paper 3 business

Strategic decision

A long-term, high-risk decision that affects the overall direction of the business.

Corporate objectives

Long-term targets set for the whole business to help achieve its mission.

Tactical decision

A short- to medium-term decision taken to implement strategy and usually made by middle managers.

Organic growth

Expansion of a business from within using its own resources, such as increased sales or new stores.

External growth

Expansion by joining with or taking over another business (e.g. merger or acquisition).

Economies of scale

Cost advantages a business gains as output increases, leading to lower average costs.

Diseconomies of scale

Rising average costs when a business grows too large, often due to inefficiencies.

Globalisation

The increasing interconnectedness of economies, businesses, and markets across the world.

Offshoring

Moving part of a business's operations to another country, usually to reduce costs.

Multinational corporation (MNC)

A business that operates and owns assets in more than one country.

Exchange rate

The value of one currency in terms of another, affecting export and import prices.

Payback period

The time it takes for an investment to generate enough cash flow to repay the initial outlay.

Net present value (NPV)

The total present value of future cash flows from an investment, minus the initial cost.

Average rate of return (ARR)

The average annual profit of an investment expressed as a percentage of the initial cost.

Lewin's Force Field Analysis

A model that analyses the driving and restraining forces for change in a business.

Disruptive innovation

A new product or service that significantly alters or replaces an existing market or technology.

Kaizen

A philosophy of continuous improvement that encourages all workers to suggest small changes regularly.

CSR (Corporate Social Responsibility)

The idea that businesses should act ethically and consider their wider impact on society and the environment.

Stakeholder

Any individual or group with an interest in the decisions and activities of a business (e.g. employees, shareholders, customers).

Gearing ratio

The proportion of a company's capital that comes from debt rather than equity.

Liquidity

A business's ability to meet short-term financial obligations.