Business Paper 2

Question 1

What are the two ways of internal finance?

Answer 1

Retained profit, sale of assets

Question 2

What is a benefit to retained profit?

Answer 2

No interest has to be payed

Question 3

What is a drawback to retained profit,

Answer 3

Once spent it is gone and you cant use

Question 4

What is a benefit to sale of assets?

Answer 4

No interest needs to be paid

Question 5

What is the drawback to sale of assets?

Answer 5

You may have sold the thing you might need in the future

Question 6

What are the external sources of finance?

Answer 6

Loan and share capital and stock market floatation

Question 7

What are the benefits to loan capital?

Answer 7

You get a lot of money fast

Question 8

What are the drawbacks to loan capital?

Answer 8

You have to pay interest

Question 9

What are the benefits to share capital

Answer 9

You get a lot of money fast by selling shares

Question 10

What are the drawbacks to share capital?

Answer 10

Dilution of control

Question 11

What are drawbacks to a plc?

Answer 11

People are motivated financially so they will care more about money rather than the business

Question 12

What is in the design mix?

Answer 12

Function, aesthetic, cost

Question 13

What is in the product life cycle?

Answer 13

1. Development
2. Introduction
3. Growth
4. Maturity
5. Decline

Question 14

What is product differentiation

Answer 14

Basically unique selling point

Question 15

What are some ways of extension strategies?

Answer 15

Flavour, packaging, sales

Question 16

What is competitive pricing?

Answer 16

Charge a lower or similar costs to competitors

Question 17

What is cost plus pricing?

Answer 17

Pricing your product via cost of making the product then adding how much profit you want on the end

Question 18

What is penetration pricing?

Answer 18

Low to high pricing, this attracts customers

Question 19

What is premium pricing?

Answer 19

The price is set high to highlight its a luxury product

Question 20

What is price skimming?

Answer 20

Where you set your price high then reduce it slowly over time

Question 21

What are some influences on price?

Answer 21

Tech, competition, market segments, product life cycle

Question 22

What are some ways to promote your business?

Answer 22

Advertising, sponsorship, product trials, special offers , branding

Question 23

What are some technological ways of promoting?

Answer 23

Targeted advertising online, viral advertising on social media, e newsletters

Question 24

What are the two things that place covers?

Answer 24

Where the product is sold and how it is sold

Question 25

What is direct distribution?

Answer 25

Where you buy straight from the retailer

Question 26

What is batch production?

Answer 26

Group of similar items made together

Question 27

What is an adv to batch?

Answer 27

Labour costs are less than job

Question 28

What is a disadv to batch?

Answer 28

You have to pause production to change the recipe maybe

Question 29

What is job?

Answer 29

Product made to meet customer needs

Question 30

What is an adv to job

Answer 30

Increase prices

Question 31

What is disadv to job

Answer 31

High labour costs

Question 32

What is flow?

Answer 32

Continuous movement of items through the production process

Question 33

What is an adv for flow?

Answer 33

It can run 24/7, less human error

Question 34

What is a disadv for flow?

Answer 34

Everything is the same you can’t cater it to customer needs

Question 35

What is just in time?

Answer 35

The stock arrives just in time when you need it

Question 36

What is adv to jit

Answer 36

No stock space is needed

Question 37

What is disadv to jit

Answer 37

Delays, good relationship needs to be maintained

Question 38

What is quality control?

Answer 38

People employed to check quality

Question 39

Adv quality control

Answer 39

Only job, quality bound to be checked

Question 40

Disadv quality control

Answer 40

Pay wages

Question 41

Quality assurance

Answer 41

Employees responsible for their quality

Question 42

Adv quality assurance

Answer 42

Owner ship and control over product , no extra wages

Question 43

Disadv quality assurance

Answer 43

Slower work

Question 44

Gross profit

Answer 44

Revenue - cost of sales

Question 45

Net profit

Answer 45

Gross profit - other expenses

Question 46

Gross profit margin

Answer 46

Gross profit / rev x 100

Question 47

Net profit margin

Answer 47

Net profit / revenue x 100

Question 48

Average rate of return

Answer 48

Average annual profit / investment cost x 100

Question 49

Average annual profit

Answer 49

Total profit / years

Question 50

Financial motivation

Answer 50

Remuneration, bonus, commission, promotion, fringe benefits

Question 51

Non financial motivation

Answer 51

Job rotation, job enrichment, autonomy (decision making)