Business Theme 1

Question 1

What is the difference between risk and uncertainty?

Answer 1

Risk is a decision with the hope to bring significant reward, like an invest, where Uncertainty is a negative effect that comes from the general course of business, they are unable to plan for uncertainty.

Question 2

Define primary research.

Answer 2

Primary research is conducting research which hasn’t been done before, which is usually directly from the target audience of potential consumers.

Question 3

Define secondary research.

Answer 3

Secondary research is the collection of data from information that already exists , All secondary research was originally primary research.

Question 4

What is quantitative research?

Answer 4

Quantitative research asks closed questions, which shortens the scope of the answer making it easier to find patterns in the market.

Question 5

What is qualitative research?

Answer 5

Qualitative research asks open questions, making them open for interpretation, this makes the answers more accurate, however as each answer varies it can be difficult to analyze the results in large quantities.

Question 6

What is the purpose of product differentiation

Answer 6

Product differentiation is used as a way to gain a competitive advantage, involving creating a product with distinguishing features which make the product unique.

Question 7

What is added value?

Answer 7

Added value is the difference between the selling price and the total cost of producing the product, businesses wish to add value to their products to make them more desirable, so that customers are more willing to pay a higher price.

Question 8

What is a dynamic market?

Answer 8

A market that is constantly changing with consumer tastes, government regulations and the emergence of new competition.

Question 9

What is market segmentation?

Answer 9

When a market is split into groups, such as location, age or language. This is used to help businesses understand which section of the market they should focus on.

Question 10

What is a market map?

Answer 10

A visual representation of a consumer market, utilizing 2 axes.

Question 11

What is ceteris paribus?

Answer 11

Is where you assume everything else remains the same.

Question 12

What is disposable income?

Answer 12

Income that consumers have leftover to spend after taxes.

Question 13

What is a substitute good?

Answer 13

A good that has the same function has another good.

Question 14

What is a complimentary good?

Answer 14

A good that is usually bought alongside another good.

Question 15

What are some demographics?

Answer 15

Gender, age, income, Ethnicity, and occupation.

Question 16

What is an external shock?

Answer 16

A factor that affects a business that is usually not preventable.

Question 17

What does market equilibrium mean?

Answer 17

Its where price and quantity meet. The amount suppliers are willing to sell their goods at, and have enough quantity to satisfy demand.

Question 18

How do you calculate PED?

Answer 18

% change in quantity demanded/ %change in price

Question 19

What do the answers for PED mean?

Answer 19

If the answer is 0 = complete price inelasticity, no change in demand if there was a change in price.
If the answer is less than 1, demand for the product is price inelastic which means the demand is not very sensitive to changes in price.
If the answer is greater than 1, then demand for the product is price elastic. This means that demand is quite sensitive to changes in price.

Question 20

What does PED look at?

Answer 20

The responsiveness of demand after a change in price.

Question 21

What influences PED?

Answer 21

Brand loyalty of the consumer
Disposable income of consumers
Availability of substitute products
Purchase frequency
Degree of necessity
Time

Question 22

How do you calculate YED?

Answer 22

% change in quantity demanded/ % change in income

Question 23

What do the answers of YED mean?

Answer 23

greater than 1 = demand is income elastic
Between 0 and 1 = demand is income inelastic
less than 0 = increases in income have a negative effect on demand (usually with inferior products)

Question 24

What does YED look at?

Answer 24

The responsiveness of demand after a change in income.

Question 25

What influences YED

Answer 25

Luxury, necessity or inferior goods Expectations of income, promotion, job loss and recessions.

Question 26

What are the 4 Ps?

Answer 26

Product Promotion Price Place (where consumers go to buy your product)

Question 27

What are the 3 points in the design mix?

Answer 27

Function Aesthetic Cost

Question 28

What are the advantages of public relations?

Answer 28

Businesses create a name for themselves, which consumers remember, helps with branding. Businesses promote themselves through storytelling which creates interest for the consumers.

Question 29

What are the disadvantages of public relations?

Answer 29

Difficult to measure success. Word of mouth can have a negative impact on a business if it becomes skewed.

Question 30

what are the advantages of direct marketing?

Answer 30

Easy to track success of their work. Able to test usefulness of a method before opening it to a full-scale marketing campaign.

Question 31

What are the disadvantages of direct marketing.

Answer 31

Many consumers may not want to be contacted. Can lead to poor quality leads.

Question 32

What influences a business's choice of promotional mix?

Answer 32

Budget Competition Promotion objectives Product Product life cycle Target market

Question 33

What are some examples of Unique Selling Points?

Answer 33

Design After-sales service Unique features Distribution Quality Durability

Question 34

What is price skimming?

Answer 34

Price skimming is where the selling price starts off high, but slowly is reduced as demand falls.

Question 35

What is price penetration?

Answer 35

Price penetration is where you initially start off with the price being fairly affordable or even cheap, and once it becomes favorable in the market the price is increased

Question 36

What is competitive pricing?

Answer 36

Competitive pricing is where a business follows the price of a competitor. Where the largest company will set the price, with the smaller companies following suit.

Question 37

What is cost-plus pricing?

Answer 37

Calculating the average cost of producing a single product and then adding a mark up, considering how much consumers would actually be willing to pay.

Question 38

What is a loss leader?

Answer 38

Selling a product for an artificially low price to entice consumers to buy other products at the business.

Question 39

What is Psychological pricing?

Answer 39

Selling a product at a price which seems cheaper (selling at £9.99 instead of £10)

Question 40

What is a distribution channel?

Answer 40

A distribution channel is the flow of organization that connect a product from producer to consumer.

Question 41

What are all of the possible stages of distribution?

Answer 41

Producer Wholesaler Retailer Consumer Distributor Agent

Question 42

What are the stages in the product life cycle?

Answer 42

Research and Development Introduction Growth Maturity Decline Extension Strategy

Question 43

What is a Boston Matrix?

Answer 43

Displays each product/service in relation to its market: How much market share they have and how well the market is performing in general

Question 44

What are the 4 categories in a Boston Matrix

Answer 44

Cash Cow ( Low market growth, High market share) Question Mark / Problem Child ( High market growth, Low market share) Star ( High market growth, High market share) Dog ( Low Market Growth, Low market share)

Question 45

What are the advantages of mass marketing?

Answer 45

Large target market allows for high number of potential sales Global marketing allows for economies of scale Potential to create huge brand with worldwide recognition

Question 46

What are the disadvantages of mass marketing?

Answer 46

Expensive forms of marketing Time consuming Constant investment Risk of irritating the consumer

Question 47

What are the advantages to niche marketing?

Answer 47

Targets a specific customer type Less expensive than mass marketing Less competition

Question 48

What are the disadvantage to niche marketing?

Answer 48

Can potentially attract other competing firms Potential for sales is much lower than mass marketing

Question 49

What is business-to-business?

Answer 49

Marketing is aimed at other businesses

Question 50

What is business-to-consumer?

Answer 50

Marketing is aimed at almost everyone

Question 51

What are some ways businesses can increase customer loyalty?

Answer 51

Loyalty/Points cards Saver schemes Good customer service

Question 52

What are the problems with loyalty?

Answer 52

May just be convenience, not loyalty May just be the cheapest alternative Some customers are indifferent and are not actually loyal

Question 53

What does loyalty mean?

Answer 53

When a consumer decides to stay with a business and make repeat purchases.

Question 54

What does sponsorships mean?

Answer 54

When a business supports another person or business in exchange for cross-promotion

Question 55

What does sustainable mean?

Answer 55

Where a business fulfils their strategic objectives without compromising the land or society in which they operate.

Question 56

Benefits of treating staff as an asset?

Answer 56

Likely to perform better staff turnover is likely to stay low

Question 57

Benefits of treating staff as a cost?

Answer 57

Cheaper Saves time

Question 58

What does outsourcing mean?

Answer 58

Where a business will find a person or other firm to take on a particular business process

Question 59

What does the term dismissal mean?

Answer 59

Where: an employee is unable to perform key tasks due to lack of skills or qualifications Gross misconduct Long term illness not related to disability

Question 60

What does the term Redundant mean?

Answer 60

Where: A company has to close down Technology replaces tasks normally performed by workers A firm move production line overseas

Question 61

What is the recruitment process?

Answer 61

Vacancy arises Job Description and Person Specification are written Job is then advertised Application forms Short-listing Interviewing References Appointment

Question 62

Advantages of internal recruitment?

Answer 62

Existing employees require less training Helps motivate and retain employees Business already knows employee with their skills and qualities Relatively cheap

Question 63

Disadvantages of internal recruitment?

Answer 63

Doesn't bring in any new ideas for the business Will need to fill the old job of the employee May cause friction in the workplace

Question 64

Advantages of external recruitment?

Answer 64

Brings new ideas into the business More options and variety to choose from Less likely to be badly influenced by others

Question 65

Disadvantages of external recruitment?

Answer 65

Can be timely and costly Could demotivate employees Selection procedure can be rigorous

Question 66

Advantages of on-the-job training?

Answer 66

Still working in the business and is contributing to productivity less expensive for the business easier to assess progress of trainee Will learn from experienced workers who have practical training

Question 67

Disadvantages of on-the-job training?

Answer 67

May pick up bad habits More likely to make mistakes which could be costly Workers training the new employee are distracting and productivity might fall

Question 68

Advantages of off-the-job training?

Answer 68

Training is given by specialist, qualified instructors Gives employee chance to experience new business ideas and working practices No opportunity to damage equipment or make mistakes on the job

Question 69

Disadvantages of off-the-job training?

Answer 69

Expensive Skills learnt may not be easily transferable to workplace Does not contribute to productivity while training

Question 70

What does a centralized business mean?

Answer 70

Few top level managers that make decisions and hold responsibility for the entire company, centralized in a main office

Question 71

What does a decentralized business mean?

Answer 71

Business delegates responsibility to employees lower down the chain of command, allowing various branches to make decisions for themselves

Question 72

What does chain of command mean?

Answer 72

The the order of authority, and how instructions are passed through a business.

Question 73

What does it mean to have a TALL structure

Answer 73

Lots of chains of command which encourages specialisation, however has a slow response time and information may become inaccurate or different from what it originally was

Question 74

What does it mean to have a flat structure?

Answer 74

Few layers of command, making the decision making process much quicker and easier, however the span of control for managers is very high, making it more difficult and may demotivate workers as they wont be that close to their managers.

Question 75

Who are the 4 motivational theorists?

Answer 75

Mayo Maslow Taylor Herzberg

Question 76

What was Taylors Theory

Answer 76

People are motivated by money, with the idea of piece rate pay to make employees more efficient

Question 77

What was Mayos Theory?

Answer 77

The idea of working in groups with communication to motivate workers, as well as changing their working environment (light study)

Question 78

What was Maslows theory?

Answer 78

Hierarchy of needs : Self actualisation needs Esteem needs Love and belonging needs Safety and security needs Physiological needs (basic needs)

Question 79

What was Herzbergs theory?

Answer 79

Hygiene and motivation factors: Without hygiene factors, motivational factors will have little effect Hygiene : ( Working conditions, salary, security ) Motivation : ( Recognition, responsibility advancement )

Question 80

What are some financial incentives ?

Answer 80

Piece rate pay Time rate pay Profit sharing Commission Bonus Fringe benefits Performance related pay

Question 81

What are some non-financial incentives?

Answer 81

Job enrichment Job enlargement Job rotation Employee empowerment Team working Consultation Flexible working

Question 82

What is the difference between management and leadership?

Answer 82

Management focuses on planning, organising, leading and co ordinating all the resources of the business, whereas leadership is focused on guiding the business, how a person motivates their employees and positively influences them in order to bring success.

Question 83

What are the 4 types of leadership?

Answer 83

Democratic : Decisions involve everyone, with the leader consulting the employees Autocratic : Decisions made by business leader with business' best interest in mind Paternalistic : Decisions made by business leader but with the interests of the employees Laissez faire : Empowers employees with minimum interference

Question 84

What is a sole trader?

Answer 84

Business that is owned and operated by a single person With full responsibility of the business

Question 85

What is a partnership?

Answer 85

Operated by multiple people but are still liable for the business

Question 86

What is a PLC?

Answer 86

Public limited company, owners are no longer liable for the business, and sell shares on the stock exchange. Must share business plans to public.

Question 87

What is a LTD?

Answer 87

Private limited company, owners are no longer liable for the business, but share parts of their business to friends or family, or people they trust

Question 88

What is an opportunity cost?

Answer 88

The value of the second best alternative foregone.