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A level business > business theme 3 > Flashcards

business theme 3 Flashcards

(95 cards)

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1
Q

what is the ansoff matrix?

A

A tool that helps businesses choose the market they want to operate in and what products they want to sell

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2
Q

what are the approaches to market penetration

A

build a brand image

increase repeat purchases by developing customer loyalty

increase promotional activities

incentivise customer affiliations (clubcard)

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3
Q

what are the approaches to product development?

A

conduct market research to identify areas for improvement

use product portfolio to manage product range

divert funds to research and development

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4
Q

benefits and limitations of market penetration

A

low risk
product and market are familiar
limited investment required

however
business becomes vulnerable if it doesnt innovate
possible limited growth potential

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5
Q

pros and cons of product development

A

pros: familiar w customers
responds to customer needs
builds on existing brand loyalty

cons: product development is costly and timely

product canbibalism

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6
Q

what are some approaches to market development

A

penetration pricing
heavy promotions
takeover of bu already in the market

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7
Q

pros and cons of market development

A

pros:
potential for growth
no need for PD

cons:
low understanding of customers needs

competing against established businesses

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8
Q

possible approaches to diversification

A

external growth / takeover

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9
Q

pros and cons of diversification

A

pros:
risk bearing EOS

cons:
very high risk
no reputation or expertise in the new market

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10
Q

what is diversification?

A

new market
new product

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11
Q

what is product development?

A

new product
existing market

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12
Q

what is market development?

A

new market
existing product

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13
Q

what is market penetration?

A

existing market
existing products

e.g increasing market share, increase promotion, better product positioning,encouraging more use

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14
Q

describe the star in the boston matrix

A

high market share; high growth

a leading brand in the market. effective distribution to ensure product availability

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15
Q

describe the cash cow in the boston matrix

A

low growth high market share

successful products in mature markets. Generate high revenue for a business that can be invested in other areas of the business. requires little promotion

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16
Q

describe the dog in the boston matrix

A

low market share; low growth

invest to revitalise or discontinue the product

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17
Q

describe the question mark in the boston matrix?

A

low market share: high market growth

fast growing but not an established product yet. usually requires heavy investment to ensure success. lots of competititon

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18
Q

what 3 strategies did porter say businesses should compete on?

A

cost leadership - lowest cost operator in the market

differentiation strategy - offer a unique product to the market

segmentation strategy - target a niche group in the market

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19
Q

pros and cons of cost leadership strategy

A

pros ;
help achieve profit
lower price and acquire market share

cons:
few businesses can operate as cost leader as multiple cant directly compete on cost

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20
Q

pros and cons of differentiation strategy

A

pros
gives them a usp
adds value- premium price

cons- may not be able to do this if a product isnt defensible (under copyright)

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21
Q

pros and cons of segmentation strategy

A

pros -
marketing can be focused on a narrow segment
develop a better understanding of customer needs

cons-
customer loyalty is vital to maintain sales
the market may dissappear if it shrinks in size

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22
Q

factors to consider when choosing a corporate strategy

A

strategic direction involves a business choosing what market it will operate in and which products it will provide

anticipated returns

risk aversion

external environment

stakeholders

expected cost

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23
Q

what is the difference between strategy and tactic

A

a strategy is a long term business plan that businesses will take to achieve its objectives involving a major commitment to resources

tactics are the day to day decisions made to achieve the strategic direction of the business

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24
Q

what is a mission statement

A

a statement that communicates the aims and purpose to stakeholders in the business

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25
what are functional objectives
e.g finance, operations and people These are goals that functional managers and directors set that contribute towards achieving the corporate objectives
26
what is swot analysis
tool that bsuinesses use to analyse their current position and external factors that may affect it strengths weaknesses opportunities and threats
27
pros and cons of SWOT analysis
cons : subjective on opinions of managers. doesnt offer clear solutions . depends on perspectives pros - assists thinking in a strategic structural way low cost simple approach
28
what is PESTLE and what does it stand for
a way to analyse the external influences that impact a business. Political Economic Social Technological Legal Environmental
29
what are porters 5 forces
1. competitive rivalry 2. bargaining power of suppliers 3. bargaining power of buyers 4. threat of substitutes 5. threat of new entrants
30
explain competitive rivalry
this is the level of competition between businesses in the market.
31
what are signs competition is fierce is a market
easy entry to market easy for customers to switch little differentiation of products little growth or decline in the market because profit margins are squeezed
32
how can businesses compete in competitive markets
1. lower costs of production and prices to compete 2. differentiate products 3. takeover or merger
33
explain bargaining power of suppliers
this is the power suppliers have to negotiate terms and prices their bargaining power will change if the supply of a commodity decreased
34
what are signs supplier power is high
there are few suppliers suppliers product is essential for production the supplier is able to integrate vertically forward and sell direct to the businesses customers low availability of substitutes
35
what can businesses do when suppliers have high bargaining power
build strong relationships with suppliers agree long term contracts of supply with favourable terms backward vertical intergration
36
explain the bargaining power of buyers
this is the power buyers have to negotiate terms and prices
37
what are some signs that buyer power is high
theres little difference between products offered by competitors products are price sensitive customers buy products a lot or regularly easy for buyers to switch between competitiors
38
what options can businesses consider when buyer power is high
develop a usp lower prices to attract customers forward vertical integration is the buyer is a business
39
explain threat of substitutes
a substitutes is an alternative product that may deliver the same benefits to the customer substitutes may change w social trends
40
threats of substitutes are high if...
alternative products exist alternative prices fail customers can easily switch to a substitute this means buyers have high bargaining power
41
what can businesses do when theres threat of substitutes
develop a USP build switching costs into agreement lower prices to attract customers promote benefits in comparison to substitute products
42
what are the barriers to entry
physical, technological and intellectual factors that make it difficult for rival businesses to enter the market existence of large businesses can create a barrier to entry because they dominate resources and networks
43
Name 2 factors that cause barrier to entry
capital investment to enter a business is high existing brand loyalty
44
what can businesses do when there are barriers to entry
innvovation and development of new products can keep a business ahead of new competition build strong relationship w buyers e.g loyalty and reward cards use EOS to keep prices low and have competitive advantage
45
name 3 methods of organic growth
market penetration product development market development
46
name 3 methods of inorganic growth
mergers takeovers joint ventures
47
limitations of diseconomies of scale(business grows too much)
communication problems control flexibility motivation
48
what is backwards vertical integration
taking over a supplier e.g a tree farm
49
what is conglomerate growth
a business expand by taking over a completely unrelated business in a different industry (diversification) e.g Christmas tree wholesaler takes over another jewellery retailer
50
what is horizontal growth
a supplier merging with a business at the same level of the supply chain e.g Christmas tree wholesaler takes over another Christmas tree wholesaler
51
what is forwards vertical intergration
a supplier taking over a customer e.g a retailer that sells Christmas trees
52
what are the benefits of inorganic growth
faster growth than organic greater profitability
53
risks of inorganic growth
regulatory intervention resistance - can decrease morale and productivity financial strain
54
what is franchising?
this incolves the business licensing individuals or companies to trade under their brand using the goods or services it provides
55
whats the difference between organic and inorganic growth?
organic growth occurs when a business grows internally by selling more products and reinvesting the profit to expand into new areas e.g franchising inorganic growth involves businesses joining together
56
advantages of organic growth
less risk controlled pace cheaper than external growth diseconomies of scale is minimised
57
disadvantages of organic growth
slow pace - too slow for stakeholders who want quick returns external expertise - cant access resources, skills and knowledge that may be available if inorganic competition - business may be left behind by other that use inorganic growth to dominate the market
58
what are the limitations of quantitative sales forecasting
short term- data loses value after 2 years less valuable in volatile markets cant predict the future doesnt factor in external shocks
59
what is investment appraisal and give 3 examples of it
calculations that help businesses judge the desirability of investing in particular projects e.g: payback period average rate of return and net present value
60
how is average rate of return calculated
this measures the profit from an investment over time income from investment - cost of investment = profit total profit over years = average annual profit average annual profit over initial cost x 100 is average rate of return
61
what is net present value (discounted cash flow) and how is it calculated
NPv takes into account the future value of money by discounting cash flows. net cash flow x discount factor
62
what are decision trees
they are a way of tracing alternative outcomes from a range of business decisions
63
what is critical path analysis useful for
CPA can help a manager to complete a project in the shortest space of time possible and identify critical activities always choose the biggest number to add or subtract
64
outline the nodes of a CPA diagram
the earliest start time is shown in the top right of the node the latest finish time is the bottom right of the node
65
how to calculate float time of an activity
this is the amount of time an activity can be delayed without changing the finish date float time = LFT - duration - ESt
66
what is the critical path
the route in which there is no float time and all activities are critical because if they overrun it will extend the duration of the project.
67
what are the benefits of critical path analysis
can effectively plan for strategies can introduce deadlines on activities allocate resources efficiently
68
what are the limitations of critical path analysis
doesn't take into account qualitative issues like employee morale it relies on estimations it doesnt factor in external shocks
69
what are the influences of corporate decision making(HINT: think SECT)
timescales - short vs long term ethics corporate culture stakeholder perspective - pressure to satisfy shareholders may contradict the interest of other stakeholders
70
what is corporate culture
the norms and values in an organisation that makes up the way the business runs and the employees interact with each other
71
state and outline the 4 types of corporate culture (Charles Handy's model of culture)
power culture - a few people make all the business decisions role culture - people have clear roles / functions in the business task culture - teams are formed to solve problems or finish projects. employees associate with a task or project person - a lot of autonomy, not affiliated w a particular group
72
what are the problems with changing corporate culture
its a long process that requires training large organisations may have more than one culture across different regions culture is deep set so its hard to change
73
what are ethics
the moral principles that guide the behaviour of a business
74
give some examples of ethical business practices
treating workers fairly honest with customers ethical sourcing of material caring for the community/ environment meeting government legislation
75
what are the 4 parts of the corporate social responsibility pyramid (hint: think leep)
philanthropic responsibility - good corporate citizen, contribute to the community and improve their quality of life ethical responsibility - do what is right/fair and avoid harm! legal responsibility - obey they law economic responsibility - be profitable
76
what can we find out from a statement of comprehensive income
unusual incomes and expenses during the year changes in cost of sales profitability and management of operating costs
77
what stakeholders would be interested in the statement of comprehensive income
shareholders managers - measure performance and set targets employees - indicate potential remuneration the government - identify level of tax
78
what is the difference between statement of comprehensive income and statement of financial position
a company's balance sheet provides information on what the company is worth from a book value perspective. A company's statement of comprehensive income provides details on the revenue a company earns and the expenses involved in its operating activities.
79
what is the statement of financial position also known as
balance sheet
80
what does a companies statement of financial position tell us
providing a clear picture of an organization's financial situation. It reports on an organization's assets (what is owned) and liabilities (what is owed).
81
name the key points a company's balance sheet will tell us
liquidity of a business how a business has been financed short and long term liabilities current assets
82
what does ROCE show us and how is it calculated
how effectively the business was able to generate profit from the investment it can improve its ROCE by reducing capitial employed or increasing profit formula : operating profit over capital employed x 100
83
what does gearing ratio tell us
how a business has raised its finance. the ratio represents the proportion of a firms equity that is borrowed
84
ratio analysis: what does it mean if a business is highly geared
more than 50 % of its capital is in the form of loans a highly geared business is vulnerable to increases in interest rates
85
ratio analysis: what does it mean if a business is lowly geared
they may have the opportunity to borrow funds in order to expand they have the opportunity to borrow fund in order to expand
86
how to calculate absenteeism
number of staff absent for a period of time over total employees
87
how to calculate labour turnover
number of staff leaving in a year over average number of staff
88
name 6 ways to empower employees
communication - understanding their role increases security regular feedback extra training delegate authority flexible working provide resources
89
what are the causes of business change
size pestle transformational leadership poor performance new ownership
90
what is scenario planning
the business analyses their current and future environment and anticipates potential risks once risks have been identified the business can formulate contingency plans and minimise the impact of risk
91
what is succession planning
to ensure any loss of personnel is covered and vital knowledge and skills are not lost from the workforce
92
what is a pro and con of evidence based decision making?
data can help reduce the risk in decision making and identify likely outcomes compared to alternatives data can be difficult or expensive to collect. data can br unavailable, out of date or unreliable
93
benefit and disadvantage of subjective decision making?(intuition)
Intuition from experienced managers is useful in making qualitative decisions e.g character of a new employee/ successs of a marketing campaign without data evidence decisions made will always be really risky.
94
what is a strong corporate culture
a strong culture is deeply embedded. It's obvious to the people working there. it influences the way that employees work and interact and the business strategies.
95
what are 5 benefits of a strong culture
sense of identity/ belonging a sense of togetherness improved commitment from employees motivation people understand their purpose within the business

A level business (2 decks)

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