busines paper 2 Flashcards
(68 cards)
1
Q
What are the benefits of organic growth?
A
- Lower risk and easier to manage
- Keeps control within the business
- Builds on existing brand loyalty
2
Q
What are the drawbacks of organic growth?
A
- Slower compared to mergers
- Limited by existing resources and market
3
Q
What are the benefits of mergers and takeovers?
A
- Quick access to new markets and customers
- Can benefit from economies of scale
- Eliminates competition
4
Q
What are the drawbacks of mergers and takeovers?
A
- Clash of business cultures
- Redundancies and costs
- Diseconomies of scale (harder to manage a big firm)
5
Q
What are the benefits of horizontal integration?
A
- Reduces competition
- Increases market share
6
Q
What are the drawbacks of horizontal integration?
A
- Can attract regulatory scrutiny
- Potential culture clash
7
Q
What are the benefits of vertical integration?
A
- More control over supply chain
- Increased profit margin
8
Q
What are the drawbacks of vertical integration?
A
- Costly and complex to manage
- Can reduce flexibility
9
Q
Why do objectives change as businesses grow?
A
- Shift from survival to profit/growth
- Expansion into new markets
- Greater focus on ethics or sustainability due to public pressure
10
Q
What are the benefits of globalisation?
A
- Access to cheaper labour and materials
- Bigger customer base
- Opportunities for growth in emerging markets
11
Q
What are the drawbacks of globalisation?
A
- More competition from abroad
- Communication/language barriers
- Ethical concerns (e.g. sweatshops)
12
Q
What does SPICED stand for?
A
Strong Pound Imports Cheaper, Exports Dearer
13
Q
If the pound strengthens, what happens to imports and exports?
A
- Imports cost less
- UK goods are less competitive abroad
14
Q
If the pound weakens, what is the effect on exports and imports?
A
- Exports more competitive
- Imports cost more
15
Q
What are the benefits of acting ethically?
A
- Attracts ethical customers
- Improves brand image
- Motivates staff
16
Q
What are the drawbacks of acting ethically?
A
- Higher costs (e.g., fair trade)
- Lower short-term profit
17
Q
What are the benefits of being environmentally responsible?
A
- Compliance with regulations
- Builds reputation with green customers
18
Q
What are the drawbacks of being environmentally responsible?
A
- Investment in eco-friendly processes
- Can slow down production
19
Q
What are the benefits of product differentiation?
A
- Builds brand loyalty
- Reduces price competition
- Customers can identify the brand
20
Q
What are the drawbacks of product differentiation?
A
- Higher development and marketing costs
- Can be copied by competitors
21
Q
What are some extension strategies for the product lifecycle?
A
- Change packaging or branding
- Add new features or update design
- Offer promotions or discounts
22
Q
What is penetration pricing?
A
Attracts customers quickly but may make product look low-quality
23
Q
What is price skimming?
A
High profits early on but may lose customers once price falls
24
Q
What is competitive pricing?
A
Keeps market share but may reduce profit margins
25
What is cost-plus pricing?
Guaranteed profit margin but doesn’t consider customer demand
26
What is promotional pricing?
Boosts sales quickly but is not sustainable long-term
27
What are the benefits of promotion?
* Increases brand awareness
* Boosts short-term sales
* Encourages brand switching
28
What are some types of promotion?
* Advertising (TV, print, digital)
* Sales promotions (BOGOF, discounts)
* Social media (targeted, cheap)
* Sponsorship (events, influencers)
29
What are the benefits of e-commerce?
* Lower overheads (no shop rent)
* Sells 24/7 globally
* Convenience for customers
30
What are the drawbacks of e-commerce?
* Competition is global
* Website costs and cybersecurity risks
31
What are the advantages of direct distribution?
More profit per unit but less reach
32
What are the disadvantages of indirect distribution?
Wider audience via retailers but profit is shared
33
What are the characteristics of job production?
* High quality, tailored
* Expensive, slow
34
What are the characteristics of flow production?
* Low unit cost, efficient
* High setup costs, repetitive work
35
What are the benefits of good supplier relationships?
* Reliable delivery = fewer delays
* Better prices and terms
36
What are the drawbacks of poor suppliers?
* Late deliveries
* Poor quality = customer complaints
37
What is Just In Time (JIT)?
Lower storage costs but risky if supply is disrupted
38
What are the benefits of good quality?
* Higher customer satisfaction
* Fewer returns/refunds
* Competitive edge
39
What is quality control?
Stops poor quality reaching customer but only checks at the end
40
What is quality assurance?
Continuous checking prevents waste but slows down production
41
What are the benefits of good customer service?
* Repeat customers
* Stronger reputation
* More word-of-mouth promotion
42
What is the formula for gross profit?
Revenue – Cost of Sales
43
What is the formula for net profit?
Gross profit – Expenses
44
What is the formula for gross profit margin?
(Gross profit ÷ Revenue) × 100
45
What is the formula for net profit margin?
(Net profit ÷ Revenue) × 100
46
What is the formula for ARR?
(Average annual return ÷ Cost of investment) × 100
47
What are the benefits of financial data?
* Shows business performance
* Used for comparison with rivals
* Informs decision-making
48
What are the drawbacks of financial data?
* Doesn’t show staff morale or customer satisfaction
* May be out of date
* Can be manipulated
49
What is the purpose of non-financial data?
Shows wider performance (e.g. customer service) but is harder to measure or compare
50
What are the characteristics of a tall organisational structure?
* Clear chain of command
* Slower communication
51
What are the characteristics of a flat organisational structure?
* Fast communication
* Harder to manage large teams
52
What are the characteristics of a matrix organisational structure?
* Good collaboration
* Can cause confusion
53
What are the benefits of centralised organisational structures?
* Consistent decisions
* Slower and less flexible
54
What are the benefits of decentralised organisational structures?
* Quicker local decisions
* Risk of inconsistency
55
What are the benefits of internal recruitment?
* Quicker and cheaper
* Motivates staff
56
What are the drawbacks of internal recruitment?
* Smaller pool of applicants
* May miss new ideas
57
What are the benefits of external recruitment?
* Fresh skills and ideas
* Larger talent pool
58
What are the drawbacks of external recruitment?
* Longer process
* Costly and riskier
59
What are financial methods of motivation?
Boost performance but may not work long-term
60
What are non-financial methods of motivation?
Longer-term loyalty but may not motivate everyone
61
What are some examples of non-financial motivation?
* Job enrichment: more responsibility
* Praise and recognition
* Promotion and training
62
What is induction training?
Helps new staff settle in but costs time and money
63
What are the advantages of on-the-job training?
Cheap and relevant but could pick up bad habits
64
What are the disadvantages of off-the-job training?
Learn new skills but is costly and not always relevant
65
What is the importance of employment law?
Keeps staff safe and fairly treated and avoids legal fines
66
What is the Equality Act 2010?
No discrimination
67
What is the Health & Safety at Work Act?
Protects workers
68
What is the National Minimum Wage?
Fair pay for all ages
