External influences

Question 1

What is a competitive market?

Answer 1

A market in which a large number of producers actively compete with each other to satisfy the wants and needs of a large number of consumers. In practice, however they are in different degrees of competition.

Question 2

What are examples of physical markets?

Answer 2

• Stalls at a market

- Shopping center

Question 3

Define a non physical market?

Answer 3

Market sellers compete with each other but do not meet or interact physically with buyers at all

Question 4

State types of non physical markets?

Answer 4

• foreign currency market

- ebay

Question 5

Advantage of non physical markets?

Answer 5

• Customers can compare (prices, features etc.)
• Can buy and deliver to their home (convenience)
• Sellers can gain information and process data about customers buying habits so to better their production line and supply chain and advertise.
• Sellers can operate cheaply from one or two locations and work a successful business.
• Can buy products from abroad

Question 6

Advantages of physical markets?

Answer 6

• better customer attention/ customer service with access to information (this service comes at the cost of a higher product price.)
• Customers can view the product in the flesh and consider quality, fit etc.

Question 7

Define me tailing?

Answer 7

Products that are custom created by the user online. For example, using predefined templates, users can create their own business cards on a Web site.

Question 8

Define a market

Answer 8

Any situation where buyers and sellers are in contact in order to establish a price

Question 9

What is a monopoly

Answer 9

A market controlled by a single business with over 25% market share (opposite of a competitive market.)

Question 10

What is predatory pricing?

Answer 10

Is a pricing strategy in which a product or service is set at a very low price with the intention to drive competitors out of the market or creating barriers to entry for potential new competitors.

Question 11

What is monopolistic competition?

Answer 11

A large number of consumers with a large number of business each essentially the same products creating non-price competition; branded then promoted by the company.

Question 12

What is an oligopoly?

Answer 12

A market dominated by a few large firms with many other, smaller businesses who follow the lead of the oligopolists in terms of price and products.

Question 13

What illegal behavior do some oligopolists conduct?

Answer 13

Secret agreements to keep prices higher so that the smaller businesses lose revenue

Question 14

Examples of oligopolies

Answer 14

• Energy and gas companies

- Airlines

Question 15

Define ‘Market size’

Answer 15

The number of individuals in a certain market who are potential/sellers of a product/ service

Question 16

Why is it important that a business should have an accurate idea of their market size?

Answer 16

To plan the launch of a new product

• Small businesses will not sell a large volume
• A large market would have more potential sales but more competition

Question 17

Define ‘Market Growth’

Answer 17

An increase in the demand for a business’ product(s) over a period of time

Question 18

‘Market dominance’ definition

Answer 18

The measure of strength of a business and its product(s) relative to competition

Question 19

What is one way of calculating market dominace

Answer 19

Market Share

Question 20

List ways to incraese marketshare

Answer 20

marketshare

1. Be aware of customer needs
2. Sell more to existing customers
3. Find out why ‘old’ customers no longer use the business
4. Have a clear marketing plan
5. Use a variety of marlketing techniques- 4Ps

Question 21

Define ‘barriers to entry’

Answer 21

The factors that could prevent a business from entering and competing in a market

Question 22

Define ‘barriers to exit’

Answer 22

The factors that could prevent a business from leaving a market, even if they would like to

Question 23

State some example of ‘barriers to entry’

Answer 23

• Large start-up costs e.g. capital costs (buildings and machinery)
• Matching marketing budgets as those already in the industry; many will also have loyal customers
• Large restricts such as patent or governmet restrictions
• Innability to gain econemies of scale
• Existing firms starting a price war/ destroyer pricing

Question 24

Stated some ‘barriers to exit’

Answer 24

• Difficulty selling off expensive plant and machinery creating ‘sunk’ costs
• High redundancy costs
• Contracts with suppliers should be honoured or large pay-offs

Question 25

Ways to grow a business

Answer 25

-Organic growth | Merger and aquisitions

Question 26

Define organic growth?

Answer 26

When a business grows by selling more of its own products to existing customers or finding new customers, assuming other businesses are not growing at a similar rate.

Question 27

Define merger

Answer 27

When 2 businesses join together to form a new larger business that is more dominant.

Question 28

Define takeover

Answer 28

Acquiring the control of another business by purchasing the majority of its shares causing the 'parent company' to increase dominance. This can cause the relationship between owners and managers to be 'hostile.'

Question 29

Smaller firms in a large market should look to incraese market share and product prices by...

Answer 29

1. operating in niche markets 2. Offer better customer serrvice 3. Offer longer opening-hours 4. use local resources to gain expertise and customers

Question 30

State what CMA stands for and what they regulate

Answer 30

Competition and Markets Authority have the responsibility for enforcing competition laws. Have the power to investigate firms to see if anti-competition manner is active

Question 31

Recap Demand and Supply

Answer 31

Should know from economics

Question 32

What is globalisation?

Answer 32

The process of growth in world markets through a process of integration where its possible to trade in a global market in the same way as one would in a domestic market.

Question 33

What is a slump on the economic cycle?

Answer 33

High levels of unemployment, in many different industries low buyer confidence, low levels of consumer spending low levels of investment and low profits for businesses.

Question 34

What is the multiplier?

Answer 34

An initial change in aggregate demand can have a much greater final impact on the level of equilibrium national income

Question 35

What is fiscal policy?

Answer 35

Fiscal policy involves the government changing the levels of taxation and government spending in order to influence Aggregate Demand (AD) and the level of economic activity.

Question 36

What is monetary policy?

Answer 36

Monetary policy involves the bank of England changing the interest rates in the economy in order to influence the aggregate demand and the level of economic activity.

Question 37

What is a employment tribunal?

Answer 37

A special type of court that only deals with employment related issues such as victimization by an employer, unfair dismissal and discrimination.

Question 38

What are some laws that Businesses need to comply with?

Answer 38

Sex Discrimination Act 1975 Disability Discrimination Act 1995 National minimum wage act Health and Safety Act 1974

Question 39

What are the two types of termination of employment?

Answer 39

Redundancy and Dismissal

Question 40

What is a redundancy?

Answer 40

Where the job that used to be performed no longer exists and so the employee is surplus to requirement.

Question 41

What is a Dismissal

Answer 41

This occurs for reasons of discipline or capability. Any dismissal has to be justified and must be fair if it to be legal.

Question 42

Advantages of increase technology at business?

Answer 42

Rather than creating unemployment, the introduction of new technology may bring a net increase in employment by increasing demand for the product or service. New technology creates new demand

Question 43

Disadvantages of increased technology at business?

Answer 43

CAD and robotic processes in manufacturing have led to a reduction in the number of workers employed in those areas. New technology makes it necessary for workers to acquire new skills, what some workers may be reluctant to do due to e.g. age.

Question 44

Advantages of using computer hardware and software?

Answer 44

Systems are faster Storage is easier and storage costs are reduced Communication is easier and faster Analysis of large amounts of data is possible to aid business processes New technology has made it easier for consumers e.g. click and collect Workers do not have to be in the work place, it is possible to work from home.

Question 45

Disadvantages of using computer hardware and software?

Answer 45

Money needs to be spent on effective training for all involved in new systems. The public may be resistant to changes System failure or breakdown may mean that the whole business is affected. New computer technology is costly Security of data is a problem when storing information in computer systems.

Question 46

How has technology affected the four functional areas of business?

Answer 46

Marketing- New technology makes it possible to introduce new products to the market, e.g. smart phones Financial- The use of technology in the business can speed up accounting practices and to store data electronically. People new technology on the production line can result in redundancy or new training Operations- New technology can improve productivity.

Question 47

What types of internal change are there in a business?

Answer 47

``` Objective Personnel Skill Level Finance Innovation ```

Question 48

What types of external change are there for a business?

Answer 48

``` Globalisation Environment Technology Customer Base Economy Competition Government ```

Question 49

What is Lewin's Three step change management model?

Answer 49

Unfreeze, Transition, Freeze

Question 50

What is globalization?

Answer 50

The growth of the world so that it can be viewed as a whole place rather than a number of separate countries. The result for business is increased interdependence and the ability to trade in the world as if it were one market.

Question 51

What is conciliation?

Answer 51

The act of bringing parties together with an independent conciliator to find common ground and a solution to the problem.