2.1.1 - 2.1.5

Question 1

Economies of Scale

Answer 1

Rises when unit costs fall as output increases

Question 2

Internal economies of scale

Answer 2

Output of the business itself

Question 3

External economies of scale

Answer 3

Output outside of the business

Question 4

Minimum efficient scale

Answer 4

The lowest point where the factory can produce such that it’s long term average costs are minimised

Question 5

Monopsony

Answer 5

A market situation where there is only 1 buyer

Question 6

Brand recognition

Answer 6

The ability of a consumer to recognise a brand over other brands

Question 7

Diseconomies of scale

Answer 7

Cost disadvantages that firms and governments accrue due to an increase in firm size/output

Question 8

Corporate culture

Answer 8

Beliefs and behaviours of employees and management outside of business interaction

Question 9

Capacity utilisation

Answer 9

(actual level of output ÷ maximum possible output) × 100

Question 10

Organic growth

Answer 10

Internal growth of a business

Usually slow

Question 11

Inorganic growth

Answer 11

External growth of a business perhaps by takeovers and mergers
(Sudden)

Question 12

Conglomerate

Answer 12

A company with a large number of diversified businesses

Question 13

R&D

Research and Development

Answer 13

Researching and developing of new technologies to be ahead of the market

Question 14

Product innovation

Answer 14

Changes to goods/services which make it better than the predecessor

Question 15

Process innovation

Answer 15

Changes to the production processes which improves speed/cost efficiency

Question 16

Product life cycle

Answer 16

Graph showing:

• Product development
• Introduction
• Growth
• Maturity
• Decline

Question 17

Extension strategy

Answer 17

Trying to stop decline stage by reaching out to other areas with advertising, price reduction, adding value

Question 18

Asymmetric information

Answer 18

When sellers are well informed about the product whereas buyers are not

Question 19

Viral marketing

Answer 19

Consumers are encouraged to share information about company’s goods/services via the internet

Question 20

e-commerce

Answer 20

Commercial transactions conducted electronically on the internet

Question 21

e-retailing

Answer 21

Sale of goods/services through the internet

Question 22

Micromarketing

Answer 22

Advertising is focussed on a small group of consumers

Question 23

Long-tail

Answer 23

Large number of products that sell in small quantities

Question 24

USP

Unique Selling Point

Answer 24

Unique propositions set forward by a company

Question 25

Horizontal integration

Answer 25

Two businesses in the same industry become one at the same production stage

Eg. Tata buying JLR from Ford

Question 26

Vertical integration

Answer 26

A business acquiring/merging with another business in the same industry but at a different production stage

Eg. PayPal buying eBay for $1.5 BN in 2002