Unit 7
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- Created by: Alex_stevens
- Created on: 10-06-17 11:20
Strategy
The medium to long term plan through which an organisation aims to attain its objectives
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Tactics
The means by which a strategy is carried out; a range of different tactics may be used as part of a single strategy
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Strategic decision making
Concerns the general direction and overall policy of an organisation. They have long term effects and therefore require detailed consideration and approval. They can be high risk.
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Functional decision making
Tends to be short to medium term and is concerned with a specific functional area rather than overall policy. Usually taken to support the implementation of strategic decisions.
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SWOT analysis
Allows an organisation to access its overall position, or the position of one of its divisions or activities. Internal strengths and weaknesses, external opportunities and threats.
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Balance sheet
A document describing the financial position of a company at a particular point in time by comparing its assets and liabilities and shareholders equity
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Income statement
An account showing the income and expenditure of a company over a period of time.
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Management accounting
The creation of financial information for use by internal users in a business, to predict, plan, review and control the financial performance of the business
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Non current assets/fixed
Can be used repeatedly in the production process, although can depreciate or lose value over time. eg land, buildings, machinery
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Current assets
Short term assets that circulate in business on a daily basis and can be expected to be turned into cash within a year
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Financial accounting
The provision of financial information for external users
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Liabilities
Debts owed by an organisation to suppliers, shareholders, investors or customers who have paid in advance
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Total equity or total shareholders equity (capital)
Funds provided by shareholders to set up the business, fund expansion and purchase fixed assets
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Gross profit
Shows how efficiently a business is converting its raw materials or stock into finished products- Revenue minus cost of sales
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Operating profit
The revenue earned from everyday trading activities minus the costs involved in carrying out those activities. Also gross profit-expenses
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Ratio analysis
A method of assessing a firms financial situation by comparing two sets of linked data
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Profitability ratios
These compare profits with the size of the firm.
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Return in capital employed
Measures the profitability of a business by calculating its operating profit as a percentage of the capital that a business has at its disposal
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ROCE calculation
(operating profit or profit before tax/ total equity+non current liabilities)x100
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Liquidity ratios
These show whether a firm is likely to be able to meet its short term liabilities. Vital a firm holds sufficient liquidity to avoid difficulties when paying debts
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Current ratio
Measures liquidity by expressing current assets as a ratio to current liabilities. The preferred ratio is between 1.5:1-2:1
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Solvency
A measure of a firms ability to pay its debts on time. A firm that can meet its financial commitments is described as solvent.
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Gearing
Long term liquidity. Whether a firm will be able to continue to meet interest payments on, and to repay, long term borrowing
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Gearing calculation
(non current liabilities/total equity+non current liabilities)x100- Between 25%-50% is considered normal
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Financial efficiency ratios
The firms management of its working capital. They are used to assess the firms efficiency in its management of its assets and short term liabilities
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Payable days
(payables/cost of sales)x365
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Receivable days
(receivables/revenue)x365
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Inventory turnover
Cost of goods sold/average inventories held
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Core competences
The unique ability or abilities of a business that enable it to achieve a competitive advantage
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Short termism
A tendency for businesses to prioritise current performance rather than the long term sustainability of the business
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Kaplan and Norton's balanced scorecard
A strategic planning and management system used to ensure that a business's activities are linked to its vision statement
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Kaplan and Norton's balanced scorecard- 4 different perspectives
Financial- how a business is regarded by its owners or shareholders, customer, internal business-*** efficiently a business manages operations, learning and growth
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Elkington's triple bottom line
Describes a means of assessing business performance that considers three different factors: financial returns, social responsibility, and environmental values
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Gross domestic product
A measure of economic activity; the total value of a country's output over a given period of time, usually provided as quarterly or annual figures
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Business cycle
Boom, recession, slump, recovery
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Exchange rates
The price of one country's currency in terms of other currencies
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Inflation
An increase in the general level of prices in an economy. It also means a fall in the purchasing power of money.
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Fiscal policy
The use of taxation and government expenditure to influence the economy
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Monetary policy
Controlling the money supply and the rate of interest in order to influence the level of spending and demand in the economy
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Protection
The extent to which a government uses controls to restrict the amount of imports entering the country
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Gloabaliation
The increased integration and interdependence of national economies;it involves increased international trade, increased inward investment and an increased role for global multinational companies
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Emerging economies
Investment would be expected to achieve higher returns but accompanied by greater risk e.g. China, Brazil, Russia and India
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Carroll's CSR pyramid
A pyramid illustrating four tiers, economic responsibilities, legal responsibilities, ethical responsibilities, philanthropic responsibilities
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Technological change
Adapting new applications of practical or mechanical sciences to industry and commerce.
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Porters five forces
A model developed to analyse the competitive environment in which a business operates; the five forces are: the threat of entry, buyer power, supplier power, competitive rivalry and substitute threat
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Entry threat
The threat to existing firms in an industry from new firms entering and setting up in competition
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Buyer power
The power buyers have over the supplier of a particular product; many buyers each buying a small proportion of the total sales of a business, means less buyer power than a few buyers who each buy a large proportion of total sales.
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Supplier power
The power suppliers have over the buyer of a particular product; many suppliers each supplying a small proportion of total supplies of a business means less supplier power than a few suppliers who each supply a large proportion of total supplies
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Rivalry
The intensity of competition between firms in the industry
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Substitute threat
The threat to a firms existing market share from substitute products that might be introduced
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Barriers to entry
Factors that obstruct or restrict the entry of new firms into an industry or market
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Investment decisions
The process of deciding whether or not to undertake capital investment or major business projects
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Investment appraisal
A scientific approach to investment decision making, which investigates the expected financial consequences of an investment, in order to assist the company in its choice
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Payback period
The length of time that it takes for an investment to pay for itself from the net returns provided by that particular investment-netreturn/52, culmative return/
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Average rate of return
((total net return/no. of years)/initial cost)x100
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Net present value
The net return on an investment when all revenues and costs have been converted to their current worth
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Investment criteria
The ways in which a business will judge whether an investment should be undertaken
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Risk and uncertainty
The probability of unforeseen circumstances that may harm the success of a business decision
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Ansoffs matrix
A strategic or marketing planning model that can be used to help a business decide its strategic direction in terms of its product portfolio and target markets
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Strategic positioning
The view people take of a business that results from the business's strategic decision making
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Product differentiation
The degree to which consumers see a particular brand as being different from others
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Competitive advantage
A benefit that a firm has in comparison to its rivals, allowing it to achieve greater sales and profits and retain more customers that its competitors
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Competitiveness
The ability of businesses to sell their products successfully in the market in which they are based
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Other cards in this set
Card 2
Front
The means by which a strategy is carried out; a range of different tactics may be used as part of a single strategy
Back
Tactics
Card 3
Front
Concerns the general direction and overall policy of an organisation. They have long term effects and therefore require detailed consideration and approval. They can be high risk.
Back
Card 4
Front
Tends to be short to medium term and is concerned with a specific functional area rather than overall policy. Usually taken to support the implementation of strategic decisions.
Back
Card 5
Front
Allows an organisation to access its overall position, or the position of one of its divisions or activities. Internal strengths and weaknesses, external opportunities and threats.
Back
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