Edexcel A Level Business - Theme 3
Corporate objectives - ANSWER-The objectives of a medium to large-sized business as
a whole
Departmental and functional objectives - ANSWER-The objectives of a department
within a business
Mission statement - ANSWER-A brief statement, written by the business, describing its
purpose and objectives, designed to encapsulate its present operations
Objective (or goal) - ANSWER-A target of or outcome for a business that allows it to
achieve its aims
SMART - ANSWER-Acronym for the attributes of a good objective: Specific,
Measurable, Agreed, Realistic and Time Specific
Corporate strategy - ANSWER-The plans and policies developed to meet a company's
objectives. It is concerned with what range of activities the business needs to undertake
in order to achieve its goals. It is also concerned with whether the size of the business
organisation makes it capable of achieving the objectives set.
Distinctive capability - ANSWER-A form of competitive advantage that is sustainable
because it cannot easily be replicated by a competitor
Diversification - ANSWER-Developing new products in new markets
Market development - ANSWER-The marketing of existing products in new markets
Penetration - ANSWER-Using tactics such as the marketing mix to increase the growth
of existing products in an existing market
Portfolio analysis - ANSWER-A method of categorising all the products and services of
a firm (its portfolio) to decide where each fits within the strategic plans
Product development - ANSWER-Marketing new or modified products in existing
markets
External audit - ANSWER-An audit of the external environment in which as business
finds itself, such as the market within which it operates or government restrictions on its
operations
Internal audit - ANSWER-An analysis of the business itself and how it operates
, SWOT analysis - ANSWER-An analysis of the internal strengths and weaknesses of the
business and the opportunities and threats presented by its external environment
Trade association - ANSWER-An organisation whose members are all involved in the
same industry or trade. The organisation pursues the interests of these businesses.
Monopoly - ANSWER-A market dominated by a single business
Oligopoly - ANSWER-A market dominated by a few large businesses
PESTLE analysis - ANSWER-Analysis of the external political, economic, social,
technological, legal and environmental factors affecting a business
Diseconomies of scale - ANSWER-Rising long-run average costs as a business
expands beyond its minimum efficient scale
Economies of scale - ANSWER-The reductions in average costs enjoyed by a business
as output increases
External economies of scale - ANSWER-The cost reductions available to all business
as the industry grows
Internal economies of scale - ANSWER-The cost reductions enjoyed by a single
business as it grows
Minimum efficient scale - ANSWER-The output that minimises long-run average costs
Backward vertical integration - ANSWER-Joining with a business in the previous stage
of production
Forward vertical integration - ANSWER-Joining with a business in the next stage of
production
Horizontal integration - ANSWER-The joining of businesses that are in exactly the same
line of business
Integration - ANSWER-The joining together of two businesses as a result of a merger or
takeover
Merger - ANSWER-Occurs when two (or more) businesses join together and operate as
one
Synergy - ANSWER-The combining of two or more activities or businesses creating a
better outcome than the sum of the individual parts
Takeover - ANSWER-The process of one business buying another
Corporate objectives - ANSWER-The objectives of a medium to large-sized business as
a whole
Departmental and functional objectives - ANSWER-The objectives of a department
within a business
Mission statement - ANSWER-A brief statement, written by the business, describing its
purpose and objectives, designed to encapsulate its present operations
Objective (or goal) - ANSWER-A target of or outcome for a business that allows it to
achieve its aims
SMART - ANSWER-Acronym for the attributes of a good objective: Specific,
Measurable, Agreed, Realistic and Time Specific
Corporate strategy - ANSWER-The plans and policies developed to meet a company's
objectives. It is concerned with what range of activities the business needs to undertake
in order to achieve its goals. It is also concerned with whether the size of the business
organisation makes it capable of achieving the objectives set.
Distinctive capability - ANSWER-A form of competitive advantage that is sustainable
because it cannot easily be replicated by a competitor
Diversification - ANSWER-Developing new products in new markets
Market development - ANSWER-The marketing of existing products in new markets
Penetration - ANSWER-Using tactics such as the marketing mix to increase the growth
of existing products in an existing market
Portfolio analysis - ANSWER-A method of categorising all the products and services of
a firm (its portfolio) to decide where each fits within the strategic plans
Product development - ANSWER-Marketing new or modified products in existing
markets
External audit - ANSWER-An audit of the external environment in which as business
finds itself, such as the market within which it operates or government restrictions on its
operations
Internal audit - ANSWER-An analysis of the business itself and how it operates
, SWOT analysis - ANSWER-An analysis of the internal strengths and weaknesses of the
business and the opportunities and threats presented by its external environment
Trade association - ANSWER-An organisation whose members are all involved in the
same industry or trade. The organisation pursues the interests of these businesses.
Monopoly - ANSWER-A market dominated by a single business
Oligopoly - ANSWER-A market dominated by a few large businesses
PESTLE analysis - ANSWER-Analysis of the external political, economic, social,
technological, legal and environmental factors affecting a business
Diseconomies of scale - ANSWER-Rising long-run average costs as a business
expands beyond its minimum efficient scale
Economies of scale - ANSWER-The reductions in average costs enjoyed by a business
as output increases
External economies of scale - ANSWER-The cost reductions available to all business
as the industry grows
Internal economies of scale - ANSWER-The cost reductions enjoyed by a single
business as it grows
Minimum efficient scale - ANSWER-The output that minimises long-run average costs
Backward vertical integration - ANSWER-Joining with a business in the previous stage
of production
Forward vertical integration - ANSWER-Joining with a business in the next stage of
production
Horizontal integration - ANSWER-The joining of businesses that are in exactly the same
line of business
Integration - ANSWER-The joining together of two businesses as a result of a merger or
takeover
Merger - ANSWER-Occurs when two (or more) businesses join together and operate as
one
Synergy - ANSWER-The combining of two or more activities or businesses creating a
better outcome than the sum of the individual parts
Takeover - ANSWER-The process of one business buying another
