A-Level AQA Business Unit 7

Strategy

Long-term approach to reach objectives

Tactics

Methods to implement strategy

SWOT analysis

Examines internal strengths, weaknesses, external opportunities, threats

Balance Sheets

Snapshot of assets vs. liabilities on a specific day

Income Statement

Measures financial performance over a period

ROCE

Return on Capital Employed ratio calculation

Gearing

Measures proportion of finance provided by debt

Efficiency Ratios

Metrics like receivables, payables days, inventory turnover

Elkington's Triple Bottom Line

Profit, people, planet focus in business

Kaplan and Norton's balanced scorecard

Framework for financial and non-financial objectives

Core competences

Abilities of a business to gain a competitive advantage

Short termism

Prioritizing short-term successes in business

Long termism

Focus on long-term sustainability in business

Political and Legal Change

Areas of business legislation like labor, competition, environment

Economic Environment

Involves business cycle impacted by GDP and demand

Labour Market

Regulations like minimum wage and anti-discrimination laws

Environmental Legislation

Involves laws like the Climate Change Act 2005

GDP

Total value of an economy's output in a year

Demand

Quantity of goods/services customers want and are willing to pay for

Business Cycle

Shows economic ups and downs like slumps and booms

Inflation

Rise in percentage price of goods/services

Deflation

Fall in the price level of goods/services

Consumer Price Index

Measure of inflation targeting stability

Monetary Policy

Control of monetary supply by the central bank

Fiscal Policy

Government's use of taxes and spending to influence economy

Expansionary Fiscal Policy

Cuts in taxes to boost demand and economic activity

Free Trade

Agreements for tariff-free trade between countries

Protectionism

Imposing restrictions to protect local industries

Globalisation

Interconnectedness of markets worldwide

Consumer Lifestyle Changes

Shifts towards convenience and social conscience

Corporate Social Responsibility

Business ethics and social responsibility approach

Porter's 5 Forces Model

Analyzes competitive environment with 5 key forces

Investment Appraisal Methods

Techniques to assess investment viability

Payback Period

Time taken for an investment to be recouped

Average Rate of Return

Assesses project profitability compared to targets

Net Present Value

Current value of future cash flows for investment

Sensitivity Analysis

Testing assumptions for forecasting and risk management