The Prelim

Question 1

Product/Service grouping?

Answer 1

This is when an organisation is divided into divisions based on a product they make or a product range. This encourages customer loyalty, but there can be duplication of effort.

Question 2

Customer grouping?

Answer 2

This is when an organisation divides its operations by types of customer. It may divide its customers into Retail (High Street sales) and Online operations.

As in

Customer A

Customer B

Customer C

Customer D

Question 3

Place/Territory grouping?

Answer 3

This is common among large multinationals. This is where the organisation divides its operations by geographical area. This has the major advantage of being able to be responsive to local cultural needs, but there is naturally a high cost due to duplication of effort.

Question 4

Horizontal integration?

Answer 4

Horizontal integration is when two companies at the same stage of the production process merge or take over each other.

Question 5

Vertical integration?

Answer 5

Vertical integration occurs when firms at different stages of the production process merge together. There are two types called:

Forward vertical integration- Further in the process (supplier to manufacturer).

Backward vertical integration- Backwards. (Manufacturer to supplier).

Question 6

Diversification?

Answer 6

This is when firms in different, unrelated markets merge. This would be the equivalent of Ford and Nokia combining.

Question 7

Merger?

Answer 7

A merger is when two companies decide to join together, like for example when Halifax and Bank of Scotland combined to form HBOS.

Question 8

A takeover?

Answer 8

A takeover is more hostile. This is when a company (usually a larger one) buys out a rival. Kraft Foods bought out Cadbury’s in early 2010 for £12 billion.

Question 9

Demerger?

Answer 9

A demerger occurs when a firm divides or breaks into more than one company. Cable & Wireless, the famous UK communications firm will demerge into Cable & Wireless Worldwide plc and Cable & Wireless Communications plc, the new name for Cable & Wireless International.

Question 10

Outsourcing?

Answer 10

Outsourcing is when a company hires another business to do some work for them. Many firms outsource cleaning or IT operations to smaller, more specialist companies.

Question 11

Give an advantage and a disadvantage of customer satisfaction.

Answer 11

+ Good customer satisfaction will persuade customers to return to the business and tell friends to visit the business new.
- Training employees to deliver customer satisfaction costs money and time.

Question 12

Name three methods of finance available to a PLC.

Answer 12

Bank Loan.

Bank Overdraft.

Hire Purchase. (Pay for something in instalments while using it).

Question 13

Give three example laws of legislation.

Answer 13

National Minimum Wage Act 1999. (Incorporated the minimum wage).

Discrimination Act 1995. (Eliminated all discrimination in workplace).

The Health And Safety Act 1974 (Covers all health and safety in the workplace).

Question 14

What are the stages in the employment selection process?

Answer 14

Job Analysis- Analyse the vacant role, take note of its roles, responsibilities etc.

Job Description- Create a description of the vacant role, listing the roles, responsibilities, salary, hours, etc.

Person Specification- Create a document detailing the perfect person for the job. (Skills, qualities, experience, qualifications, etc).

Advertise The Job- Advertise the role to the target audience. Can be internal or external.

Question 15

Identify the two forms of market research.

Answer 15

Desk Research- This is where research is conducted through looking at past documents, created by others. This research is outdated as soon as its collected however, but is far less time consuming than field research.

Field research- This is where research is conducted by the business themselves, they will go into the public and conduct research there. This is highly time consuming, but the results are far more valuable to the business than using desk research results.

Question 16

Describe Just In Time stock control.

Answer 16

With Just In Time, a business holds no stock and instead relies upon deliveries of raw materials and components to arrive exactly when they are needed.

Question 17

Describe the Maximum Stock Level and the Minimum Stock Level.

Answer 17

The largest amount of items to be stored on site before overstocking becomes an issue.

The lowest amount of items to be stored on site before understocking becomes an issue.

Question 18

Give three advantages of e-commerce on a business.

Answer 18

• Opens the market to customers nationally and internationally
• Enables smaller companies to compete with larger companies
• Reduces in staffing and/or high street stores thereby reducing costs
• Provides the option to offer 24 hour shopping at minimum additional cost

Question 19

Give three disadvantages of e-commerce on a business.

Answer 19

Stiffer competition - businesses once competing with the shop in the next town now find themselves competing on a global scale.

Staff reductions - with increased competition, local companies may have to reduce their work force.

Cost of restructuring - the move to e-commerce may not be a smooth one and will certainly require a degree of investment.

Customer concerns - if high street stores are closed in an effort to save money, customers who prefer to shop on the high street may not be comfortable buying online so may go elsewhere.

Question 20

Give a use for IT in business.

Answer 20

Recording stock levels

Finance spreadsheets

Ecommerce

EPOS

Question 21

Ways to improve gross profit/net profit?

Answer 21

Buy less stock

Switch supplier

Switch method of stock transport

Question 22

Functional grouping?

Answer 22

Functional grouping is when a company is divided into broad sectors each with its own particular specialism or function, for example, marketing, accounts or human resources.

Question 23

Describe the business structure: Flat.

Answer 23

A flat structure is where a business has few levels.

Question 24

Describe the tall structure?

Answer 24

This is a structure with lots of levels.

Question 25

Advantage of expansion?

Answer 25

As a business grows it gains two major advantages over its smaller rivals. Large firms have more influence over market price. They’re big enough to be price setters.

Question 26

Describe Penetration Pricing.

Answer 26

Penetration pricing is the pricing technique of setting a relatively low initial entry price, usually lower than the intended established price, to attract new customers. The strategy aims to encourage customers to switch to the new product because of the lower price.

Question 27

What is Price Skimming?

Answer 27

Price skimming is a pricing strategy in which a marketer sets a relatively high price for a product or service at first, then lowers the price over time.

Question 28

What is a Centralised Structure?

Answer 28

Here all of the control and decision-making lies with the most senior directors or managers or the owners of the organisation. Subordinates have little or no authority at all.

Question 29

What is a Decentralised Structure?

Answer 29

In these organisations decision-making and control are delegated to and carried out by subordinates. This relieves senior management of having to make many of the routine operational decisions required by the organisation.

Question 30

What is the Circular Economy?

Answer 30

It seeks to redefine how consumers and producers use and reuse the goods they purchase. The concept of the circular economy is trying to change thinking, that goods are created, consumed and then reused like nature.

Question 31

Name some Methods used in the Selection Process.

Answer 31

CV
REFERENCES
TESTING
ASSESSMENT CENTRES
INTERVIEWS

Question 32

What do both of these documents show?

Balance Sheet:

Trading (profit and loss) account:

Answer 32

Balance sheet shows the value of a business on a particular date. It shows what the business owns and owes. (Assets and liabilities).

A trading account shows how successful a business has been over a period of time, usually a year.

Question 33

Gross profit percentage? Formula too.

Net profit percentage? Formula too.

Answer 33

Gross profit percentage-Used to measure how many pence of gross profit is earned out of every £1 of sales.

Gross profit\Net Sales *100

Net profit percentage- Used to measure how many pence of gross profit is earned out of every £1 of sales.

Net profit\Net Sales *100

Question 34

What is the boston matrix?

Also describe the four main sections of it.

Answer 34

A boston matrix is basicslly a plan made for the products in the product portfolio. It decides which products should get the most promotion, which should get developed more etc.

STARS are high growth products competing in markets where they are strong compared with the competition. Eventually growth will become slow