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Flashcards in Production, Finance And External Environment Deck (33):

What is mechanisation

When machinery is used but workers are still required to operate the machinery. E.g a driver is needed for a combine harvester


What is automation

When machinery is used and a computer controls its operation, e.g Amazon robots


2 advantages of automation

1. Less mistakes are made
2. Large amounts can be produced quicker so productivity increases


2 disadvantages of automation

1. Buying and maintaining machinery is expensive
2. The system could break down


Advantages of job production

1. More motivated, not doing repetitive tasks
2. Better quality
3. Meets customer needs


Disadvantages of job production

1. The cost of production is normally higher
2. Labour costs increase because of skill required


What is batch production

When there are set stages that the production needs to go through. One process has to be completed before the next can begin.


What is flow production (mass production)

A continuous movement of items through the production process. This means that when one task is completed the next tasks immediately begins


What is added value

The increased worth a business creates for a product (branding, design, quality)


3 ways of increasing efficiency in a business

1. Technology
2. Just in time
3. Total Quality Management


Why might a business need to raise money

1. Start up business
2. Invest in growth (new product)
3. Buy new equipment
4. Solve cash flow problems
5. Move location


Price elasticity of demand:

What might affect the sensitivity of a chance in price of a product?

- If it's luxury
- Are there cheaper alternatives
- Competitor price


Price elasticity of demand:

What might affect the sensitivity of a chance in price of a product?

- If it's luxury
- Are there cheaper alternatives
- Competitor price


Define break even

The point at which the sales are exactly the same as the costs


Break even advantages

Can set business targets
Useful for getting a bank loan
Can help when choosing whether to increase prices and reduce costs


Break even disadvantages

Forecast figures may be different to actual
Figures tend to relate to one product
Break even assumes all output it sold


Advantages of high unemployment rate

More available workers
Business can employ workers cheaply


Disadvantages of high unemployment rate

Workers are demotivated by a threat of job loss
People have less disposable income


What are the 3 ways a business is
affected by interest rates

1. The cost to business of borrowing
2. The cost to customer on mortgage etc
3. The reward for saving


What are the impacts of poor profitability?

1. Staff fear losing jobs
2. Shareholders reduced dividends
3. Management reduced bonuses
4. Share price falls and business is at risk of takeover
5. The business has a lack of profit to reinvest


What are advantages of being in the EU?

1. Access to single market
2. More potential employees
3. Increases Market size
4. Common standards
5. Grants


What are the disadvantages of being in the EU?

1. Environmental standards
2. Minimum wage laws


What is the definition of globalisation?

The process by which business activities in different countries are becoming more connected to each other


Why might China not benefit from GG toys locating a factory there?

1. Exploitation of workers
2: pollution
3. Local culture


What is inflation?

When prices of goods and services are generally rising


Why does inflation occur?

1. When expenses increase business put prices up
2. If there is increased demand businesses can charge more


How can the Bank of England control inflation?

By reducing interest rates to reduce disposable income thus reducing demand for goods thus prices fall


What is income tax?

A tax on income where the money goes from the earnings straight to the central government


What is national insurance tax?

A tax deducted to support the NHS and state pensions. Government will collect more of this tax as employment increases


What is corporation tax?

A tax limited companies pay. The government will collect more tax from GG toys if they make higher profits


What are business rates?

A tax paid by business on the property that they use. Bowton council would collect this money


What is council tax?

A tax paid by homeowners on the property that they live on


What is VAT?

A tax on spending, most goods have a 20% vat charge