ao2 theme 1 and 2 Flashcards
(10 cards)
What happens when a luxury watch brand raises prices by 20%?
The product is price inelastic (PED < 1), allowing the business to raise prices without a major drop in demand. This suggests strong brand loyalty or premium positioning.
How does a start-up skincare company focusing on natural, vegan products operate?
The business operates in a niche market, targeting customers with specific ethical values. It uses direct marketing and product differentiation.
What is the effect of introducing bonuses for drivers in a food delivery business?
Reflects Taylor’s theory of motivation (piece-rate). Likely to improve short-term productivity but may harm long-term morale.
What is the purpose of loyalty cards in a small coffee shop?
Encourages repeat purchases, builds brand loyalty, and acts as non-price competition.
What does it mean when a new gym hires trainers through an external agency?
This is outsourcing recruitment. It reduces internal burden but may harm culture fit or increase costs.
What does a £5,000 cash deficit forecast indicate for a business?
This is a cash flow issue. Solutions include using an overdraft, negotiating payment terms, or increasing inflows.
What is the labour productivity of a manufacturer producing 100 units per day with 5 workers?
Labour productivity is 20 units per worker/day. Increasing this can reduce costs and improve efficiency.
What are the implications of a clothing retailer using a just-in-time inventory system?
This reduces storage costs but creates a risk of stockouts due to supplier delays.
What does a small bakery taking a £10,000 loan for a new oven represent?
This is external finance used for capital investment. The business gains an asset but must manage repayments and cash flow.
What does it mean when a drinks company merges with a rival soft drink producer?
This is horizontal integration, likely aiming for economies of scale and market share growth, but may cause culture clashes or coordination problems.
