Business Unit 4 Revision Notes

summarised notes from Nelson Thornes AQA business textebooks. It covers all unit 4 topics

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Business unit 4 revision notes
Understanding mission, aims and objectives
Corporate aims are long term targets that will enable the business to fulfil its mission. It expresses
the ways in which the organisation intends to develop. Focus on the direction of the business, and
provide a framework within which objectives and strategies can be drawn up.
Mission statement is a declaration of the organisation's purpose, principle business aims, identity,
policies and values. It communicates corporate aims to all stakeholders, outlines why the company
exists, form a link between corporate aims and objectives. Identify with employees who can identify
aims and objectives.
Corporate objectives are quantifiable statements of a business goal, which should enable them to
achieve their long term aims. Typical ones are profit maximisation, growth, return to shareholders or
increased market share. It is determined by organisational culture, private or public sector or the age
of the business.
Corporate strategy: a plan based on the corporate aims and objectives which defines the overall
scope and direction of the business by identifying its choice of business, markets and activities.
Four mains type of strategies:
Operation strategies - increase efficiency, by economies of scale or the best mix of capital
and labour.
Corporate strategies - long term future by mergers and takeovers
Generic strategies - making the most of strengths in the business to achieve competitive
advantage
Global strategies - Growth into other countries.
Three ways of achieving strategic development:
Organic growth through internal development, slower growth i.e. Tesco.
External growth, takeover, mergers, quicker growth.
Synergy- collaborating with other companies.
Stakeholders groups:
Investors: Healthy balance sheet, Shareholders: Expect to maximise profits, Employees: Higher pay
awards, Managers: Expect promotional opportunities, financial rewards and status, Customers:
Value for money, low prices and high quality, Suppliers: Regular and increasing purchases, The
government: high tax revenues and legal compliance, Creditors: Healthy cash flow, Society: Job
creating, environment and ethical issues. All these create a conflict of interest.
Perspective of some groups:
The Government: Discourage the relocation to overseas, as will increase unemployment.
Invest in training and development, to improve skill level, increase productivity and reduce
absenteeism.

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Customers put pressure on business to improve environmental or ethical issues by
boycotting products.
Large organisations having influence on suppliers and/or customers.
Creditors and investors can stop potential products by supplying funds, need assurance of a
good financial return.
Society can put pressure on through the media, relates to environmental damage or
unethical trading.
The relationship between business and the economic environment
Micro economic factors - economic factors operating within the business market e.g. the prices for
alternate products, supply problems for the producing area.…read more

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Business strategies for recovery, upturn or growth:
Possible business strategies Evaluation
Use existing capacity and increase output to low risk as no additional capital is required
meet expected increase in demand
Expansion of capacity to cope with expected Substantial capital investments needed;
increase in demand uncertain on recovery; if other firms adopt the
same strategy, then sales wont increase
Develop new products that are in greater R&D takes time, could produce new product
demand as consumer prices rise (Income elastic after recovery
products)
Economic growth…read more

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Interest rates - The higher the rate of inflation, the higher the level of interest rates used to control
it, responsibility of Monetary Policy Committee of the Bank of England.
Cost of borrowing capital for businesses:
Cost of loans and overdraft increases and interest rates rise, add to costs and reduce net
profit.
High interest rate means consumers will have less money to spend (discretionary income).
When this fall demand will fall for income elastic products.
Interest rates are raised £ depreciates.…read more

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Product may not suit foreign tastes
Consider sales of overseas assets as these will May be needed in the future
now be worth more in £ terms Potential profit may be lost if £ falls further
Expand operations in UK, as foreign will be Small changes in exchange rates should not
expensive derail long-term expansion plan
Production in UK may still be more expensive
Trends in the £ exchange rate, has decreased whereas $ has varied.…read more

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Emerging Markets - Are nations with social or business activity in the process of rapid growth and
industrialisation. There are 28 emerging markets in the world, China and India being the largest.
Evaluation of strategy for expansion into emerging market economies:
Political uncertainty and instability - Investment projects may be in jeopardy due to political
unrest in surrounding nations.
Cyclical variations in the economy - countries that can't manage GDP growth have more
extreme phases of business cycle.…read more

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Balance of Payments: the account that records the UK's values of imports of goods and services and
the value of its exports - a deficit exists when import values exceed export values and surplus exists
when export values exceed import values.
Fiscal Policy - use by the government of changes in tax rates or government spending to manage the
economy.
Expansionary fiscal policy- increases in government spending greater than increasing taxes. Increase
total demand in the economy.…read more

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Monetary policy - use of interest rates by the bank of England to keep inflation at a target of 2%.
Impact on business of interest rate changes:-
Increase in interest rates can reduce chances of survival for new businesses.
Rising interest rates reduce customers' discretionary income and demand for less necessary
products will fall.
Higher costs of loans could make a profitable project, a loss if highly geared.
Changes in interest rates may affect exchange rate, changing import and export prices.…read more

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The BoE will lose its independence to the European Central Bank, which sets the Eurozone
interest rates. This means the interest rate set may not be ideal for the UK economy.
Impacts on the UK of further EU expansion:-
Huge new markets without any trade barriers.
Easier mergers and takeovers.
Low wage countries can be exploited. Easier and cheaper to outsource operations there.
Immigration can boost UK labour force.
Cheaper EU suppliers will help keep UK firms competitive. But drive UK suppliers out of
business.…read more

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Reduced UK strike record and improved relations helped minimise disruption and raised
productivity.
Prevent large scale destruction of countryside, which makes UK attractive to tourists and
businesses willing to invest.
Consumer confidence has encouraged consumers to spend.
All businesses accepting EU laws will create a fair business environment.…read more

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Henry Smout

this is amazing! thanks

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