All weaknesses Flashcards
(33 cards)
1
Q
What is market capitalisation and what is the formula?
A
- Is the total value of ordinary shares issued by a company.
- Market cap= No of shares issued X Current share price
2
Q
What are the three different types of sample
A
Random- Names picked randomly from a list.
Stratified- Population divided into groups and people are selected randomly from each group. Is proportional to each group.
Quota- People picked who fit into the category(e.g. Mums age 30-40). Used to get opinions on target market.
3
Q
What is income elasticity of demand and what is the formula?
A
Income elasticity of demand= % Change in quantity demanded/% change in real income
- It is the way that how incomes increase, demand will usually go up and vice versa.
- Able to see if the economy will grow or shrink.
4
Q
What is penetration pricing?
A
- This is setting a low initial price to attract customers and increase market share. Then slowly increase the price.
+ Can benefit from EOS as they produce large quantities, especially effective in price sensitive markets such as washing powder
+Can be used as extension strategies. - Customers may expect low price to continue which can anger them.
- Need good brand image when upping prices.
5
Q
What is Price Skimming?
A
- Usually done with new, innovative products where they set a high initial price and slowly bring it down after a year or so.
+ Take advantage of early adopters.
+ Improves scarcity value and brand image as its seen as more exclusive. - May annoy early adopters
- The initial high price may put off customers, decreasing sales.
6
Q
What are some other pricing strategies?
A
- Dynamic
- Competitive
- Predatory
- Loss leader
- Discrimination.
7
Q
What is a mechanistic structure and benefits and drawbacks?
A
Mechanistic- Used a centralised, tall structure with a clear line of hierarchy.
+ Good for high-skilled employees as they work separately
+ Good if managers are experienced and skilled.
! Not good for a constantly changing market
! Communication takes a long time
8
Q
What is an organic structure and the benefits and drawbacks?
A
Organic- Uses a decentralised, flat structure with employees making more decisions.
+ Communication
+ Motivation
+ Adaptable
- Time consuming
- Span of control
9
Q
What are different structures used by a business to adapt to a strategy?
A
- Functional
- Product based
- Regional
- Matrix
10
Q
What is a functional structure?
A
- Staff are organised by department with each ran separately.
- This can make implementing strategy simpler as each department can focus on what to work on.
- However, if communication from departments isn’t good, implementing strategies can be hard to coordinate and also they may look out for what’s best for their department.
11
Q
What is a product based structure?
A
- Staff are organised by product, with a separate division for each.
- This would be ideal for implementing specific strategies eg. wanting to significantly increase market share on one product while keep another one steady.
- However, if the business wants to apply a strategy across the whole business it can be less effective in different areas.
12
Q
What is a regional structure?
A
- Staff are organised by location, with regional divisions that run themselves.
- Good for adaptability and knowledge of the local environment so can implement strategy more effectively.
- However, if the business wants to apply a strategy across the whole business it can be less effective in different areas such as taking local needs into account.
13
Q
What is a matrix structure?
A
- Staff are organised by two different factors such as project terms and functional department.
- This structure can easily change to implement different strategies as employees can change roles and teams
- However, there can be conflict in decision making and managers may have overlapping priorities.
14
Q
What are some objectives for HR and what do they consist of?
A
- Matching the workforce to business needs. This can be anticipating the size of the business and if you need to contract or expand the workforce. Deciding the skill of the workforce, the employment contracts and the diversity of the business.
- Helping employees reach their full potential. This includes investing in training, correct equipment, ensuring their is career progression, matching tasks to skill sets and ensuring effective management and working conditions.
- Supportive employee/employer relations. Includes listening and reacting to concerns, improving relationships to ensure less absenteeism and staff turnover and can help work with trade unions.
15
Q
What is a works council?
A
- A organisation set up to discuss the current state of workforce and any concerns. Usually have elected officials.
16
Q
What was Maslow’s ideology and what are the stages of his period?
A
- Was that once the employer achives the bottom they work themselves up to achieve full potential. However, it may be unclear which part they are at and may need to be in a different order.
-Self-actualisation- Meeting the full potential and developing skills and responsibility. - Self esteem- business giving employee recognition and promotion.
- Social needs- Friendship, teamwork. The business organising staff night outs.
- Safety- A safe work environment with job security.
- Basic physical needs- Able to pay workers enough for affording basic needs.
17
Q
What was Herzberg’s hygiene and motivating factors?
A
- Recognises individual needs. However, is based on a small sample of workers and my not fit with other employees.
- Hygiene includes good company policy, supervision, working conditions, pay and good relations. These may not necessarily motivate employees but it will ensure employees do not get demotivated.
- Motivating includes interesting work, personal achievement, recognition and more responsibility
18
Q
What is Carroll’s Pyramid of CSR and his ideology?
A
- Believed their was 4 types of CSR responsibilities and they should all be addressed equally. It can be used to analyse business decisions and whether they are a necessity or voluntary.
-Philanthropic responsibilities- To be a good corporate citizen, contribute resources and better lives. - Ethical responsibilities- To do the “right” thing and avoid harm. eg. Fairtrade
- Legal responsibilities- To obey laws and regulations.
- Economic responsibilities- To be profitable, so the business survives. This is the foundation for the rest.
19
Q
What is a payback period and its formula?
A
- The time it takes for a project to make enough money to pay back the initial investment
- Amount invested/annual net return
20
Q
What are the pros and cons of payback period?
A
+ Easy to calculate and understand.
+ Very good for high tech projects(technology seems to become obsolete quick so the business needs to get its money back fast)
- It ignores cash flow after payback, only focuses on the short term rather than looking at the better long term investment.
- Ignores the time value of money.
21
Q
What is Ansoff’s Matrix and what are the 4 directions?
A
- Is a tool for managers for comparing risk involved and helps create strategic drift.
- Market penetration( Ex market and product)
- Market development( Ex product and New market)
- Product Development(New product and ex market)
- Diversification(New product and market)
22
Q
What are the pros and cons of market penetration?
A
- Is increasing its market share. Organic and can be done by advertising. Eg. Dominos aiming to have over 2000 outlets in the UK.
Low risk
+Works well in a growing market
+ Low costs
-Not well in saturated markets
-Limited growth
23
Q
What are the pros and cons of product development?
A
- New product and same market.
-Such as Daisan moving from traditional vacuum to electric.
+ Encourages innovation
+ Competitive advantage - High costs in research and development
- Needs already a high market share.
24
Q
What are the pros and cons of Market development?
A
- Market development(Same product different market)
- Can be done by moving geographically, new distribution channels and different pricing policies. (Starbucks into China).
+ Able to identify growing and declining markets for sales growth and pricing. - Often more risky that product development
- Usually expensive(R&D) and time consuming.
- May not suit customer needs.
25
What is the pros and cons of diversification?
- (New and New)
- Completely changing usual business operations. eg. Virgin or Google specialise in everything. Samsung moving to fridges.
+Spreads risk.
+Encourages innovation.
-Very risky
-No knowledge of the market
-Most expensive and time consuming.
26
What is Kotter and Schlesinger four reasons for resistance for change?
- Self interest-where people are more concerned with their own situation rather than the businesses. If change doesn't directly benefit them, they will resist it.
- Misunderstanding- Some resist because they don't understand what change means for them. This can happen through poor communication which can lead to incorrect info which then can lead to anxiety and confusion.
- Low Tolerance of Change-People get used to completing tasks the way they know how and will resist change if they believe they can't develop these new skills. They may feel they will not perform well in new situations and fear in job security. May be a loyalty to the old ways.
- Different assessments of the situation- Key stakeholders may have strong disagreements over reasons for change so may resist them. May not be able to see advantages of change.
27
What are Kotter and Schlesinger's 6 ways to overcome change?
- Education and communication-Managers need to raise awareness and involves discussions and reports to clearly establish why this change is made.
- Participation and involvement-Key stakeholders should be involved in the design and implementation and will then feel more involved leading to less resistance.
- Facilitation and support-Listening to concerns by holding regular meetings to make sure they feel supported and cam use support groups to overcome fears.
- Negotiation and agreement-Giving stakeholders opportunities to negotiate and compromising over key sticking points and financial and non financial incentives may need to be used.
- Manipulation and Co-option- Employee may be given a desirable role to overcome change however can be risky as giving employee can feel tricked. May exaggerate the extent of crisis to manipulate them.
- Explicit and implicit coercion- As last resort, a person may be threatened to comply which could be redundancies or losing promotion opportunities.
28
What are ways to improve cash flow?
- For new businesses, cash flow needs to positive to have start-up costs and day to day costs(Working capital).
- Use of overdrafts, holding less stock, debt factoring
- Use rationalisation
29
What are internal and external factors that affect change?
- Internal include change in leadership, better or worse expected financial performance, change in staff and the type of business eg. more innovative.
- External include new technology as it can be faster and cheaper, consumer tastes, economy slowing, PESTLE.
- Reacting to these changes (Emergent) can make a business competitiveness sore.
30
How do you work out total float?
- TF= LFT-Duration-EST
31
What are the 4 different types of economies of scale?
- Technical- Related to production, methods in large scale are often more efficient. Large businesses likely to have better machinery, leading to less staff needed to operate, lower costs.
- Managerial- Employing managers with specialist skills can oversee plans being more quickly and efficiently
- Purchasing- Buying more stock meaning decrease in unit costs due to discounts
- Marketing- Usually fixed so business can spread costs over more units and a large business can afford more effective advertising.
32
What are Porter's five forces?
- Barriers to entry
- Supplier Power
- Buyer Power
- Competitors
- Threat of substitutes
33
