1.2 Types of Organizations
What are two synonyms for a "business"
Organization, firm, enterprise
Tactical objectives
Name two internal and two external stakeholders.
Internal : employees, managers, shareholder
external: customers, suppliers, government, banks and other creditors
This external growth method involves a company selling the licensing rights to an individual to sell their goods and services under their brand.
Franchising
Countries often seek to attract ________, when a foreign corporation establishes operations, and thus invests, in your country.
Foreign direct investment (FDI)
What is a synonym for a "company"?
Corporation
What are the four common types of business objectives?
1) profit
2) growth
3) protecting shareholder value
4) ethical objectives
What is the difference between a stakeholder and shareholder?
Stakeholder = broad term that covers many groups, including shareholders.
Shareholders = those with equity in the business
A shortage of pilots for the airline industry is:
a) internal economy of scale
b) external economy of scale
c) internal diseconomy of scale
d) external diseconomy of scale
d) external diseconomy of scale
The likely financial result of an outcome obtained by multiplying the probability of an event occurring by the forecast economic return if it does occur.
Name a difference between social enterprises and traditional companies/
Social enterprises: driven by social causes; profits reinvested into social cause
Traditional business: driven by commercial purpose: growth and profits distributed to owners; may have CSR considerations
What is the difference between vision and mission statements?
Vision statement - what the org. wants to achieve in the long term
Mission statement - the business's core aims and phrased in a way to motivate employees and attract investors.
What is the stakeholder concept?
the view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders.
Name two internal economies of scale
Financial
Marketing
Managerial
Technological
Purchasing
Risk-bearing
Specialization
What do the letters stand for in STEEPLE analysis?
social
technological
economic
environmental
political
legal
ethical
Give 1 advantage and 1 disadvantage for becoming a privately held company.
Advantages:
- limited liability, separate legal personality, continuity, original owner is able to retain control, able to raise capital (shares to family, friends and employees), greater status then unincorporated businesses
Disadvantages:
- Legal formalities, capital can not be raised by the public, difficult to sell shares, accounts are less secret compared to sole trader or partnership
What is a triple bottom line?
People, Planet, Profit. The idea that a business should care for more than just profit
What are three interests of suppliers?
- Speed of payment
- level and regularity of orders
- fairness of treatment , e.g. not being exploited by a very large customer business
A business achieves internal economies of scale when it...
grows larger and lowers average costs, thus achieving cost-saving benefits.
Starting a customer loyalty program would qualify as what type of growth strategy on Ansoff's matrix?
Market penetration
What is the difference between a publicly held company and a public sector company?
Publicly held companies - private sector, can operate on stock market
Public sector - public sector, connected to government
What are two drawbacks of implementing CSR practices?
Compliance costs
Added bureaucracy can delay decision-making
Potential stakeholder conflict with investors
Give one advantage and one disadvantage of conciliation as a method of stakeholder conflict resolution.
Advantages: It is a flexible process, conciliators are legal experts on disputes, it is cheaper than a court case
Disadvantges: The process is not legally binding, might become too informal if parties don't take it seriously.
What are three external economic factors businesses should be concerned with?
level of economic activity
unemployment rates
exchange rates
interest rates
consumer confidence
tariffs
inflation rates
What is a force-field analysis?
An quantitative decision-making tool that visually maps the opposing forces against a change.