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Business > Paper 1 - Market, People and Global > Flashcards

Paper 1 - Market, People and Global Flashcards

1
Q

What is an entrepreneur?

A

Individuals who typically set up and run a business and take risks associated with this

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2
Q

Give 3 entrepreneur qualities…

A

1) take risks
2) resilient
3) innovation/initiative

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3
Q

what is the formula for profit…

A

P= TR-TC

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4
Q

What is profit maximisation?

A

the ability for a company to achieve a maximum profit with low operating expenses

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5
Q

What is profit satisficing?

A

an entrepreneur may aim to make just enough profit to keep the business moving and have another aim at the same time - this is more of a realistic goal

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6
Q

social enterprise

A

a business model that puts the interests of people and planet before shareholder gain

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7
Q

intrapreneurship

A

an employee within a larger business who thinks like an entrepreneur

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8
Q

leadership

A

the action of leading a group of people or an organisation, or the ability to do this

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9
Q

management

A

the process of dealing with or controlling things or people

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10
Q

what are the 4 types of leadership

A

1) autocratic
2) democratic
3) paternalistic
4) laissez - faire

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11
Q

what is autocratic leadership?

A
  • tell their employees what they want done without getting the advice of their followers. eg. donald trump.
  • they issue orders and expect them to be followed (ethnocentric approach) they are motivated by money
  • the manager insists on obedience
  • usually results in members being dissatisfied with the leader
  • there is little cohesion and poor motivation
  • however –>autocratic leadership may be needed in some circumstances e.g. army
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12
Q

what is democratic leadership?

A
  • offer guidance to group members and employees have greater involvement in decision making.
  • the leader consults with subordinates and then makes a decision eg. richard branson
  • can be either PERSUASIVE or CONSULTATIVE
    persuasive –> leader has already made the decision but takes the time to persuade others its a good idea
  • consultative –> leader consults others about their views before making a decision and the final decision takes into account these views

democratic leaders need good communication skills

*however–> decisions may take longer

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13
Q

what is paternalistic leadership?

A
  • similar to autocratic leadership, but they are interested in subordinates
    leader decides what is best for employees, based on a parent/child relationship, softer form of leadership
  • employees are consulted but the leader makes the final decision
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14
Q

what is laissez-faire leadership?

A

where employees can carry out and make decisons freely and work in a very relaxed environment with little guidelines.

e. g. steve jobs
- leader gives little guidance and allows workers freedom
* effective when workers are highly skilled*

advantage- good in a creative environment
disadvantage - lack of supervision
- some may not be able to set their own boundaries and not meet deadlines
- could cost the business if deadlines are missed

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15
Q

hierarchy

A

where employees are ranked due to their status and authority

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16
Q

chain of command

A

this is the flow of information power and authority through organisation

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17
Q

what happens if there is a long chain of command…

A

1) message distortion
2) takes a long time - less efficient
3) more important layers may dilute the urgency and the impact
4) more challenging with complex instructions

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18
Q

span of control

A

the number of subordinates that report to an individual directly and are responsible for

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19
Q

wide span of control (flat structure) - short chain of command

A

this means a single manager or supervisor oversees a large number of subordinates. this gives rise to a flat structure

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20
Q

advantages of wide span of control

A

1) issues get dealt with quicker

2) more profit for managers as things are dealt with quicker - more direct

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21
Q

disadvantages of wide span of control

A

1) more challenging to supervise as there are more people to monitor
2) harder to get a promotion - lead to poor motivation and lower productivity

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22
Q

narrow span of control (tall structure) - long chain of command

A

this means a single manager or supervisor oversees a few subordinates. this gives rise to a tall organisational structure

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23
Q

advantages of narrow span of control

A

1) allows specialisms and close control

2) lots of promotion opportunities*

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24
Q

disadvantages of narrow span control

A

1) more expensive because of the different layers - have more managers to pay more
2) more distanced from decision making

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25
Q

delegation

A

the transfer of responsibility down the chain of command

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26
Q

centralisation

A

Businesses that have a centralised structure keep decision-making firmly at the top of the hierarchy

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27
Q

decentralisation

A

A structure in which decision making is spread out to include more managers in the hierarchy

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28
Q

how many stages are in the recruitment process?

A

8 stages

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29
Q

what is the first stage of recruitment

A

1) identify the vacancy
- retired
- moving to a different job
- promotion
- maternity leave

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30
Q

what is the second stage of recruitment

A

2) write a job description including:

- responsibility and workload of position

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31
Q

what is the third stage of recruitment

A

3) person specification
- qualities and skills
(desirable, essential)

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32
Q

what is the fourth stage of recruitment

A

4) advertise the recruitment
- internally/externally
eg. newsletter, email, online, meeting

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33
Q

what is the fifth stage of recruitment

A

5) candidates apply
- may have to send off cv, or application form
adv - for the business it is quick and easy and also keeps costs down
disadv - might have some irrelevant info which would be time consuming

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34
Q

what is the sixth stage of recruitment

A

6) candidates are shortlisted
- many jobs will attract more candidates than possible
BLIND SHORTLISTING - the names and DOB are taken out so there are no sexist/bias decisions

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35
Q

what is the seventh stage of recruitment

A

7) shortlisted candidates are interviewed
- normally face to face
- sometimes over the phone

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36
Q

what is the eighth stage of recruitment

A

8) candidates may participate in other recruitment activities
- may have to go to recruitment centre
- may have to complete certain tasks/training

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37
Q

internal recruitment

A

workers already in the business can apply for a new position
adv- already loyal and you know what there work ethic is like

38
Q

external recruitment

A

workers outside of the business can apply

  • more likely to work harder if they are at a new job
  • they bring ‘fresh blood’ and new skills
39
Q

costs of recruitment

A
  • cost of the advert
  • cost of the wage of the new employee
  • loss of productivity - takes 6 months to ‘settle in’
  • up to half of employees leave within the first year
40
Q

what are the three types of training

A

1) induction training
2) on-the-job training
3) off-the-job training

41
Q

induction training

A
  • ensures they are familiar with the work place
  • able to do their job
  • feel part of the organisation
  • quickly become productive for the business
  • company policies/health&saftey
  • introduce to staff

if the job is more basic the induction won’t be as long

42
Q

on-the-job training

A

-coaching or mentoring while doing the job, assistance and advice is provided by those more experienced
adv - less expensive than off the job
- learning can be put into practice immediately
disadv - reduces efficiency
- some workers have bad habits that they may pass on

43
Q

off-the-job training

A

it doesn’t reduce efficiency and staff can still do their job

44
Q

what is work - life balance

A

making sure that work and life is balanced because otherwise they don’t become overwhelmed

45
Q

advantages of work life balance

A
  • individuals are more motivated to work hard and this will lead to an increase in productivity
  • less stress so your health is better reduced absenteeism
46
Q

what is the importance of employee motivation?

A
  • staff are more loyal, reliable, productive
  • loyal staff are less likely to leave which improves labour turnover rates
  • -> also reduces absenteeism
47
Q

who are the 4 theorists for motivation?

A

1) taylor
2) mayo
3) maslow
4) herzberg

48
Q

what was taylors theory?

A

” fair days pay for a fair days work “

  • believed the employee would do minimum work if not supervised
  • main form of motivation is high wages = high output
  • a managers job is to tell employees what to do
  • a workers job is to do what they are told and get paid accordingly
49
Q

what was mayo’s theory?

A

based his assumptions on research undertaken at Hawthorne factory

  • changed working conditions such as break times
  • found that just being watched increased motivation
  • working in teams was more important than money
  • non financial motivators were more important
  • boring and repetitive work can be a demotivator
50
Q

what was maslow’s theory?

A

hierarchy of needs

1) self actualisation
2) self esteem
3) love/ belonging
4) safety and security
5) physiological needs

51
Q

what was herzberg’s theory?

A

two factor theory
employees have motivating factors and hygiene factors

motivating - interesting work, recognition, personal achievement, responsibility and scope to develop

hygiene factors - if not met, would dissatisfy employees but if not met, it would not motivate them any more than they already are.
–> general satisfaction / prevention of dissatisfaction

52
Q

what are financial incentives

A
  • piecework - worker gets paid per piece of work they do
  • commission
  • bonus
  • profit share –> annual dividend based on profits
  • performance related pay(PRP) –> based on appraisal
53
Q

what are non financial incentives

A
  • job enrichment - more variety of tasks so increase responsibility
  • job rotation - one task to another
    job enlargement - more tasks at the same level of responsibility (horizontal)
  • flexible - reduces absenteeism
  • team working
  • empowerment - more authority than others - loyal
  • consultation - H&S issues, redundancy, changes to contract
  • delegation - might give too much or too little work
54
Q

what does marketing involve?

A
  • identifying needs of customer
  • awareness of product
  • designing products that meet these needs
  • understanding threats from competitors
  • charging the right price
  • products available easily
55
Q

what is the definition of a mass market?

A

when a business sells the same product to all consumers and markets them in the same way

  • no. of customers –> millions –> so they can produce large quantities at a lower cost –> EOS
  • may result in increase sales and revenue etc
    • but there is a lot of competition so marketing may be expensive**
56
Q

what is the definition of a niche market?

A

a smaller market within a large subset of a larger market

  • -> selling to a smaller group with more specific needs
  • -> avoids competition - charge premium price
57
Q

what is the definition of a brand?

A

something is given a name to distinguish itself from others

  • important in a mass market
  • differentiate
  • create customer loyalty
  • develop image
  • can charge a premium price when the brand is strong
58
Q

what is the definition of online retailing?

A

involves shoppers ordering goods online and taking delivery home

59
Q

what is the definition of pricing strategies?

A

the pricing policies or methods used by a business when deciding what to charge

60
Q

what are the 6 pricing strategies?

A

1) cost - plus pricing
2) price skimming
3) penetration pricing
4) predatory pricing
5) psychological pricing
6) competitive pricing

61
Q

what is cost plus pricing?

A

businesses have to set a price that will make a profit

  • involves adding a mark up to cover unit costs - usually common with retailers
  • however –> it ignores market conditions
  • may be difficult to identify all costs if a business has multi products
62
Q

what is price skimming?

A

launch a product onto the market and charge a high price for a limited period

  • aim to generate high levels of revenue while it is unique and has no competitors
  • charging a high price helps the business to recover high development/research costs
  • early adopters are prepared to pay high prices
  • -> helps elevate the image of the product
  • however –> skimming may draw in competition who charge lower prices
  • will only be used if demand is inelastic
63
Q

what is penetration pricing?

A

introduce a new product onto the market and charge low price to gain a foothold in the market

  • customers are attracted by a low price and then continue to buy and repeat buy
  • beneficial when targeting low/ middle class customers
  • can grow the sales of a new line quickly
  • can put pressure on rivals
  • can’t have the low prices for too long because customers will get used to them and then not respond when they raise them
64
Q

what is psychological pricing?

A

set the price slightly lower than a round figure
e.g. £99 instead of £100
makes the customer think they are getting a low price
- targets customers who like a bargain
- not likely to be used with up market products

65
Q

what is predatory/destroyer pricing?

A

aims to eliminate other competitors from the market

  • involves charging very low prices for a period of time until one or more competitors leaves the market
  • some forms of predatory pricing are illegal in the UK
  • however–> can be used to sell unsold stock
66
Q

what is competitive pricing?

A

pricing strategies based on the prices charged by rivals

  • likely to be used in a fiercely competitive market
  • could charge the same price as competitors and avoid a price war
  • price leadership - mkt leader sets price for others to follow
67
Q

what are the 6 factors that determine which pricing strategy to choose?

A

1) PED
2) differentiation/ USP
3) amount of competition
4) strength of brand
5) stage in Product LC
6) costs/ need to make profit

68
Q

what are the 5 marketing strategies?

A

1) product life cycle
2) extension strategies
3) boston matrix
4) B2B & B2C
5) consumer behaviour

69
Q

what are the 5 stages of the product life cycle

A

1) development/ research
2) introduction
3) growth
4) maturity
5) decline

70
Q

what is involved in the DEVELOPMENT stage of PLC

A
  • large number of new products will fail at this point
  • -> because new businesses are reluctant to take risks
  • it involves high costs as there will be no sales at this stage
  • businesses will be spending but receiving no revenue
71
Q

what is involved in the INTRODUCTION stage of PLC

A
  • sales may be slow and they may need to build a new production line and the firm will have to meet promotion and distribution costs
  • will need to spend on promotion –> make consumers aware of the product
  • prices may be set high to cover costs OR low to get a foothold in the market
  • length of this stage will vary according to product
  • fast moving consumer goods - rapid sales/growth
72
Q

what is involved in the GROWTH stage of PLC

A
  • product has been established and sales will being to grow
  • new customers buy product and repeat buy
  • unit costs may fall as prodn increases –> product is then profitable
  • competitors may launch their own versions
  • -> business should consider prices/promotion
73
Q

what is involved in the MATURITY stage of PLC

A
  • product has a stable market share
  • -> sales will have peaked and competitors take advantage
  • as more firms enter - market becomes saturated
  • may be too many firms -some forced out mkt
  • business may use extension strategies to extend life cycle
74
Q

what is involved in the DECLINE stage of PLC

A
  • for majority of products, sales will eventually decline
  • -> due to changing consumer tastes, new tech or introduction of new products
  • product will lose its appeal to customers
  • may also be possible to make a profit if a high price is charged and costs are low on promotion etc*
75
Q

what is the definition of extension strategies?

A

methods used to prolong the life of a product
two approaches:
1) adjustment to product
2) promotion

76
Q

what is the first approach to extension strategies?

A

PRODUCT ADJUSTMENT
involves making improvements, updating, repackaging or extending the range
- this may add value to the product
–> may be faster, more stylish, more functions
- extend product range
–> add new flavours/ alternatives etc
- modified with new packaging

77
Q

what is the second approach to extension strategies?

A

PROMOTION

  • leave product unchanged but boost sales through promotions
  • find new uses for the product
  • find new markets for the product
  • a big advertising campaign to rejuvenate sales
  • encourage frequent use of products
  • firms that can predict a decline in sales from forecasts will be able to react quicker and start extension strategies
78
Q

what is the definition of boston matrix?

A

analyses a product portfolio according to the growth rate of the market and the relative mkt share of products in the market

79
Q

what is the definition of product portfolio?

A

made up of product lines –> a group of products which are similar
e.g. TV’s –> HD, widescreen, flatscreen
“ the collection of products a business is currently making “

80
Q

what is the definition or market growth?

A

how fast is the market for the product growing?

- sales of a product in a fast expanding market have a better chance of growing than in a declining one

81
Q

what is the definition of relative market share?

A

how strong is the product within its market?

- is it a leader or is it 12th in terms of sales?

82
Q

what are the 4 elements of the boston matrix?

A

1) star
2) cash cow
3) question mark/problem child
4) dog

83
Q

what are the features of STAR in boston matrix

A

high market growth & high market share

  • valuable to businesses
  • strong position - can take advantage of a fast growing market
  • likely to be profitable but may need to invest
84
Q

what are the features of CASH COW in boston matrix

A

high market share & low market growth

  • positioned well in market and –> likely to be profitable
  • little chance of increasing sales in the future
  • little need for investment
85
Q

what are the features of QUESTION MARK in boston matrix

A

low market share & high market growth

  • potential to turn into star if mkt is fast growing
  • unlikely to be profitable with weak market share
  • investment needed to cope with expanding sales
86
Q

what are the features of DOG in boston matrix

A

low market share & low market growth

  • poor prospects for future sales and profits
  • may generate some positive cash flow, need little investment
87
Q

what should businesses do to make sure they are in the best position with their boston matrix

A

businesses should balance their product to make sure they dont contain too many items in each category

88
Q

what is the definition of marketing strategy?

A

a set of plans that aim to achieve a specific marketing objective
–> involves elements of the marketing mix

89
Q

what is a mass market?

A

can be global and have millions of potential customers

–> usually very competitive, rewards for success are significant

90
Q

features of marketing mix in the mass market

A

  • they will be close substitutes of each other
  • most successful are those that can differentiate(USP)
  • if it cant differentiate it may rely on other areas of the marketing mix
    PRICE
    ———————————————————————————
    prices charged are likely to be similar
  • price wars will reduce revenue for every competitor, so they try to reduce this
  • price leadership is common - where the leader/ most dominant business sets a price and everyone follows
    PROMOTION
    ———————————————————————————
  • help gain an edge
  • prepared to invest heavily in advertising
    eg - less than 5% who see a TV advert will by the product - but 5% of millions will reach a lot
    PLACE
    ——————————————————————————–
  • often use multiple channels to distribute goods
  • fast moving consumer goods - supermarkets, wholesaler
  • some manufacturers pay supermarkets to display certain goods in prominent places - e.g. eye level or on the end of an aisle
  • internet used to sell good and services in mass markets
    –> has allowed small businesses to have access to mass markets
91
Q

what is a niche market?

A

a subset of a larger market where customers needs are very specific(bespoke) and their needs are sometimes neglected by larger firms

92
Q

features of marketing mix in the niche market

A

  • product is likely to have significant differences from rivals
  • they will be designed specifically to meet the needs of the customer group e.g. quality
    PRICE
    ——————————————————————————–
  • more flexibility in pricing
  • less competition - so higher prices can be charged without losing market share
  • customers will be prepared to pay higher prices
    PROMOTION
    ——————————————————————————–
  • tends to be more targeted
  • smaller market - so dont need to use national media
  • need to identify customer profile very accurately to ensure advertising targets correct people
    PLACE
    ——————————————————————————–
  • more selective when choosing distribution channels
  • use exclusive distributors or handle privately
  • can use internet if practical

Business (3 decks)

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