Strategy & Planning (AQA A Level Business): Flashcards
Exam code: 7132
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Define strategy.
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Cards in this collection (55)
Define strategy.
Strategy is a long-term plan of action designed to achieve a business's overall aims and objectives, usually set several years ahead.
True or False?
Strategic decisions are easy to reverse once resources have been committed.
False.
Strategic decisions are usually made by senior managers or directors, affect the whole business and are difficult to change once resources have been committed.
Define planning.
Planning is the process of translating strategy into practical steps, deciding what resources, timescales and responsibilities are needed to deliver it.
How does a clear strategy provide direction and consistency?
A clear strategy means marketing, finance, HR and operations decisions all point towards the same long-term goals, rather than each area working independently and potentially in conflict.
A strategic plan ensures that ____ resources, such as finance, staff and management time, are directed towards long-term objectives.
A strategic plan ensures that scarce resources, such as finance, staff and management time, are directed towards long-term objectives.
How does planning help a business manage risk?
Planning ahead allows a business to identify likely threats and prepare a response in advance, rather than being forced into a rushed reaction.
Why do objectives set during planning help a business measure performance?
They give managers a clear standard to measure actual performance against.
Why can a clear strategy reassure stakeholders?
Investors, lenders and employees are more likely to commit their money or effort if they can see a clear and credible long-term strategy.
True or False?
Strong performance in one functional area can hide serious weaknesses in another.
True.
Strong results in one area can mask problems elsewhere, so using data from all four functional areas gives a rounded assessment.
What does finance data show a business that is setting a strategy?
Finance data show whether the business has the financial strength to fund its chosen strategy.
What is a key limitation of quantitative analysis?
Numbers alone do not explain why something is happening, and they can be presented selectively to support a particular argument.
In sound strategic decisions, quantitative data identifies what is happening, while _________ data helps explain why.
In sound strategic decisions, quantitative data identifies what is happening, while qualitative data helps explain why.
How do functional decisions use data differently from strategic decisions?
Functional decisions use the same type of data on a smaller, more reversible scale to keep performance aligned with the overall strategy.
What two comparisons can be made with marketing data to assess performance?
Marketing data can be analysed over time to see whether performance is improving, and compared with similar firms.
What does web and digital marketing analytics show a business?
It shows website traffic, click-through rates, bounce rates, conversion rates and email metrics.
What does competitor benchmarking reveal?
Competitor benchmarking reveals rivals' pricing, promotions, product ranges and market positioning.
True or False?
Marketing data on their own fully explain customer motivations.
False.
Marketing data lack context. They do not explain customer motivations, brand perception or wider market forces, so further research may be needed.
Marketing insights may be ______ by the time they are ready, especially in fast-moving markets.
Marketing insights may be outdated by the time they are ready, especially in fast-moving markets.
How can data quality issues limit the usefulness of marketing data?
Errors or gaps in data entry or sampling bias can give a false picture of performance.
Define gross profit margin.
Gross profit margin is the proportion of revenue remaining after direct costs of production have been deducted.
Gross profit margin = Gross profit ÷ Revenue × 100
Define acid test ratio.
The acid test ratio is a stricter test of short-term liquidity that excludes inventory in case it cannot be sold quickly.
Acid test ratio = (Current assets − Inventory) ÷ Current liabilities
The ___________ measures the ability of a business to pay its short-term debts using its short-term assets.
The current ratio measures the ability of a business to pay its short-term debts using its short-term assets.
Define gearing ratio.
The gearing ratio is the proportion of a business's capital that comes from long-term borrowing rather than shareholders' funds.
Gearing = Non-current liabilities ÷ (Total equity + Non-current liabilities) × 100
What does RoCE measure?
RoCE measures how efficiently a business generates profit from the total capital invested in it. It is calculated using this formula:
RoCE = Operating profit ÷ (Total equity + Non-current liabilities) × 100
True or False?
Finance data are historic, so a business's problems may be well underway before they show up.
True.
Financial statements reflect what has already happened, so they are backward-looking rather than an early warning of future problems.
How can finance data be manipulated?
Window dressing, such as delaying payments or changing accounting policies, can flatter the figures.
Why do external stakeholders rely on financial ratios?
Lenders, investors and suppliers use financial ratios to decide whether to offer credit or invest.
Define labour turnover.
Labour turnover is the proportion of staff leaving a business during a specific time period.
Labour turnover = Number of staff leaving ÷ Average number of staff employed × 100
What does labour cost per unit measure?
Labour cost per unit measures the average labour cost attributed to each unit of output. It is calculated using this formula:
Labour cost per unit = Total labour costs ÷ Total output
Average wage is calculated by dividing total labour costs by the total number of _______.
Average wage is calculated by dividing total labour costs by the total number of employees.
What does labour retention measure?
Labour retention measures the proportion of staff remaining with a business during a specific time period.
Define productivity.
Productivity measures how well a business uses its resources to produce output.
Why does higher productivity tend to lower unit costs?
Higher productivity means fixed costs are spread across more units of output, lowering the cost of each unit.
True or False?
A business must recruit more staff to raise profit when labour productivity rises.
False.
When each worker delivers more output, profit should rise without recruiting more staff. Rising labour productivity also suggests training, motivation or new technology is working.
What does high capital productivity show about a business?
It shows the business is getting strong returns from its investments, so it needs less new spending to grow.
Define defect rate.
The defect rate is the proportion of output that is judged to be substandard in a given time period.
Defect rate = Number of defective items ÷ Total output × 100
The returns rate is calculated by dividing the number of returned items by total ___ and multiplying by 100.
The returns rate is calculated by dividing the number of returned items by total sales and multiplying by 100.
How is the wastage rate calculated?
The wastage rate is calculated using this formula:
Wastage rate = Cost of wasted materials ÷ Total cost of sales × 100
Define capacity utilisation.
Capacity utilisation measures how effectively a business uses its assets to produce output by comparing current output with maximum possible output.
True or False?
Running at very high capacity utilisation can increase equipment breakdowns.
True.
Pushing equipment too hard can increase breakdowns and defects. The right rate balances output with reliable, high-quality production.
Why might low capacity utilisation not be a sign of poor operations?
Low capacity utilisation may be due to weak customer demand rather than poor operations, so using the data alone risks misplaced blame.
Define qualitative analysis.
Qualitative analysis is the examination of non-numerical information, such as opinions or feelings, to gain deeper insight into a situation or decision.
What can customer reviews reveal that an overall score cannot?
Customer reviews reveal the detailed reasons behind satisfaction or dissatisfaction, not just an overall score.
What can exit interviews reveal to a business?
Exit interviews reveal staff morale, give insight into workplace culture and highlight the real reasons people are leaving.
Define focus group.
A focus group is a small group of people brought together to discuss and give their reactions to a product, service or idea, generating qualitative insight for a business.
Social media commentary can reveal unprompted, _______ public opinion and early signs of emerging trends.
Social media commentary can reveal unprompted, authentic public opinion and early signs of emerging trends.
What can stakeholder consultations reveal?
They reveal the reaction of a specific group, such as a trade union or local community, to a proposed decision.
True or False?
Qualitative analysis should be used instead of quantitative data.
False.
Qualitative analysis is used alongside quantitative data. Numbers tend to show what has happened, while qualitative evidence helps explain why.
Why is relying on qualitative evidence alone risky for major decisions?
It is harder to prove to stakeholders such as banks or shareholders that the decision is justified.
What kind of change does qualitative feedback often trigger at a functional level?
It often triggers smaller, faster changes within a single department, such as HR adjusting a shift pattern after staff complaints.
Why can qualitative analysis give an early warning of problems?
Attitudes and complaints often change before they show up in sales, employee turnover or productivity figures.
True or False?
Qualitative analysis can be subjective.
True.
Interpretation of qualitative evidence can vary between managers, and personal bias can distort conclusions.
Focus groups and interviews may use small or ______________ samples that do not reflect the views of the wider customer or employee base.
Focus groups and interviews may use small or unrepresentative samples that do not reflect the views of the wider customer or employee base.
Why is qualitative information difficult to benchmark against competitors?
There is no standard scale, making it harder to compare against competitors or track precisely over time.
Why is qualitative analysis often time-consuming?
Themes in open-ended feedback must be carefully read and categorised, unlike a ratio that can be calculated instantly.
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