aqa alevel business unit 1

what is a mission statement

a formal summary of the aims and values of a company, organization, or individual.

what is a mission

An organisation's aims or long-term intentions, its ultimate purpose.

What are corporate objectives?

goals for the whole organisation rather than of different elements of the organisation.

what are the functional objectives

Functional objectives are the objectives of each department. They are specific to each department.

What is strategy?

the medium-to-long term plans through which an organisation intends to achieve its objectives

Why do businesses set objectives?

-co-ordinate employees

-motivate employees

-create reward systems

-measure and review performance

-Inform decisions to improve performance

what are the importances of profit

-its a source of finance

-reward for taking risk

-sign of financial stability

-its an indicator of success

how can profit help cash flow and growth

-profit can be retained to help fund expansion

-a sign of financial stability so suppliers will trust you and extend trade credit

-more access to investors and bank loans

how can profit motivate employees

businesses can introduce profit sharing which can motivate employees and increase productivity

John Lewis did this to motivate employees

What are SMART objectives?

S- Specific

M- Measurable

A- Agreed

R- Realistic

T- Time bound

Why are SMART objectives important?

-ensure staff are clear about what it is and give them a clear sense of direction

-being realistic can motivate employees and provide them with an appropriate level of challenge

-being agreed can mean most employees have a say in the objective rather than just being set by managers

what are common business objectives

Profit

Growth

Survival

Cash flow

Social

Ethical

what is cashflow

-The flows of money into and out of the business

what are fixed costs

Costs that do not vary with the quantity of output produced

what are variable costs

costs that vary with the quantity of output produced

what are the factors of production

land, labor, capital, entrepreneurship

used for the production of the goods and services

what is a private sector business

financed and run by private individuals

what is a public sector business

owned and operated by the government

What is an unincorporated business?

There is no distinction in law between the individual owner and the business itself

-sole trader, partnerships

-owners and business have same legal identity

what is an incorporated business

business and individual owners have separate legal identities

-plc, ltd

What is unlimited liability?

The owner is personally and fully responsible for all losses and debts of the business

-owners and business have same legal identity

What is limited liability?

If the company falls into debt you only pay back what you invested

-owners and business have sperate legal identity

-if a business dies the debt dies with it

what are the advantages of a sole trader

- Easy to setup

- You can be your own boss

- You get to keep all the profits

- you choose your holidays

-able to respond quick to change

-no need to publish accounts

what are the disadvantages of a sole trader

- Unlimited liability

- Lots of competition from bigger businesses

- limited access to finance

- you have to run all aspects of your company, need to be multi-skilled

-difficult to take holidays

what to think about if a buiness wishes to change ownership

-PROFIT, the effect to expansion and the amout of profit you will now take home

-LIABILITY, if owners assets are at risk

-MANAGEMENT, how much control will you now have

-SOURCE OF FINANCE, business can change to plc to gain finances for expansion

what is a private limited company, ltd

A business that is usually run by a family or small group of individuals who own it.

what are the benefits of a private limited company

-limited liability, can encourage investment

-additional sources of finance, sell shares

-control of who shareholders are, so less risk of conflict

what are the disadvantages of a private limited company

-shares are less attractive as they are not traded on the stock exchange

-share profit

-more admin work

-legal requirements to publish accounts

what is a public limited company

Owned by shareholders who are members of the general public

Shares are bought and sold on the stock exchange

what are the advantages of a plc

- limited liability

-easier to raise finances, greater scope for investment

-suppliers will be more willing to offer trade credit to a plc

what are the disadvantages for a plc

-must publish a great deal of financial information

-significant administrative cost

-founders can lose control

-a stock exchange listing and pressure from investors may mean more entheses on short term financial result rather than long-term preformance

what is market capitalisation

The total value of all of the ordinary shares issued by a company

what is the formular for market capitalisation

market capitalisation=total number of all ordinary shares x price of one share

what is ordinary share capital

Money raised by selling shares

what is divdend

a payment made by a company to its shareholders out of profits earned

why may shareholders invest

-provide financial support, be involved in day-to-day running of the business

-to gain controll of business

-to receive dividends

-to make capital gain, sell share at higher price than you brought

what can influence share price

-preformance of the company

-state of the economy

-competition in the market

-proposed takeover

-investors expectations and their response to rumours

What is a non for profit organisation?

a business that is set up to pursue objectives that benefit society

- a non for profit also have reduced tax

What is PESTLE analysis?

P- political

E- economic

S- social

T- technology

L- legal

E- environmental

sees what external factors that may impact a business

what can political in pestle include

-government, economic and social policies

what can economic include in pestle

-business cycle

-income levels

-interest and exchange rate

-levels of inflation and of unemployment

-eu

what can social include in pestle

-demographic factors

-ethical issues

-influence of stakeholders and pressure groups

-changing life styke

what can technological include in pestle

-new products and processes

-impact and cost of change

what can legal include in pestle

-legistation

what can environmental include in pestle

-environmental issues and fair trade

how can competition affect cost and demand

-level of competition will effect the amount of marketing that is done by the business

-level of competition will effect demand.

higher competition can mean price elastic

lower competition can mean price inelastic

how can market condition affect cost and demand

-if employment is high, higher supply of workers, so can give lower wages

-seasonality can effect demand

how can income affect cost and demand

-good economy, higher income, higher labour cost

-if income is higher, higher demand for luxury goods

how can intrest rate affect costs and demand?

-impact of debt

-low intrest, no need to save so spend money

-high intrest, save money, less demand

how can demographic factors affect cost and demand

-high immigration, high supply of workers, lower wages

-UK ethnic population can change demand for certain products

how can environmental issues and fair trade affect cost and demand

-fair trade, more ethical, higher farmers wages

-fair trade,more ethical, higher demand