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EDEXCEL GCSE Business > Theme 2 Collection > Flashcards

Theme 2 Collection Flashcards

1
Q

2.1.1 - What is internal (organic growth) and what are the examples of this?

A

Internal growth is when a business grows by expanding on its own without mergers or takeovers from other businesses.

  • New products
    • Innovation
    • Research
    • Development
  • New markets
    • Through changing the marketing mix
    • Taking advantage of technology
    • Expanding overseas
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2
Q

2.1.1 - What is external (inorganic growth) and what are the examples of this?

A

When a business combines with another to grow.

  • Takeover: When one business joins another
  • Merger: When two ore more businesses join together
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3
Q

2.1.1 - What are the advantages and disadvantages of a business going through organic (rather than inorganic) growth?

A

PROS:

  • A business that grows from within can retain their own company culture
  • Higher production means the business can benefit from economies of scale and lower average costs
  • More influence comes with more market share, the business can start setting prices for the industry

CONS:

  • This is a very high risk strategy, opening lots of stores or taking on new staff is very risky
  • Long period between investment and return on investment
  • Growth may be limited and is dependent on reliability of sales forecasts
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4
Q

2.1.1 - Describe how economies of scale work.

A

When your costs decrease due to larger levels of production:

  • More products being produced means more materials being ordered more regulalry
  • Bulk orders reduce price
  • Variable cost per unit reduced
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5
Q

2.1.1 - What are the advantages and disadvantages of a business mergers?

A

PROS:

  • Economies of scale. Better deals because of increased order size, bulk-buying discounts etc.
  • Increased revenue and market share.
  • Buying technology
  • International Expansion. Buying a business in another country helps with culture issues, foreign laws etc.

CONS:

  • Clash of cultures
  • Possible communication problems
  • Unreliable merger partners
  • Diseconomies of scale. As a business gets larger costs will go up with problems of motivation, communication and co-ordination
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6
Q

2.1.1 - What is an internal source of finance and what are examples of this?

A

Capital gained within a business.

  • Retained Profit
  • Selling Assets
  • Personal Savings
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7
Q

2.1.1 - What is an external source of finance and what are examples of this?

A

Capital gained outside a business.

  • Loan capital
  • Share capital
  • Stock market floatation
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8
Q

2.1.1 - What are the pros and cons of loan capital?

A

PROS:

  • Improve cash flow
  • Financial advice

CONS:

  • Time for approval
  • Interest
  • Expensive
  • Collateral
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9
Q

2.1.1 - What are the pros and cons of share capital?

A

PROS:

  • Large amounts of capital
  • No interest
  • Does not need to be repaid

CONS:

  • Loss of control
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10
Q

2.1.1 - What is a public limited company?

A

When a private limited company (a business owned by its shareholders) makes shares available to the public to purchase. This process is stock market floatation

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11
Q

2.1.1 - What are the pros and cons of stock market floatation?

A

PROS:

  • Large amounts of capital
  • No interest
  • Does not need to be repaid

CONS:

  • Loss of control (As all the shareholders vote on desicions)
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12
Q

2.1.2 - What might business aims and objectives change in response to?

A
  • Market conditions
  • Technology
  • Legislation
  • Growth
  • Consumer taste
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13
Q

2.1.2 - As a business evolves, how would its focus on survival or growth alter?

A

It would be less focused on survival as it starts to pass the break even point. Once it starts to make a profit, growth will be the preferred choice.

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14
Q

2.1.2 - As a business evolves, how would its focus on entering or exiting markets alter?

A

It will change the markets it is in. For example it may:

  • Enter new markets so that the business is growing by venturing in new areas
  • Exit markets if they see that they aren’t making enough sales in that area
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15
Q

2.1.2 - As a business evolves, would it be growing or reducing the workforce?

A

It may decide to:

  • Grow the workforce so that the business can have a higher production rate
  • Reduce the workforce if it has become more reliant on technology that they’ve aquired through growth
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16
Q

2.1.2 - As a business evolves, would it be increasing or decreasing its product range?

A

Just like with entering and exiting markets, a business may:

  • Increase its product range so that the business is growing by venturing in new areas
  • Decrease their product range if they see that they aren’t making enough sales in an area
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17
Q

2.1.2 - How would market conditions effect business objectives?

A

There may be lots of new competitors entering the market, this will mean the business has to change their aims.

E.g. there may be increased unemployment in a country which is affecting the demand for the business’s goods or services

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18
Q

2.1.2 - How would growth effect business objectives?

A

A business may change its aims and objectives in response to its own performance.

For example if it has done well in the year and made lots of profit it may decide to grow and expand and take on more staff.

However if a business has had a bad year it may decide to reduce the number of staff and focus on core business instead.

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19
Q

2.1.2 - How would legislation effect business objectives?

A

For example now in the UK there is a Minimum wage law a business may have to change its aims, as growth may be slower because they have to pay the new higher wages.

They may also decide to use workers abroad as their minimum wage may be lower/non-existent and so their costs will be less.

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20
Q

2.1.3 - What is Globalisation?

A

The ever-increasing integration of the world’s local, regional and national economies into a single international market.

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21
Q

2.1.3 - What are the advantages and disadvantages of globalisation?

A

PROS:

  • Impact on productivity and competition
  • Specialisation
  • Impact on growth rates, inflation, balance of payments and unemployment
  • Economies of scale
  • Impact on inflation

CONS:

  • Impact on unemployment
  • Impact on balance of payments
  • Dominance of US corporate culture ‘McDonaldisation‘
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22
Q

2.1.3 - What are imports and exports?

A
  • An import is the purchase of a good or service from a foreign business that leads to a flow of money out of the UK.
  • The UK buyer will have to change pounds into the seller’s currency to make the transaction.
  • An export is the sale of a good or service to a foreign buyer that leads to a flow of money into the UK.
  • The foreign buyer will have to change their currency into pounds to complete the purchase.
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23
Q

2.1.3 - What is a multinational company?

A

Companies that own or control production or service facilities outside the country in which they are based.

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24
Q

2.1.3 - What are tarrifs?

A
  • A tariff is a tax placed on an import to increase its price and decrease its demand (goods that cost too much don’t sell well).
  • Tariffs can be imposed by governments to raise revenue and to restrict imports.
  • Tariffs help to persuade consumers will switch and buy UK made goods.
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25
Q

2.1.3 - Why are tarrifs important for the UK’s economy in terms of exports and imports?

A

Tarrifs encourage less imports meaning there will be relatively more exports.

As exports are incoming money and exports are outgoing money, a decrease in imports means the UK will make more money

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26
Q

2.1.3 - What are the advantages and disadvantages of tarrifs?

A

PROS:

  • UK produced goods do not have to pay the tariff and so are likely to be cheaper allowing UK businesses to gain a price advantage compared to imports
  • It can protect new businesses from being swamped by international competition from MNEs
  • It can raise important tax revenue for government which can be spent possibly on infrastructure (bridges and roads)

​CONS:

  • High import price won’t put many customers off
  • Tariff may just increase prices for consumers
  • Other countries may impose their tariffs in response to this on their imports, (e.g. when the UK exports to China they make our goods more expensive)
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27
Q

2.1.3 - What are Trade Blocs and some common examples?

A

A trade bloc is a group of countries who make a trade agreement not to place tariffs on imports from each other.

  • EU
  • NAFTA
  • ASEAN
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28
Q

2.1.3 - How may businesses compete internationally through the internet, e-commerce, and changing their marketing mix?

A
  • Place: selling online through e-commerce and having international shipping for products means businesses can reach more places internationally. Alternatively they may do this by becoming a multinational company (expensive)
  • Promotion: Social media is a better way to promote through the internet as it has an international range at a low cost. Promotion techniques (e.g. targeted advertising) may aslo be used with this
  • Price: lowering their prices so that despite any tarrifs that are placed on them they still have competetive pricing
  • Product: Making their product more adaptable to foreign countries
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29
Q

2.1.3 - What are the advantages and disadvantages of trade blocs?

A

PROS:

  • A larger target market
  • Cheaper imports from EU countries
  • Economies of scale
  • Easier to recruit labour

CONS:

  • More competition for UK businesses
  • Imports may be more expensive from non-EU members.
  • Tariffs on UK exports from non-EU members
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30
Q

2.1.4 - What are ethics in terms of business?

A

The understanding of morals and right and wrong.

In a business context to be ethical is to pay workers a fair wage, to not pollute and to conduct business in way which does not harm or exploit people or the planet.

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31
Q

2.1.4 - What is a trade-off?

A
  • A trade-off is a compromise between one thing and another
  • There has to be a trade-off or compromise between making a profit and being ethical so everyone is happy
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32
Q

2.1.4 - What is a pressure group and what actions do they take?

A

Pressure groups are organisations set up to try to influence what consumers think about the business and its environment.

  • The write letters to MPS
  • They write to the press
  • They organise marches
  • They run campaigns
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33
Q

2.1.4 Why is it important for a business to be ethical?

A

So that they produce an ethical brand image. An unethical brand image can lead to bad publicity which may cause people to boycott their business leading to a deacrease in revenue

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34
Q

2.1.4 - How may businesses create sustainable products?

A

By manufacturing products in ways that don’t harm the environment.

E.g. using renewable energy sources and not wasting raw materials

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35
Q

2.2.1 - What is the design mix?

A

The three aspects that make up the design of a product:

  • Aesthetic (How does the product look, feel or taste?)
  • Function (What problem the product solves?)
  • Price (Can it be manufactured and sold or prices that make a profit?)
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36
Q

2.2.1 - What is the first stage of the product life cycle?

A

Introduction:

  • Will involve high costs in research and development
  • The product may have been test marketed before launching, so profits may be negative.
  • Sales will be low as customers may to yet be aware of the products
  • Little-to-no cash flow
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37
Q

2.2.1 - What is the second stage of the product life cycle?

A

Growth:

  • Enjoying rapid growth in sales and profits
  • The customers are aware of the product and demand is high
  • High cash flow
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38
Q

2.2.1 - What is the third stage of the product life cycle?

A

Maturity:

  • Face intense competition now all the producers have joined the market.
  • Sales are high but profits are starting to fall.
  • Products have to be discounted to keep sales high
  • Highest cash flow
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39
Q

2.2.1 - What is the fourth and final stage of the product life cycle?

A

Decline:

  • May be limited in production.
  • Profits and sales have fallen.
  • The product may be withdrawn from sale.
  • Low cash flow
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40
Q

2.2.1 - What are examples of extensions strategies and why may they be used?

A

Extension strategies extend the life of a product (usually through the maturity phase) to increase shelf-time and opportunity for sales.

  • Advertising
  • New packaging
  • Explore new markets
  • Price reduction
  • Add new value
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41
Q

2.2.1 - What are examples of differentiation and why is it important?

A

Differentiation creates a unique brand image and promotes customer loyalty as a product stands out from its competitors This can be achieved through:

  • Branding
  • USP
  • Location
  • Design
  • Customer Service
  • Quality
  • Product mix
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42
Q

2.2.2 - What is skimming pricing?

A
  • A product is priced high to begin with as it has a desirability factor (novelty) that will mean customers will want it when it is new.
  • The price can be lowered later on, but is high to start with to skim the profit while the product is trending.
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43
Q

2.2.2 - What is penetration pricing?

A
  • Setting an initial low price for a new product so that it is attractive to customers.
  • The price is likely to be raised later as the product gains market share.
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44
Q

2.2.2 - What is cost plus pricing?

A
  • Cost-plus pricing is worked out by calculating the total cost to produce the product or service and then profit is added on top
  • Most often used in the food industry where it is easy to calculate the exact cost of ingredients
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45
Q

2.2.2 - How does the way that technology affects the costs of a business, effect their pricing?

A

While the inital cost of machinery is high, technological advancements means that production processes have become more efficient giving a business economies of scale.

As the average costs of production fall then this can be passed on to the consumer as lower prices.

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46
Q

2.2.2 - What is the difference between niche and mass market?

A

Niche:

Unique differentiated products are more likely to be sold for higher or premium prices.

Mass:

Similar products which are sold to the mass market will have low prices to encourage sales.

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47
Q

2.2.2 - How may pricing change throughout the product life cycle?

A
  • Introduction: Low prices to encourage customers to try the product.
  • Growth: Small discounts to encourage purchase.
  • Maturity: Prices will be at their highest as the business harvests profit.
  • Decline: Heavy discounts to get last sales before withdrawal.
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48
Q

2.2.3 - What is advertising used for?

A
  • Promote the brand
  • Raise awareness of a product
  • Remind customers how great the product is
  • Persuade customers to switch

[Some A class advertising below]

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49
Q

2.2.3 - What is sponsorship and how is it used in promotion?

A
  • When a business sponsors something, they are establishing an association with another organisation or event.
  • That connection must make sense to the customers and enhance the reputation of the business.
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50
Q

2.2.3 - What are product trials and what strategies might be used alongside it?

A

When consumers buy a good for the first time and assess whether or not they want to buy it again.

  • Public Relations
  • Viral Marketing
  • Free Samples
  • User Testing
  • Penetration Pricing
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51
Q

2.2.3 - What is targeted advertising?

A

A customer is shopping online for video games, they then click on a news site and see an advert for video games.

This is targeted advertising. Businesses can choose the audience for adverts on Facebook.

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52
Q

2.2.3 - What are methods of viral marketing?

A
  • Advertising
  • Social media
  • Internet
  • Word of mouth
  • Interactive games
  • Video clips
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53
Q

2.2.3 - What are e-newsletters?

A

Advertising by sending out an e-newsletter to acustomer (means via e-mail). This campaign has then gone viral. The business needs to ask their e-mail customers to share the newsletter.

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54
Q

2.2.4 - What are retailers?

A
  • A retailer sells goods direct to a consumer. The owner of the retail shop may have bought the goods from a wholesaler or manufacturer to sell on to the consumer
  • The retailer will mark-up the price of the goods, so they will be more than they paid for them.
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55
Q

2.2.4 - What are e-tailers and ‘clicks and mortar’ stores?

A
  • E-tailers are online e-commerce stores (e.g Amazon)
  • Clicks and mortar stores have both online and physicla presence (e.g. Argos, Sainsburys)
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56
Q

2.2.4 - What are the advantages and disadvantages of retailers?

A

PROS:

  • Going shopping is an enjoyable experience that customers can do with their friends or family
  • Trying on clothes helps when buying
  • Customers can have the product as soon as they have bought it (instant satisfaction)
  • Retailers win when a customer needs to see, touch, try or test a product first

CONS:

  • Retailers are only open during the day and customers may be too busy with work or family
  • Customers may have to wait in a queue or carry heavy bags of shopping
  • Customers may find it embarrassing to buy some personal items
  • May charge higher prices than the e-tailers
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57
Q

2.2.4 - What are the advantages and disadvantages of e-tailers?

A

PROS:

  • Can be started with a smaller investment as no premises and less staff needed
  • Can sell a much larger range than a physical shop
  • Can undercut competitors prices by being cheaper (no shops, less staff)
  • Lots of potential to grow rapidly and reach an global marketplace
  • Lower fixed costs as no shops to pay rent on

CONS:

  • Hard to establish trust with the customer as no face-to-face interaction
  • Website costs can be high
  • Security and fraud for online transactions are an issue
  • Only as strong as your distribution / delivery if this is late then it may damage your reputation
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58
Q

2.2.5 - How is price affected by the rest of the marketing mix?

A
  • Products that are rarer or higher in demand will drive up price
  • Places that have increased distance to travel cost more to transport the product increasing price
  • Promotion may be used heavily to ensure that its acceptable to charge high prices
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59
Q

2.2.5 - How is product affected by the rest of the marketing mix?

A
  • Customers may demand lower prices so the quality of products may be reduced to match this
  • Customers demand products to be accesible from new places e.g. digital download
  • Products may have to be adapted to fit new promotion techniques
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60
Q

2.2.5 - How is place affected by the rest of the marketing mix?

A
  • Products that need to be tried and tested before purchase need to be sold in retail stores
  • Products with higher prices will be sold in high-end areas to match its target market
  • More influential promotion will increase the range of where products can be sold
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61
Q

2.2.5 - How is promotion affected by the rest of the marketing mix?

A
  • Older products may need more promotion to, for example, extend its life and clear all stock.
  • Places such as discounter shops will expect products to constantly have promotional sales -
  • Higher priced products that target a niche market will benefit more from PR reviews in magazines (niche promoting)
62
Q

2.3.1 - What are the three different types of production?

A
  • Job
  • Batch
  • Flow
63
Q

2.3.1 - Describe what job production is giving pros and cons.

A

Producing a one-off item for a one-off customer.

PROS:

  • Bespoke, to customers measurements or specifications e.g. a kitchen
  • Very motivated workers as they see the product from start to finish
  • This usually increases productivity and reduces rates of absenteeism
  • Higher prices can be charged to the customers

CONS:

  • Skilled labour and craftsmen are expensive
  • Wide range of tools may be required
64
Q

2.3.1 - Describe what batch production is giving pros and cons.

A

Producing a set number of identical items (e.g 500 pairs of size 11 boots for British armed forces)

PROS:

  • Flexibility as production can be changed to meet customer needs or fluctuations in demand
  • Standard production of items means it can be mechanised
  • Less labour involved than job production
  • Employees specialise so become good at their job

CONS:

  • Workers may be less motivated with repetitive work
  • Idle time between batches needs to be managed as this is wastage because work stops while the machines are changed to make the next product
  • If one batch takes too long the other batches will all be held up too
65
Q

2.3.1 - Describe what flow production is giving pros and cons.

A

Production of a single item, such as cans of Heinz Baked Beans.

PROS:

  • Economies of scale
  • Automated/computerised production means improved quality and more complex designs in shorter times
  • As production is continuous stocks of parts and raw materials don’t need to be held businesses can use JIT

CONS:

  • High costs to buy the factory and machinery
  • Low motivation of staff due to repetitive tasks
  • Break downs and lost production can be costly
  • Very inflexible, hard to change the factory machinery to make different products, the production process will be set up to make just one item e.g. bottled cola
66
Q

2.3.1 - Define productivity (with formula).

A

Productivity is output per worker. It measures how much each worker produces over a period of time:

Productivity = Total output ÷ number of workers

67
Q

2.3.1 - How does technology affect costs?

A
  • Initial costs of buying new machinery or robots will be expensive
  • Soon these costs will be made back with the improvement in quality and reduction of wastage
  • Robots don’t need to be paid so the savings on wages will soon build up
68
Q

2.3.1 - How does technology affect quality?

A
  • Design used to be on paper now with CAD (computer aided design) designs can be completed on the computer and seen in 3D
  • Machinery and robots ensure there is no human error in production
69
Q

2.3.1 - How does technology affect flexibility?

A
  • Using CAM (computer aided manufacture) allows you to use computers to monitor and adjust tools in manufacturing
  • Also a business producing products can be more flexible and produce a wide variety of products
70
Q

2.3.1 - How does technology affect productivity?

A
  • Robots and machines can work 24/7
  • They do not need breaks, lunch hours, time off or holidays
  • This will increase the productivity of a business producing products
  • Productivity is output per hour
71
Q

2.3.2 - What is stock?

A

Materials that a business holds.

72
Q

2.3.2 - Describe the features of a bar-stock graph

A
  • The highest each peak reaches is the maximum stock after a delivery arrives.
  • The horizontal line in the middle is the point at which the business will contact suppliers in order to get more stock before they run out
  • The dashed line at the bottom shows the buffer stock
73
Q

2.3.2 - What is buffer stock and why is it needed?

A
  • Buffer stock is the amount of stock permanently kept in storage at a level.
  • It is needed in order to ensure that if supplies don’t arrive in time, the business will still be able to function and they have back-up stock to depend on
74
Q

2.3.2 - What is JIT strategy?

A
  • Just-in-time means that a business does not keep stocks of parts in a warehouse.
  • Instead they order the parts and get them delivered same day from the supplier.
75
Q

2.3.2 - Why is it essential that business using JIT have a good relationship with their suppliers?

A
  • JIT does not work when there are delivery or quality issues.
  • No buffer stocks are held in a JIT system so if delivery does not arrive the product cannot be made
76
Q

2.3.2 - What are the pros and cons of JIT?

A

PROS:

  • As parts are ordered as they are needed there is no wastage
  • Massive cost saving in terms of premises and staff (no warehouses)
  • Stock is less likely to go out of date
  • The business will improve their cash flow, as their money is not tied up in stock

CONS:

  • The business can’t meet unpredictable surges in demand
  • The business can’t quickly replace damaged parts
  • If the delivery does not turn up in time this can stop the whole production line, which is costly
77
Q

2.3.2 - What four things are necessary to consider when choosing a supplier?

A
  • Quality: Supplies of good quality can create better products
  • Delivery: Can reduces risk of running out of stock
  • Availability: Means stock can be replenished easily
  • Trust: More reliable and likely to be on time

These decisions can also be made based on:

Customer satisfaction, Reputation, Costs

78
Q

2.3.3 - What is quality?

A

Achieving a minimum standard for a product or service, or a production process, which meets customers’ needs.

79
Q

2.3.3 - What is quality control?

A

Taking a small sample of finished products and testing if they meet the standards required

80
Q

2.3.3 - What is quality assurance?

A

Ensuring that quality is produced and delivered at every stage of the production process, often through making quality the responsibility of every worker.

81
Q

2.3.3 - Why may a business prefer quality control/assurance over each other?

A
  • Quality control is less expensive as you don’t have to check every single process
  • Quality assurance makes sure irreversible mistakes are minimized (Once a mistake has been made, quality control can’t fix it)
82
Q

2.3.3 - In short, what is the difference between Quality control/assurance?

A

Quality control is about checking products at the end and assurance is about throughout

83
Q

2.3.3 - Why does a higher quality give a business a competitive advantage?

A
  • Differentiated products
  • Meeting customer needs
  • Building a strong brand
  • Premium prices can be charged
84
Q

2.3.4 - What is the sales process?

A
  • Product knowledge
  • Speed and efficiency of service
  • Customer engagement
  • Responses to customer feedback
  • Post-sales service
85
Q

2.3.4 - What is the importance of product knowledge in the sales process?

A
  • Understanding the products’ features allows the sales person to present their benefits accurately and persuasively.
  • Customers respond to enthusiastic sales staff who are passionate about their products and eager to share the benefits with them
86
Q

2.3.4 - What is customer engagement?

A
  • Customer engagement (CE) is an effect, a reaction, a connection, a response and/or an experience of customers with one another, with a company or a brand.
  • This can be either consumer- or company-led and can be on or offline.
87
Q

2.3.4 - What is the importance of responding to customer feedback in the sales process?

A

All customer feedback is important to a business – positive or negative as it will help them to provide a better product or service in the future

88
Q

2.3.4 - What is post-sales service?

A

Various processes which make sure customers are satisfied with the products and services of the business.(e.g. Repair, Maintenance, Warranty)

89
Q

2.4.1 - What is Gross profit?

A

A measure of the profit a business makes exclusing fixed costs

90
Q

2.4.1 - What is the formula for a gross profit margin (GPM)

A

(GPM) is a measure of how well the business is doing by seeing how much of their sales revenue is profit. The higher, the better.

91
Q

2.4.1 - What is Net Profit?

A

Regular profit. Revenue - total sales

92
Q

2.4.1 - What is the formula for a net profit margin (NPM)

A

(NPM) is a measure of how well the business is doing by seeing how much of their sales revenue is profit. The higher, the better.

93
Q

2.4.1 - What is Average rate of return (ARR)?

A

When a business wants to analyse the profitablility of a potential project they will use ARR to see how quickly the investment costs will eb paid off and how much profit is made per year

94
Q

2.4.1 - How do you calculate ARR?

A

(Average annual profit ÷ Initial capital outlay) x 100

Firstly, to find the average annual profit, add up all profits given and divide by the number of profits given. [You may be given yearly revenue instead of profit, in which case you would need to take away the initial capital outlay]

Initial capital outlay is the money spent on the investment and is usually given in the question

ARR is a percentage

95
Q

2.4.2 - What is quantitative data?

A
  • Quantitative data is data about numbers
  • Quantitative data is displayed in charts, graphs, as statistics and percentages
96
Q

2.4.2 - What is market data?

A
  • Market data refers to the electronic streaming of prices, volumes and related information used for the trading of shares on the stock markets around the world
  • PLCs will be interested to see how their share price is doing, and if their competitors shares are going up or down
97
Q

2.4.2 - What is financial data?

A
  • A business which is a ltd or plc must produce an annual financial report each year.
  • The financial data is important to anyone who is considering investing money in the business
  • Financial data can be compared year-on-year to see how the business is doing
98
Q

2.4.2 - What are the uses of financial data when understanding business performance?

A
  • A Ltd or plc will have to prepare two types of financial statement at the end of the financial year.
  • Balance sheet – this is a snapshot in time of what the business owes and what it owns
  • Income statement – this shows if the business has made a profit or a loss during the year
99
Q

2.4.2 - What are the uses of financial information when making business desicions?

A
  • Banks - The bank would use the financial information of a business to see if they will lend more money in the future
  • Government - HMRC would look at the financial information to see if the correct amount of tax has been paid
100
Q

2.4.2 - What are the limitations of financial data?

A
  • May only show a snapshot of a short period of time
  • Can quickly become out of date
  • May have been inaccurately gathered
  • Can be interpreted in different ways
101
Q

2.5.1 - What is an organisational chart?

A

A diagram which shows the internal structure of an organisation.

102
Q

2.5.1 - What is a span of control?

A

The number of people who report directly to another worker in an organisation.

103
Q

2.5.1 - What is a chain of command?

A

The path down which orders are passed.

In a company, this goes from the board of directors down to other workers in the organisation.

104
Q

2.5.1 - Why is it beneficial to have a structure in a business?

A
  • All businesses have to organise what they do
  • A clear structure makes it easier to see which part of the business does what, and who has which job role
  • Makes communication easier across the company
  • Employees should find it easier to be aware of their roles and responsibilities
105
Q

2.5.1 - What is delegation?

A
  • Delegation is where a task is given to a subordinate (lower) employee in the hierarchy
  • Good managers are good at delegating tasks to the right employees
  • A task that has been delegated may have a deadline so managers can see if the task has been completed on time
106
Q

2.5.1 - What is a hierarchical structure?

A
  • Tall and thin structure
  • Small span of control and long chain of command
  • Lots of layers with few people on each layer
107
Q

2.5.1 - What are the benefits and limitations of a hierarchical structure?

A

PROS:

  • Lots of layers in the hierarchy means lots of opportunities for promotion (motivation)
  • Supervisors normally have a small span of control so they can get to know their subordinates really well
  • Knowing subordinates means they can delegate the right tasks and make sure their team is well trained

​CONS:

  • Lots of layers and a long chain of command can mean that the business is very inflexible
  • It can also mean that communications within the organisation are slow
  • This is expensive as there are more managers and supervisors
108
Q

2.5.1 - What is a flat structure?

A
  • Short and fat
  • Wide span of control and and short chain of command
  • Few layers with lots of people on each
109
Q

2.5.1 - What are the benefits and limitations of a flat structure?

A

PROS:

  • ​Fewer layers of hierarchy between the bottom and the top of the organisation may mean that communication is fast
  • Lots of delegation means that staff are given greater responsibility, which might mean more opportunities to use their abilities

CONS:

  • Staff can be overstretched or overworked in a flat structure as there is less supervision, this can cause stress and demotivation
  • Can create a power struggle if the manager is rarely around as subordinates jostle for roles and responsibilities
  • Wide span of control means managers have too many staff to manage and may lose touch with them and delegate poorly
110
Q

2.5.1 - Through what means can people in a business communicate?

A
  • E-mail
  • Telephone
  • Fax
  • Text
  • Messenger
  • Twitter
  • Written document

(Many more but just use common sense)

111
Q

2.5.1 - What are the pros and of a centralised structure?

A

A centralised structure is when all of the decision making is controlled by a few people (or even one person)

PROS:

  • Quicker decision making
  • Easier to co-ordinate
  • Economies of scale
  • Easier to implement policies

CONS:

  • Customer service experiences inflexibility
  • Lack of manager motivation
112
Q

2.5.1 - What are the pros and of a decentralised structure?

A

A decentralised structure is one where decision making is spread throughout most if not all employees

PROS:

  • Flexible decisions with situational understanding
  • Improves customer service
  • Good way of training juniors
  • Should improve motivation

CONS:

  • Decisions aren’t ‘strategic’ (long-term beneficial or rational)
  • Consistency is hard to achieve
  • No strong leadership in crisis
  • Hard to have tight financial control
113
Q

2.5.1 - Why is communication important for a business?

A
  • Motivates employees
  • Easier to control and coordinate business activity
  • Makes successful decision making easier
114
Q

2.5.1 - What are the problems with insufficient communication?

A
  • If communication skills are poor, employees lack enthusiasm in doing their work
  • Poor business communication skills will also demotivate the employees
  • They are provided with unclear instructions on projects, leading to confusion and boredom
115
Q

2.5.1 - What are the problems with excessive communication?

A
  • Can lead to workers not getting to important information
  • Can be confusing and stressful leading to demotivating workers
  • May put off potential employees and reduce retainment
116
Q

2.5.1 - What are some barriers to effective communication?

A
  • Overload: Too much information reduces chance of important information getting through
  • Structural layers: Too many structural layers can mean that messages get altered as they travel up/down
  • Inconsistency: Conflicting messages can lead to confusion of what decision to make
117
Q

2.5.1 - What are the three ways you could work (in terms of time)

A
  • Full time: Working the whole working week
  • Part time: Working a fraction of the working week
  • Flexi-hours: Spreading out a certain amount of time at work as you please
118
Q

2.5.1 - What are the three types of ways to work (in terms of contracts)?

A
  • Permanent: With a contract to work for the foreseeable future
  • Temporary: With no permanent contract
  • Freelance: Workers who tend to be self employed and do particular pieces of work for a business as a supplier.
119
Q

2.5.1 - How has technology affected ways of working?

A

It has allowed for better efficiency in working and communicationIt also allows people to work form home

120
Q

2.5.1 - What are the pros and cons of remote work (work from home)?

A

PROS:

  • Fit a business round a family, gives a good work-life balance
  • The owner can work hours that suit their lifestyle
  • No commute, so reduction in costs of travelling
  • No expensive premises to pay for, so a reduction in fixed costs
  • Less stress from travelling and tension with colleagues

CONS:

  • No socialisation with other workers, so business owner may not have anyone to bounce ideas off
  • Work is all around the business person so they may find it hard to switch off
  • The business owner may find that they work more hours than a regular job as they don’t keep track of the time that they work
  • Needs lots of self discipline to avoid distractions
  • Too easy to be lazy and not work
121
Q

2.5.2 - What are the directors of a business?

A
  • A board of Directors in a business makes strategic decisions
  • Directors have a responsibility to run a business so that it is successful for all its stakeholders, not just shareholders
  • Sometimes they must take difficult decisions, when times are hard, to withhold a dividend or to pay a low one, because using a small profit for this may cause long-term problems for the business
122
Q

2.5.2 - What are the senior managers of a business?

A
  • Senior managers are at the top level of the business
  • They deal with tactical day to day decisions for the business
  • These are often appointed by the board of directors to help the business meet its objectives
123
Q

2.5.2 - What are the supervisors/team leaders of a business?

A
  • Person in the first-line management who monitors and regulates employees in their performance of assigned or delegated tasks
  • Supervisors are usually authorised to do the disciplining, rewarding and other associated activities regarding the employees in their departments
  • Supervisor will be in charge of all the employees on shift
124
Q

2.5.2 - What are the operational staff of a business?

A
  • These are the staff that take care of the day to day tasks of running the business
  • These staff are not involved in the strategy or management of the business
125
Q

2.5.2 - What are the support staff of a business?

A
  • Support staff are there to carry out a specific role which helps the business to run or the organisation to function
  • In a school support staff may be: teaching and classroom assistants; learning support assistants; learning mentors etc.
126
Q

2.5.2 - What documents are involved in recruitment?

A
  • Person specification
  • Job specification
  • Job description
  • Application form
  • CV
127
Q

2.5.2 - What is a person specification?

A

This is a wish list of qualities that the business would like the new member of staff to have

This outlines the:

  • Personal qualities
  • Qualifications
  • Work
  • Experience
  • Skills
128
Q

2.5.2 - What is job description?

A
  • As part of the recruitment process the business will also write a job description.
  • This describes the duties and responsibilities of the role.
  • It also describes what the new employee would do on a day-to-day basis
129
Q

2.5.2 - What is an application form?

A
  • When the business has written the person specification and the job description they will advertise the job.
  • Those applicants who wish to apply may be asked to fill in an application form
  • This may be the application form of the company or a SAF (Standard application form).
130
Q

2.5.2 - What is a CV?

A

(Curriculum Vitae)

  • A business may also ask applicants to send in their CVs so they can be attached to their application forms.
  • A CV is a summary of the applicants working life to date.
  • Some businesses now ask for video CVs
131
Q

2.5.2 - What are the benefits of internal recruitment?

A
  • Internal candidates favoured as their track record and skills are already known
  • Internal candidates are already loyal to the business and can be more productive quickly as they don’t have to be inducted
  • Internal candidates will already fit with company culture, no expense of a new person not fitting in, leaving and having to be replaced – therefore less risky and cost effective to recruit
  • Less expensive – no cost of advertising
132
Q

2.5.2 - Why may some businesses use external recruitment?

A
  • Internal candidates may not have skills set required for a new position – as these might not be able to be trained in.
  • Vacancy may have to be advertised externally if there is no-one suitable already working in the business
133
Q

2.5.2 - What is the difference between internal and external recruitment?

A

Internal recruitment is taking someone who is already wronging in the business to a new position while external recruitment is hiring a completely new employee

134
Q

2.5.3 - What is formal training?

A
  • Trainer sets the objectives
  • Usually away from the job but can be on the premises
  • Outside experts brought in
  • Expensive, cost of the trainer
  • Strict learning schedule
  • May offer a certificate at the end
135
Q

2.5.3 - What is informal training?

A
  • Learner sets the objectives
  • Training takes place on the job
  • Quick training by other members of staff
  • Cheap, no cost except some loss of productivity while training is taking place
136
Q

2.5.3 - What is self learning and why is it beneficial?

A
  • Self-learning means studying without a teacher, classroom or formal setting.
  • In a business context this means staff may carry out an online course to improve their skills (e.g. on computer)
  • This can be beneficial as it is cheap and won’t cost too much productivity
137
Q

2.5.3 - What is ongoing training and why is it beneficial?

A

Regular staff training is important to keep up with a dynamic business environment, benefits to the business:

  • Keep up with industry changes
  • Keep up with new technology S
  • tay ahead of competitors
  • Identifies staff weaknesses
  • Increases job satisfaction levels
138
Q

2.5.3 - What are performance reviews and why are they needed?

A
  • This is a discussion between the employee and their supervisor about the job.
  • This should be formal and documented
  • This recognises high performing employees and is an opportunity for the employee to get feedback on how they are doing at work
  • It motivates employees to work harder as they know they are being reviewed
139
Q

2.5.3 - What is the link between training, motivation and retention?

A
  • Employees being trained makes them feel more valued.
  • This makes them more motivated and therefore more likely to continue working for the business
140
Q

2.5.3 - Why is re-training often needed?

A
  • New technology in the business will mean that staff will need to be retrained to use the new technology
  • As soon as they are trained then productivity will rise
  • Older staff may be resistant to change and may need more persuasion to train on the new equipment
141
Q

2.5.4 - Why is motivation important in the workplace?

A
  • Attracts employees: Meaning you have a larger recruitment and can easily find who you want to work for you
  • Retains employees: Meaning your better workers will be staying and doing work for you
  • Increases productivity: Meaning more money is able to be made
142
Q

2.5.4 - What are financial methods of motivating employess?

A
  • Remuneration
  • Bonus
  • Commission
  • Promotion
  • Fringe benefits
143
Q

2.5.4 - What are non-financial methods of motivation?

A
  • Job rotation
  • Job enrichment
  • Autonomy
144
Q

2.5.4 - What is a remuneration?

A
  • Remuneration means money given to an employee in return for work or service.
  • This may be employee’s wages, or salary or pay.
  • To motivate some employees a business may decide to pay them more, to give them a “pay rise”
145
Q

2.5.4 - What is a bonus?

A

Extra money earned on top of salary for different situational reasons

146
Q

2.5.4 - What is a commission?

A
  • Employee receives a reward for every sale made. (e.g. 10% of every sale they make).
  • Some jobs are advertised with “OTE” which means on target earnings and gives the employee an idea of how much commission they can earn.
147
Q

2.5.4 - What is job promotion?

A
  • It is important for a business to promote their staff.
  • This keeps employees motivated as their earnings will go up with the new job.
  • If a business promotes from within staff will remain more loyal to the business.
148
Q

2.5.4 - What are fringe benefits?

A
  • Also known as ‘perks’
  • Items an employee receives in addition to their normal wage or salary (e.g. company car, private health insurance, free meals)
  • Often increases loyalty to company as these benefits are not always taxed or are taxed at a reduced rate
  • More likely to recruit best people to company
149
Q

2.5.4 - What is job rotation and what are the advantages and disadvantages?

A

Employees are rotated between different jobs [wooaah no way] PROS:

  • Relieves boredom
  • Easy to find an employee to cover for an absent colleague
  • More motivated due to wider range of skills

CONS:

  • Training costs are high
  • Fall in output due to less specialisation
  • Could be simply a greater number of boring tasks with less social benefits due to constant changing of groups
150
Q

2.5.4 - What is job enrichment and what are the advantages and disadvantages?

A

Employees are given redesigned jobs that have more challenge and responsibility

PROS:

  • Develops unused skills and challenges employees
  • Allows employees to contribute to decision making process Increased feelings of achievement

CONS:

  • Some employees may feel under pressure not simply challenged
  • Costly
  • Benefits only when thinking long term as employees have to be trained
  • Not all jobs can be enriched (e.g. bin men [aww man that’s just rubbish])
151
Q

2.5.4 - What is autonomy and what are the advantages and disadvantages?

A

Autonomy means allowing employees to make their own decisions

PROS:

  • Employees feel more ownership of their own work and so are more motivated
  • Employees able to use their own thinking skills to complete their work at their pace

CONS:

  • Some employees may become unhappy as they need more direction in their work and want recognition from their boss
  • Some employees may want to make more decisions than they are entitled to.

EDEXCEL GCSE Business (12 decks)

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