paper 1 Flashcards
(156 cards)
1
Q
what is the boston matrix
A
a way of accessing where a product is in its lifecycle
2
Q
the purpose of the boston matrix
A
helps market planning
identifies strategies using the 4p’s
3
Q
4 different names for a product on the boston matrix
A
star
cash cow
problem child / question mark
dog
4
Q
star
A
high market share in a growing market
has successfully reached the growth stage
neutral cash as still needs investment
5
Q
problem child / question mark
A
low market share in a growing market
6
Q
cash cow
A
high market share in a stable market
has reached maturity
high yield
generates high cash
7
Q
dog
A
low market share in a stable market
in decline phase
8
Q
4 strategies for products
A
milking
building
holding
divesting
9
Q
holding
A
market spending to maintain sales
10
Q
building
A
investing in the promotion and distribution of the product
11
Q
milking
A
taking as much profit as possible with little investment
12
Q
divesting
A
selling reaming stock
13
Q
strategy for star
A
holding
14
Q
strategy for problem child
A
building and sometimes divesting
15
Q
strategy for cash cow
A
milking
16
Q
strategy for dog
A
divesting
17
Q
break even
A
is the point at which a business does not make a profit or loss
18
Q
break even analysis
A
a technique that analyses the relationship between total revenue and total costs to determine profitability at various levels of output
19
Q
contribution
A
looks at the surplus made on each product sold by the business. it shows how many products need to be sold to cover the fixed operation costs
20
Q
margin of safety
A
the amount sales can fall before the break even point
21
Q
advantages of break even
A
gaining funding- required for plans
selling revenue targets
decide appropriate pricing
22
Q
disadvantages of break even
A
doesn’t give an insight into chances sales will meet this point
data may be unreliable
23
Q
PED
A
the sensitivity of demand to a change in price
24
Q
Elasticity
A
measure the extent to which demand will change
25
Elastic
describes demand that is very sensitive to a change in price
26
Inelastic
not price sensitive - price can be increased and demand won’t have a significant drop
27
Factors affecting PED
substitutes- lots of alternatives= elastic
proportion of income- small income= inelastic
legal protection- high income= inelastic
USP
brand loyalty
Necessity
Habit
28
most important factor affecting demand
price
29
differentiation
how you make your product stand out from other competitions using USP
30
how will differentiation affect the price elasticity of certain products
better differentiated product= more inelastic
nothing else in the market, so people will buy anyway
31
branding and brand loyalty
distinctive design that differentiates product in the market
32
why might branding and brand loyalty affect PED
more elastic
33
what happens to revenue if price of elastic product increases
decrease - price sensitive > more people will switch to different brands/products
34
strategies to reduces PED
increase product differentiation
reduce competition
35
YED
the sensitivity of demand to a change in income
36
gross incomes
amount the average employee receives before any deductions for tax/pension contributions
37
factors affecting YED
if product is a necessity
who buys the product
positive/negative elasticity
38
significance of YED
allow a balanced product port-folio
sales forecasting
financial planning
39
difference in PED and YED
PED- >1 income elastic, 0 normal good, <0 inferior good, +1.5= luxuary
40
subsidies role
can lower a firms average cost per unit, encouraging them to expand production
41
centralised organisational structure
when a small number of employees at the top of the hierarchy make all the important decisions in a business and often have the most experience and expertise
42
decentralised organisational structure
when more employees from different levels of the hierarchy are delegated to make decisions in the business and are closer to the day to day operations of the business
43
Advs of centralised
consistent decision across business
best positioned decisions (more experience)
operations and decisions are more closely controlled and managed
44
Disadvs of centralised
decisions can be slow
demotivates employees
decision makers don’t have the specialist knowledge of all the company’s functions when making decision based on them
45
Advs of decentralised
faster decisons
decisons are made with specialist knowledge
improves company motivation
46
Disadvs of decentralised
inconsistent decisions
some decisions not aligned with aims and objectives
lower experience staff could make ineffective decisions causing problems
47
maslow
explains our actions are motivated by certain physiological and psychological needs that progress from basic to complex (human motivation)
48
maslow motivation model
Self actualisation
self esteem
love and belonging
safety and security
physiological needs
49
main idea of maslow
the most basic needs must be met before people can progress up to the more advanced needs
50
budget
a spending plan based on income and expenses
51
types of budget
profit budget
income budget
expenditure budget
52
information needed for a budget
historical data
own knowledge
market research
53
benefit of budgets
makes sure businesses don’t spend money they don’t have
54
drawbacks or budgets
hard for a new business as they have no past data
55
risks of not budgeting
could end up running out of cash
56
expenditure budget
predict how much business will spend over a period of time
57
income budget
predicts how much money will come in from sales
58
adverse variance
when actual profit is lower than budgeted profit
59
favourable variance
when the difference between the budgeted and actual profit leads to a higher than expected profit
60
contingency cost
an amount included in a budget to cover any unexpected issues
61
GDP
gross domestic product
the value of all goods and services sold throughout the economy through a period of time, produced in the UK
62
job enrichment
involved adding new tasks to your employees existing told so they can contribute their full potential
63
why does labour productivity matter
labour costs
business efficiency and productivity
remain conpetitive
high labour productivity= lower lanky costs per unit
64
factors influencing labour productivity
extent and quality of fixed assets
skills, ability and motivation
methods of production organisation
trained workforce
external factors
65
how to improve labour productivity
measure performance
streamline production process
invest in capital equipment
invest in employee training
improve working conditions
66
problems in increasing labour productivity
potential ‘trade off’ with quality
potential for employee resistance
employers may demand higher pay for improved productivity
67
labour productivity
how productive your workforce is
68
stakeholder
individual or organisation with a vested interest in a business
69
shareholder
owner of the business, benefits from value increase
70
return on investment
stakeholders interest in profits and dividends
71
managers
interested in rewards, job security, and promotion
72
employees
interested in rewards, job satisfaction and responsibilities
73
customers
interested in value for money, product quality, and customer service
74
suppliers
interested in profitable trade and financial stability
75
bank and finance providers
interested in profitability, cash flows, and business growth
76
governement
interested in tax collection, business growth, and compliancd
77
society
interested in successful business and compliance with laws
78
distribution
delivering products to buyers; how a business gets its product to their customers
79
marketing mix
price
product
place
promotion
process
people
physical environment
80
promotional mix
the coordination of the various methods of promotion in order to achieve marketing targets
81
promotion
the process of communicating with customers or potential customers
82
branding
the process of differentiating a product from its competitors through a name, sign, symbol, design, or slogan
83
product
everything that the customer buys-brand features and benefits of a good or service
84
price
set to match the expectations of customers and features of the product
85
place
using the right channels to get the product to the customer
86
process
making the transaction convenient efficient and effective for the consumer
87
physical environment
matching the physical environment in which the transaction takes place to the product or brand
88
people
adding to the product by using the right people in the transaction
89
product life-cycle
the stages through which goods and services move from time they are introduced on the market until they are taken off the market
90
introduction
prices may be low to initial sales. have a promotion to cremate awareness. low number of product variations launched
91
growth
prices may increase with popularity. New varieties and distribution methods introduced. business must keep up with demand growth
92
maturity
consider cutting prices to maintain demand promotion slows as customers are aware of the product
93
saturation
or potential customers have the product and there are other better cheaper alternative
prices may be cut to maintain competitiveness
94
decline
further prices cut to maintain demand variety of products streamlined to the most popular business may consider discontinuing the product
95
influences on price
costs, the price elasticities of demand, competition, product life-cycle, branding, other elements of the marketing mix
96
price skimming
starting with the highest price possible so you generate the most amount of revenue and then gradually lowering price
97
dynamic pricing
adjusting the price to levels of demand such as hotel room
98
penetration pricing
this is starting with a low price to gain interest and then raise in the price to maximise revenue
99
influences on promotion
the target audience, competition, technology, the message, promotion budget
100
influences on place
control over promotion and pricing, expectations of customers, nature of the product, scope/scale
101
capacity utilisation
the extent to which the organisations maximum possible output is being reached
102
capacity utilisation is measured
by over a time period
103
ideal target for capacity utilisation is
90%
104
every percentage under 100% represents
unused resources
105
disadvantages of capacity utilisation
higher proportion of fixed costs per unit
lower profit
spare capacity
bored and demoralised workers
106
advantages of capacity utilisation
spare capacity, more space
less pressure and stress
allows a company to cope with a sudden increase in demand
107
unit costs of labour
the cost of employing labour per unit of output
108
capacity
a measure of how much output a company can achieve in a given period of time
109
how is capacity a dynamic concept
it can change
more working shifts= increased capacity
110
personal funds
main source of finance for sole traders and partnerships. consists of using their own money for the business
111
retained profit
the value of profits that the business keep after paying taxes and dividends to use within the business
112
sale or assets
selling dormant assets such as machinery
113
share capital
only applicable to limited liability companies. money raised from selling shares in the company
114
loan capital
obtained from commercial lenders such as banks
115
overdrafts
temporarily overdraw on its bank account. usually used when businesses have minor cash flow problems
116
trade credit
source of finance that allows a business to ‘buy now pay later’
117
grants and subsidies
government financial gifts to support business acitivities
118
hire purchase
allows the business to pay their creditors in instalments, perhaps over 12 or 25 months
119
debt factoring
financial service that allows a business to raise funds based on the value owed by its debtors
120
leasing
a form of hiring whereby a contract is agreed between a leasing company and the customer. where the lessee pays rental income to hire assets from the lessor, who is the legal owner of the assets
121
venture capital
high risk capital, usually in the form of loans or shares, invested by venture capital firms, usually at the start of a business idea
122
business angels
extremely wealthy individuals who choose to invest their money in business that offer high growth potential
123
debentures
a kind of loan capital
124
capital expenditure
investment spending on fixed assets such as the purchase of land and buildings
125
initial public offering
business converting its legal status to a public limited company by floating its shares on a stock exchange for the first time
126
external sources of finance
funds from outside the business
127
internal sources of finance
funds from within the business
128
sale and leaseback
external source of finance involving a business selling fixed assets
129
share issue
exists when an existing public limited company raises further finance by selling more shares
130
too much inventory
can result in high storage costs including heating, lighting, insurance etc
131
too little inventory
customer demand not fulfilled
stop production whilst waiting for inventories
132
maximum inventory level
the largest amount of items to be stored on site
133
minimum inventory level
the lowest amount of items to be stored on site
134
re-order quantity
the amount of stock ordered to restore inventory levels to their maximum point
135
re-order level
the level of inventory at which new stock is ordered
136
lead time
the amount of time it takes between ordering stock and the stock being delivered
137
buffer stock
stock held in case deliveries are held up or there is an unexpected large order
138
centralised inventory
inventory that a company holds in a single storage facility
139
economies of scale
the cost advantage of operating on a larger scale, buying more cheaply in bulk and reducing unit costs. this is an advantage to medium to large scale foodservice operations
140
working capital
this is money that a business can access immediately, rather than. key that is tied up in investments or property. the availability of working capital is critical to the day-to-day operation of a food service operation
141
cash
includes notes and coins of different amounts
142
standing order
an agreement by the owner of the bank account and their bank to allow a third party to withdraw a fixed sum of money from their account on a certain
143
direct debit
a written document instruction the bank to make a payment from on persons bank account to another bank
144
mobile banking
the ability to complete banking transactions on mobile devices and internet connected computers
145
store card
similar to a credit card but can only be used in certain stores. the owner can use the card to buy items from that store on credit
146
debit card
a card issued by banks to be used to purchase goods and services with payment taken directly from the users current accounts
147
electronic transfer
when financial payments are electronically transferred from one bank account to another
148
cheque
an agreement by the owner of the bank account and their bank to allow a third party to withdraw specific amount from their account
149
contactless card
a card which contains technology to enable it to be touched on a contactless terminal and for funds to be withdrawn
150
credit card
issued by financial institutions allowing goods and services to be purchased with payment delayed
151
opening balance
the amount of money a business starts with at the beginning of the reporting period.
it is the closing balance of the previous month
152
closing balance
the amount of money thi business has at the end of the reporting period
it is net cash flow + opening balance
153
net cash flow
a profitability metric that represents the amount of money produced or lost by a business during a given period
154
inflows
the money that the business receives over a certain period
155
outflows
the amount of money a business loses over a certain period
156
why is net cash flow important
keeps operations running, pays bills, and helps a company to grow
