WACE Business Management Enterprise ATAR flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

PESTLE analysis

A macro-environment scanning tool covering Political, Economic, Social, Technological, Legal and Environmental factors, used to classify external influences as opportunities or threats for a business.

Porter's Five Forces

An industry analysis model measuring competitive rivalry, threat of new entrants, threat of substitutes, supplier power and buyer power. Stronger combined forces imply lower industry profit potential.

Barriers to entry

Factors making it difficult for new competitors to enter an industry, such as economies of scale, capital requirements, brand loyalty, regulation and control of distribution channels.

Stakeholder power and interest

A classification of stakeholders by their ability to influence the business and their concern with its outcomes, used to prioritise which stakeholder claims management must address.

Unlimited liability

A legal position where the owner or partners are personally responsible for business debts, meaning personal assets can be seized to satisfy business obligations.

Separate legal entity

The principle that a company exists independently of its owners: it owns assets, contracts in its own name, pays tax and continues after shareholders change or die.

Matrix structure

An organisational structure where employees report to both a functional manager and a project or product manager, increasing coordination and focus but creating dual authority.

Span of control

The number of subordinates directly reporting to one manager. A wide span creates a flatter structure; a narrow span creates more management layers.

SMART objectives

Objectives that are Specific, Measurable, Achievable, Relevant and Time-bound, allowing progress to be tracked and performance evaluated objectively.

Break-even quantity

The output at which total revenue equals total costs, calculated as fixed costs divided by the contribution per unit (price minus variable cost per unit).

Margin of safety

The percentage by which expected or actual sales exceed break-even sales, indicating how far sales can fall before the business makes a loss.

Cash flow forecast

A projection of expected cash inflows and outflows over periods, used to identify liquidity shortfalls. Profitability does not guarantee sufficient cash to pay debts.

Incremental versus radical innovation

Incremental innovation improves existing products or processes in small steps; radical innovation introduces something new that can create or displace markets.

Product life cycle

The progression of a product through introduction, growth, maturity and decline, with sales, competition and promotion strategies changing at each stage.

Intrapreneurship

Entrepreneurial behaviour practised by employees within an existing organisation, supported by autonomy, reward systems and tolerance of calculated failure.

Diffusion of innovation

The spread of a new product through a market, from innovators and early adopters to the majority and laggards. Adoption speed rises with relative advantage and simplicity.

Marketing mix

The controllable elements used to reach a target market: Product, Price, Place and Promotion, extended for services by People, Process and Physical evidence.

Market segmentation

Dividing a broad market into groups sharing characteristics, using demographic, geographic, psychographic or behavioural variables, so marketing can target each group effectively.

Price elasticity of demand

The percentage change in quantity demanded divided by the percentage change in price. Absolute values above one indicate elastic demand; below one, inelastic demand.

Market share formula

Market share equals the business's sales divided by total market sales, multiplied by 100, expressed as a percentage of the whole market.

Lean production

An operations approach that minimises waste in materials, time and effort while maintaining output quality, often using just-in-time inventory and continuous improvement.

Capacity utilisation

Actual output divided by maximum possible output, multiplied by 100. Low utilisation signals idle resources; sustained high utilisation risks strain and quality problems.

Total quality management

A quality approach involving all employees in continuous improvement, aiming to build quality into every process rather than inspecting defects after production.

Gross profit margin

Gross profit (revenue minus cost of goods sold) divided by revenue, multiplied by 100, showing the percentage of sales retained before operating expenses.

Current ratio

Current assets divided by current liabilities, measuring short-term liquidity. A value near 2:1 is conventionally regarded as sound, though norms vary by industry.

Gearing ratio

Total liabilities divided by total assets, multiplied by 100. Higher gearing means greater financial risk because interest must be paid regardless of profit.

Economies of scale

Cost advantages arising as output increases, including purchasing, technical, financial, managerial and marketing economies, which lower average cost per unit.

Vertical integration

Growth by combining with businesses at different stages of the supply chain: backward integration toward suppliers, or forward integration toward distributors and customers.

Ansoff's matrix

A growth grid combining existing or new products with existing or new markets, producing market penetration, product development, market development and diversification.

Triple bottom line

A sustainability reporting framework measuring business performance across three dimensions: economic prosperity, social equity and environmental quality.

Variance analysis

Comparing budgeted figures with actual results. A favourable variance raises profit, such as revenue above budget or costs below budget; the reverse is unfavourable.

Opportunity cost

The value of the next-best alternative forgone when a decision is made. It is relevant to decision analysis even though it is not recorded as an accounting cost.