A-level Business Paper 1 Flashcards
Flash card according to 2022 advanced info
What is a private sector? examples?
What is the public sector? examples?
They are owned by a private individual eg sole traders , ASDA, John and Lewis.
They are owned by the government and aim to provide services to the public eg NHS
What are the aims and objectives of a non-profit business? examples?
business such as the red cross disperse money from donations internationally
What are limited and unlimited liabilities? give an ad and dis of both
advantage- Limited liability mean the are not responsible for the deps of the business, this means that it is a less of a finacial risk further more decisons dont have to be made by the investor so there is less stress
however share holder can lose the money that they invested into the business, this may be caused by the product not having as much sucess or demand as expected, short termisum may also affect this
Disadvantage- unlimited liabilities means that the owner and the business is seen as one under the law as a result the business debts becomes the owners debts leading to selling their houses eg sole traders further more small business are more likly to have unlimited liabities and the percentage of small business that close within the first year are 60% so it is a huge finacial risk
howerver the owner would have full control over the business and be able to mold the business the way he want and with maybe his principles or objectives such as useing recyclble material unlike share holders constant focus on profit
what are sole traders? what are the advantages and disadvantages of being one?
They are individuals who are self-employed and trade under his or her name
Freedom and control of decision making of business and The owner is entitled to all the profit made by the business as the owner doesn’t need to share it with shareholders this suggests they can decide whether he or she wants to keep the profit as savings or put it back into the business to further expand the business
however risky as no one to share the unlimited liabilities with so incase of debt the owner can’t share the debt the stress of a declining business can affect a person’s mental health further more all decisions made by the owner are stressful or overwhelming
sole trades have access to limited sources of finance as sole traders are seen as high risk this suggest they have to show constant levls of profit or they may not get the full amount
what is the difference between private limited and public limited companies?
private limited company(LTD) cant sell shares to the public, the business is usually owned by family members, making it less risky and all the share holders has to agree to sell shares
public limited company (PLC) can sell their shares to the public, so they can raise capital quicker duse to the stock exchange however the finances are made public so competitors can see how well the business is doing
what is share capital?
amount of money gained from selling shares
what is market capitalization?
total value of the shares of a business
what are dividends
A dividend is a distribution of profits by a corporation to its shareholders
what is the role of share holder and why do they invest
Shareholders invest in a company by purchasing shares, each of which represents a certain percentage of the business. In return for owning shares, members are entitled to vote on significant decisions and receive a portion of any profit generated by the business.
they are involved in finacial stupport and decision making according to their shares
what are shares
what influences share prices
corporation’s assets and profits equal to how much stock they own. Units of stock are called “shares.”
the share price is determined by the demand and if more people want to sell their shares then the demand goes down furthermore the if the overall performance of the business id high there would higher dividends so higher demand eg if belief of high future performance or a takeover
what are the mission objective and a private sector public sector sole trader public limited company
private sector -maximize profit
public sector - provide eservices for the public
sole trader - may be market penetration(enter the market) create a USP or give the product at lower prices to gain a completive advantage as most business (60%) fail within the first 3 years from the launch of their product by larger business that dominated the market further more they have low amounts of budgets and recourses to be completive
what are the market conditions that may influence cost and demand?
political factors such as an increase in interest rates or reduce or increase taxes so the public has less or more disposable income and increasing or reducing the demand for products this may lead to the business reducing prices whiuch may result in an increased cost furthermore this may not affect necessities and have a larger impact on luxury items such as rolls Royce
new technology may mean the business such as Samsung may be force to develop their product due to competitors such as Apple who have developed and innovated face id so they can still be competitive and to gain more market share however this may lead to and increase i cost due to research and development but may result in getting a new innovative USP
seasonal products such as a Christmas trees maybe have higher demand during the December period than in the rest of the year, this means the business would pre-order higher stocks of raw materials and employ more staff to cope with the demand, as a result, they can reduce the prices after the seasonal period to extend the number of products
name and explain 2 or more external factors and how they can affect a business
can be political, environmental or social
competition- a competitor entering the market or launching a new product may mean that there may be a decrease in the demand for their product as they provide better prices or the product itself is more desirable for the competitor which would lead to an increase in demand and gain market share further more it may cause the business to spend more on advertising and promotion however if it is a market dominated by two or more business a new business mat find it harder to enter it or survive eg mc Donald’s and burger king provides similar products with similar products and it would be hard for a new business to compete and gain market share from them eg Tesco experienced a fall in demand due to Aldi and lidis low price
new technological advancements may mean they can improve the product to make it more efficient over the long-term as the development (r and d) and implementation of the new product may be expensive but can improve the efficiency and overall unite cost per product however it may mean redundancy damaging their reputation of employees furthermore they can implement it into the product itself such as a car with the better sound system or larger factors such as the better engine to improve speed this may lead to an overall improvement of customer satisfaction
legislation changes such as new safe rules and regulations may mean that the business needs to apply new processes or employ new staff to ensure the safety requirements are met this may lead to an increase in cost however this can mean there is a better reputation for the business increasing demand
what is the difference between intuitive and scientific decision making? what are the advantages and disadvantages of both
making decisions scientifically means the decisions are based on data this means and an inexperienced leader may use data to make decisions due to the lack of experience this suggests they are less likely to make expensive mistakes that can damage the business reputation however collecting and analysing the data can be costly and time-consuming this suggests they would have to employ skilled people to interpret and help the leader finalise on a decision this means that slow decision making can be more harmful as they won’t be able to respond to changes quickly enough unlike their competitors furthermore if the data is not up-to-date, biased or unreliable it can mislead the business and the leader can make the wrong decision
intuitive decision making is based on a hunch or gut feeling the success of the decision made may depend upon the experience the leader or manager has in the field and whether they had to deal with similar problems in the past furthermore intuitive decisions are quicker however people can still make mistakes and some may say such desion making is illogic
what influences decision making?
the amount of risk the business is willing to take
the amount of reward the business might achieve eg higher profit or production
the amount of uncertainty when making decisions making scientific can reduce uncertainty
opportunity cost. it is the idea that the time and money spend on one thing means that they have to give up something that could have benefited the business more
mission /ethics /external factors/resources available
what is a decision tree what are the advantages and disadvantages?
decision trees are flow charts that show the different decision alternatives and possible outcomes
they set out the problem clearly and encourage a logical approach furthermore Useful when similar scenarios have occurred as the management has more experience to make the probabilities
however, the Constantly changing nature of a business eg the covid pandemic
probabilities may have a bias as managers are encouraged to make them so they may not be accurate
what are stakeholders? give examples of stakeholder needs and how do they impact a business’s decision making?
everyone or groups of people affected by a business are called stakeholders they can be customers who want quality and low prices not meeting the customer needs may mean that there would be a decrease in customer loyalty and demand for their product furthermore low quality can affect the brand image leading to customers finding other alternative competitors with better products or with cheaper prices
stakeholders who want higher profits and dividends this may lead to less of the retained profit to be put back into the business limiting the many factors such as being able to keep up with the competition due to the lack of financial support in innovation and keeping up with the market’s technology such online streaming and may lead to the prices of the products to be higher furthermore it can lead to short-termisum this is when the business is fou=cused on short term profits instead of long term investments in the business
it may be employees with better training better working environment or higher wages such support can be costly for the business however they can help motivate the employees leading to higher productivity and effectively increasing the retained profit furthermore it can improve the reputation of the business this means more skilled worker would be interested in working there, as a result, they could improve the overall workforce as they could bring new innovative ideas that can eventually help the business and productivity however a business may need to make decisions and prioritise which stakeholder to concentrate on depending on the importance of meeting customer needs or how workforce dependent the business is or if they mainly use machinery to make product how much the stakeholder help the in funding different projects
why set market objectives? what can they be, give examples?
Increasing sales volume or sales growth means increased demand over period they can do this by being innovative reducing costs taking care of customer needs to attract and gain more customer loyaty and repeat purchase
markets objectives could also be to increase market share or market size this suggests they could aim to get 10% higher market shar by next year as a result they could see how well they are doing compared to their competitiors consequently this means that they would have to focus on providing better customer service for a growing market they would have to show the customers why their product is better this can be through price or quality depending on wheather it is a luxury item or a nessesity and teir target customer
what are some external and internal influences on marketing objectives?
some of the internal factors that may influence the marketing objective may be whether the objective allies with the corporate objective this suggests that MO helps the business achieve its overall goal for example a small business may want to increase profit or gain market share, as a result, they could reduce prices to increase demand and earn higher profits furthermore the MO should be within the financial budget set for marketing this may mean the amount of retained profits or the share capital for a plc and maybe the amount of dividend a shareholder requires may determine the level at which a business may be able to grow
some external factors may include in deciding marketing objectives may be the economic state for example during a boom a business can increase prices due to customers having a higher level of disposable income ess essay for a luxury business such as Rolex however during a recession reducing the prices more than their competitors may mean they can get higher demand and market share furthermore another factor that may influence MOis new technology this suggests that a business who uses that new technology whether it s to innovate the product of the production to make it more efficient it can give a competitive advantage and may help create a USP for the business leading to an increase in demand and market share
what is price and income elasticity of demand
how much the price or income affect the demand
(not in adv)
give a definition of segment target and position
segment is to divide the market into groups eg age
income or place
target -a niche (Rolex) or mass-market (supermarkets)
position-how to LEAVE IMPRESSION OR WHAT MAKE PRODUCT BETTER TO COMPETE
give a definition of mass and nice market and why would a business target a mass or niche market
niche focus on a small number of customers eg the rich rolls Royce
mass focus on a wide range of customers eg cococla
why is positioning important after targeting a market and what influences it?
the current set of the market eg the competition the amount of market share owned by them whether it’s har to enter it due to the heavy loyalty of customers to competitors
what are the 7 different marketing mix
price place promotion product process planet people
what influences of the marketing mix
competition price/ product
type of business-place
process- customer service
why would a business choose to change its marketing mix
new technology
competition
economic changes
what is a product portfolio with examples and why is it important
A product portfolio is the complete collection of products or services that a business sells diversification
what is the Bostons matrix used for and explain each section shown for a products
star- high market share and growth
cow high market growth low market share
question mark- low market share low market growth
dog-low market share high market growth
name and explain each section of a life cycle
introduction growth maturity and decline
how can extension strategies and product development be important?
improving or redesigning can prolong the life cycle it can provide new innovative ideas for the next project
what is price skimming and price penetration
price skimming is when a product is sold for a high price due to high-quality innovative idea or use so customers are willing to pay for it
price penetration is when a product is introduced with low prices to attract customers and gain market share
advantages of digital advertisement
it’s cheaper and can make use of viral marketing and target marketing
why is a multi-channel distribution
they sell their product through online and in stores
why might a business choose people process and physical environment
people= services
process= technology
physical environment = aesthetics
