often measured by market share or asset expansion.### Positive Aspects:- Leads to increased market power and economies of scale.- Attracts talent and investment for future development.### Negative Aspects:- Can overstretch resources if not managed sustainably.- May lead to diseconomies of scale or loss of focus on core business.

What is Efficiency?

Efficiency is the ability to maximise the use of assets in a cost-effective manner, often related to productivity and resource utilisation.### Positive Aspects:- Reduces waste and maximises output from given inputs.- Improves competitiveness and profitability.- Frees up resources for other uses.### Negative Aspects:- Can lead to excessive cost-cutting that compromises quality or employee conditions.- May result in less flexibility if processes become too rigid.

Liabilities

The Current Ratio is calculated as Current Assets divided by Current .

Solvency is assessed through the Gearing ratio (Debt ÷ Equity), indicating a business's capacity to meet its long-term financial obligations.### Positive Aspects:- A higher level of debt can amplify returns to shareholders (financial leverage) in good times.- Gearing can fund significant expansion without diluting ownership.### Negative Aspects:- High gearing increases financial risk, as substantial debt requires consistent interest payments.- Can lead to insolvency if the business cannot meet its debt obligations, especially during downturns.

What is Solvency and Gearing?

tactical

Short-term objectives relate to daily and plans of a business.

interdependent

Financial management is with Marketing, Operations and HR through budgets and resource allocation.

Retained profits are earnings kept within the business to reinvest, rather than distributed as dividends. They are an internal source of finance.### Positive Aspects:- No interest payments or loan repayments.- Does not dilute ownership or require external approval.- Readily available for immediate reinvestment.### Negative Aspects:- Reduces dividends for shareholders, potentially causing dissatisfaction.- Limited by the amount of profit generated by the business.

Retained Profits: Internal Source of Finance

Commercial bills are short-term loans ($$>$ $100,000) issued by financial institutions, typically with a maturity period of 30 to 180 days.### Positive Aspects:- Flexible and tailored to specific financial needs.- Can be a quick source of large funds for short-term liquidity.- Usually have competitive interest rates compared to overdrafts.### Negative Aspects:- High face value can be a risk for smaller businesses if not carefully managed.- Interest rates can fluctuate, adding to cost for variable rate bills.

What are Commercial Bills?

overdraft

An agreement allowing a business to overdraw its account is called an .

Receivable

Factoring involves the discounted sale of Accounts to a specialist firm.

property

A mortgage is a long-term loan secured against .

assets

Unsecured notes are promises to repay money that are not backed by specific .

debenture

A secured promise by a company to pay back money lent is called a .

Leasing allows asset use without purchasing ownership, where payments are made for the use of an asset.### Positive Aspects:- Improves cash flow by avoiding large upfront capital expenditure.- Payments are tax-deductible expenses.- Provides access to modern equipment without the burden of ownership.### Negative Aspects:- No ownership of the asset at the end of the term.- Total cost over the lease term can be higher than outright purchase.- Less flexibility for modifications to the asset.

What is Leasing?

An IPO (Initial Public Offering) is the first public sale of shares by a private company, making it publicly traded.### Positive Aspects:- Raises significant capital for expansion, debt reduction, or R&D.- Enhances company's public image and credibility.- Provides liquidity for existing shareholders to cash out.### Negative Aspects:- High costs associated with the IPO process (underwriting, legal fees).- Increased regulatory scrutiny and public disclosure requirements.- Loss of some control for original owners.

What is an Initial Public Offering (IPO)?

rights

An offer of new shares to existing shareholders in proportion to holdings is a issue.

placement

Offering shares to specific institutions or investors is called a .

Corporations

ASIC regulates markets and corporations under the Act 2001.

30

Company taxation in Australia is generally levied at %.

investment

Global economic outlook influences consumer confidence and business .

borrowing

Lower overseas interest rates can make global more attractive.

needs

Planning and implementing in finance starts with identifying financial .

quantitative

Budgets provide information about resource requirements.

accessible

Record systems must ensure data is accurate, reliable, efficient and .

obligations

Financial risk is the chance of being unable to cover financial .

controls

Separation of duties and internal audits are examples of financial .

balance

Cash flow statements link the income statement and the sheet.

non-recurring

Normalised earnings remove or unusual influences on profit.

asset

Capitalising expenses means adding capital expenditure to the balance sheet as an .

twelve

Timing issues arise because financial statements are usually prepared over a -month period.

mandatorily

Debt repayments are a limitation because length and recovery provisions are not disclosed.

faith

Ethical reporting requires directors to act in good .

cash

Distributing payments evenly through the year helps manage flow.

discounts

Paying suppliers early to gain incentives is called offering for early payment.

Liabilities

Working capital equals Current Assets minus Current .

low

A Just-in-Time approach keeps inventory levels intentionally .

leasing

Sale-and-leaseback boosts working capital by selling an asset and it.

variable

Fixed costs remain constant, whereas costs vary with output.

centres

Departments to which costs are directly attributable are called cost .

unnecessary

Expense minimisation aims to remove costs.

objectives

Revenue controls rely on clear marketing to maximise sales.

hedging

Exchange rate risk can be managed through natural or contractual .

option

A forward exchange contract locks in a future rate, whereas an option gives the right but not obligation to trade currency.

Global

The acronym SIGG summarises finance influences: Sources, Institutions, Government, markets.

Customisation

Operations’ strategic role includes Quality, Dependability, Cost, Speed, Flexibility and .

Cost leadership aims to outperform competitors by offering the lowest price, achieved through efficient operations and cost control.### Positive Aspects:- Attracts price-sensitive customers, leading to high sales volume and market share.- Can create a strong barrier to entry for new competitors.### Negative Aspects:- May necessitate compromise on quality or customer service to maintain low prices.- Can lead to price wars that erode profit margins for all competitors.

What is Cost Leadership?

expertise

Goods differentiation varies characteristics, whereas service differentiation may focus on provider .

obsolescence

Perishable goods require spoilage prevention, while non-perishable goods emphasise planned .

long-term

Technology as an influence on operations can increase speed and reduce costs.

Environmental sustainability means using resources without jeopardising future access, involving practices that minimise environmental impact.### Positive Aspects:- Enhances brand image and attracts environmentally conscious consumers/investors.- Can lead to cost savings through resource efficiency and waste reduction.- Complies with regulations and reduces legal risks.### Negative Aspects:- Can require significant upfront investment in green technologies.- May increase short-term operational costs.- Requires continuous monitoring and adaptation to evolving standards.

What is Environmental Sustainability?

Globalisation involves removing trade barriers between nations, leading to increased global interdependence and interconnectedness.### Positive Aspects:- Access to larger markets and broader customer bases.- Opportunities for global sourcing of inputs and strategic alliances.- Increased competition can drive innovation and efficiency.### Negative Aspects:- Exposure to global economic fluctuations and currency risks.- Increased competition from international businesses.- Potential exploitation of labor or environmental standards in some regions.

What is Globalisation and its Impact on Operations?

durability

Quality expectations for goods include design, fitness for purpose and .

break

Cost-based competition is derived from determining the -even point.

Corporate Social Responsibility (CSR) refers to a business’s commitment to operate in an ethical and sustainable manner, extending beyond mere legal compliance.### Positive Aspects:- Enhances brand reputation and customer loyalty.- Attracts ethical investors and skilled employees.- Can lead to innovation in sustainable products and processes.- May improve community relations and reduce regulatory scrutiny.### Negative Aspects:- Can incur additional costs for ethical sourcing, sustainable practices, or community programs.- May divert resources from core profit-generating activities.- Risk of 'greenwashing' if CSR efforts are not genuine or transparent.

What is Corporate Social Responsibility (CSR)?

customers

In operations, materials, information and are transformed resources.

transforming

Human resources and facilities are the two main resources.

Visibility

The four V’s of transformation include Volume, Variety, Variation in demand, and .

time

A Gantt chart visually schedules tasks over .

shortest

Critical Path Analysis identifies the time needed to complete a project.

efficiently

Task design groups jobs so employees can complete work more .

tasks

Product layout arranges equipment according to the sequence of .

actual

Monitoring compares planned performance against performance.

warranty

Customer service quality can be measured through feedback and claims.

customisation

Performance objectives in operations include cost, quality, speed, flexibility, dependability and .

innovation and technology

Developing new products can follow either consumer approach or approach.

outputs

Supply chain management integrates the flow of supplies through inputs, transformation and .

warehousing

Logistics decisions cover distribution channels, transportation modes and .

Global sourcing involves purchasing inputs from overseas suppliers.### Positive Aspects:- Access to lower cost raw materials or labor.- Access to specialised skills or resources not available domestically.- Increases supply chain flexibility and reduces reliance on single suppliers.### Negative Aspects:- Increased lead times and potential for supply chain disruptions.- Exposure to foreign exchange rate fluctuations and political risks.- Potential quality control issues due to distance and different standards.

What is Global Sourcing?

supplies

E-procurement uses automated online systems to order .

Outsourcing involves using external providers to perform business activities that were historically performed internally.### Positive Aspects:- Cost savings due to economies of scale and specialisation.- Access to expertise and technology not available internally.- Allows the business to focus on core competencies.### Negative Aspects:- Potential loss of control over quality and processes.- Risks to intellectual property and data security.- May lead to job losses within the business and impact morale.

What is Outsourcing?

sold

FIFO assumes the first goods purchased are the first goods .

inspections

Quality control uses at various points of production.

assurance

ISO certification is an example of quality .

Six Sigma is a methodology associated with quality improvement that aims to reduce defects and increase process standardisation through statistical methods.### Positive Aspects:- Dramatically reduces defects and improves product/service quality.- Leads to significant cost savings through waste reduction and increased efficiency.- Enhances customer satisfaction and loyalty.### Negative Aspects:- Requires substantial investment in training and implementation.- Can be rigid and complex to apply, requiring specialist expertise.- May be difficult to implement in creative or less structured environments.

What is Six Sigma?

Resistance to change can stem from financial factors (e.g., cost of new equipment, job insecurity) or organisational inertia (e.g., fear of the unknown, established routines).### Positive Aspects (of change management to overcome resistance):- Ensures smooth transition and adoption of new processes.- Preserves employee morale and productivity during change.- Identifies potential issues early and allows for mitigation.### Negative Aspects (of resistance itself):- Can delay or derail vital business transformations.- Leads to friction, reduced morale, and potential loss of valuable employees.- Prevents the business from adapting to market changes and achieving new efficiencies.

What is Resistance to Change?

Economies of scale occur when fixed costs are spread over increased output, leading to a decrease in average cost per unit.### Positive Aspects:- Lowers per-unit production costs, increasing profit margins.- Enhances competitive advantage through lower pricing potential.- Accommodates larger production runs, meeting higher demand.### Negative Aspects:- Can lead to diseconomies of scale if the business grows too large and becomes inefficient.- Increased coordination and communication challenges in larger operations.- May result in less flexibility and customisation due to mass production.

What are Economies of Scale?

best

Scanning and learning means adopting global practice.

improving

R&D involves work directed towards introducing or products and processes.

Cost-based

The acronym TEGGLQC lists operations influences: Technology, Environmental, Government, Globalisation, Legal, Quality expectations, competition.

profit

Marketing’s strategic role is to satisfy customer needs while achieving maximisation.

market

Marketing identifies a target to focus promotional efforts.

made

The production approach to marketing relied on the idea that customers would buy whatever was .

consume

Consumer markets consist of individuals who purchase and finished products.

niche

A market targets a very small segment with specific needs.

self-image

Psychological factors affecting customer choice include perception, motivation, attitudes, lifestyle and .

family roles

Sociocultural influences encompass social class, culture, reference groups, education and .

economic

Economic influences fluctuate with levels of activity.

Consumer

The Australian Consumer Law is part of the Competition and Act 2010.

misleading

Describing a product as better than it is constitutes deceptive and advertising.

markets

Price discrimination occurs when different prices are charged for the same product in different .

research

Sugging means selling under the guise of market .

threats

A SWOT analysis examines strengths, weaknesses, opportunities and .

decline

The product life cycle stages are introduction, growth, maturity and .

analyses

Market research collects, records and data about issues.

Time

SMART marketing objectives should be Specific, Measurable, Achievable, Relevant and based.

controlling

Implementation, monitoring and complete the marketing process.

psychographic

Market segmentation can be geographic, demographic, behavioural or .