Theme 1 Flashcards
(339 cards)
1
Q
Market Segmentation
Define
A
When potential customers are divided into different groups
2
Q
A Pro of Market Segmentation
A
Products tailored to meet customer needs better
3
Q
2 Cons of Market Segmentation
A
- Higher costs due to research and development required
- Reduction in economies of scale as product range increases
4
Q
Mass Marketing
Define
A
Mass marketing is when a business markets to the whole market with it’s products, ignoring differences in market segments.
5
Q
3 Pros of Mass Marketing
A
- Less need for Market research
- Economies of Scale
- Higher sales Volumes
6
Q
3 Cons of Mass Marketing
A
- Less tailored to customer needs
- Low prices mean lower profit margins
- High levels of competition
7
Q
Define Niche Marketing
A
Niche marketing is a subsection of a larger market
8
Q
2 Pros of Niche Marketing
A
- Better meets customer needs
- Increased Brand loyalty, meaning more repeat purchases and ability to charge higher prices.
9
Q
2 Cons of Niche marketing
A
- Potential overdependence on niche
- Lack of economies of scale
10
Q
Define Market share
A
The proportion of sales of a certain product compared to the market as a whole
11
Q
Define Brand
A
A brand is a name, image, or logo which helps one product stand out from it’s competition.
12
Q
2 Pros of Branding
A
- Brands help businesses stand out from competition
- Brands help businesses have higher perceived quality and allow them to charge higher prices
13
Q
Define Dynamic Markets
A
Dynamic markets are markets which are subject to rapid and continuous changes.
14
Q
Define Online Retailing
A
Selling products via the internet
15
Q
3 Pros of Online Retailing
A
- Access more customers as websites operate 24/7 and can reach international markets
- Websites are cheaper than physical rent
- Useful for market research as businesses can track consumer behaviour
16
Q
2 Cons of Online Retailing
A
- High costs of website development
- Potential poor customer service due to lack of physical contact
17
Q
Define Competition
A
Competition occurs when at least two businesses are providing goods/services to the same target market.
18
Q
Define Direct Competition
A
Direct competition occurs when the business is targeting customers with the same product as a competitor
19
Q
Define Indirect Competition
A
Indirect competition is when firms sell different products to the same target market, but compete for the consumers disposable income.
20
Q
3 Pros of competition
A
- Better quality and variety goods
- Lower prices
- Better customer service
21
Q
2 Implications of a lack of competition
A
Reduces incentive for businesses to:
1. Innovate
2. Offer lower prices
22
Q
Define Risk
A
Risk is the potential threat to business success and can be calculated and prepared for
23
Q
Define Uncertainty
A
Uncertainty is when events are difficult to predict
24
Q
Define Product Orientation
A
Product orientation is when a business focuses on the characteristics of the product rather than customer needs.
25
Define Market Orientation
Market Orientation is an approach that focuses on customer needs when designing a product
26
Define Market Research
Market research is the collection and analysis of information about a market
27
3 Pros of Market Research
1. Reduce risk when launching new products or entering new markets.
2. To understand customer needs
3. To Identify competition
28
Define Primary Market Research
Primary Market Research is the process of gathering information directly from consumers
29
Name 5 methods of Primary Market Research
1. Surveys
2. Observation
3. Interviews
4. Test marketing
5. Focus Groups
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What are Surveys
Surveying is the process of asking questions to get opinions and learn about customer experiences with a product.
31
What are observations?
Observations is when a business hires someone to study consumer behavior in a particular location
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What are interviews?
Interviews are when interviewers ask questions, which takes longer than surveys but they can also ask follow up questions
33
What is Test marketing?
Test marketing is when free samples are provided
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What are Focus groups?
Focus Groups is when a sample of the target market is put together to collect detailed feedback from them.
35
2 Pros of Primary Market Research
1. Acquire specialised information which is not available to competition
2. Up to date information
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3 Cons of Primary Market Research
1. Sample size may be too small
2. Interviewer and Interviewee bias
3. Can be expensive and time-consuming
37
Define Secondary Market Research
Secondary Market Research involves the collection and analysis of data that already exists
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2 Pros of secondary market research
1. Quicker to collect
2. Free information
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3 Cons of secondary market research
1. Could lack relevance to purpose
2. Could be out-of-date
3. Data is available to competition
40
In what 3 ways can ICT be used to support market research?
1. Websites -> Can track consumer behaviour and gather reviews
2. Databases -> Can store large amounts of customer information
3. Email surveys
41
Define Market Positioning
Market Positioning is where a business positions itself in a market with regards to factors such as price and quality.
42
Define Market Mapping
Market Mapping is a tool for identifying the position of a product within a market, and is a two dimensional diagram.
43
1 Pro of Market Mapping
1. Identify gaps in the market
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3 Cons of Market Mapping
1. The market gap may not be profitable to fill
2. May require primary market research, so may be expensive
3. May not be effective for dynamic markets
45
Define Competitive Advantage
Competitive advantage is the factors of a product which makes it have perceived higher value.
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3 Ways to acquire competitive advantage
1. Adding value
2. Strong branding
3. Price leadership
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Define Product Differentiation
Product Differentiation is an attempt by a business to distinguish its products from those of competitors.
48
3 Things Product Differentiation helps to achieve:
1. Increase demand
2. Increase brand loyalty
3. Charge higher prices
49
Define demand
Demand is the QTY of a good/service that consumers are willing and able to buy at any given price in a given time period
50
Define market
A market is any place where buyers and sellers meet to trade.
51
Define the marketing mix
The marketing mix is a framework for businesses to create successful marketing strategies, made up of 4 factors of Price, Place, Product, and Promotion.
52
How can businesses use the marketing mix?
To differentiate themselves from competitors
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Define the Product Design Mix
The product design mix refers to the combination of elements that makes up a product's design, Function, Aesthetics, Cost.
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In the Product Design Mix, define Function
The function is the product's intended purpose and if it meets the needs of it's intended users.
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In the Product Design Mix, define Aesthetics
Aesthetics refers to the product's visual and sensory appeal
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In the Product Design Mix, define Cost
Costs of production affects the price the product can be sold at
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Define Social Trends
Social trends refers to the changes in attitudes and behaviours of people.
58
How will the product design mix change as a result of increased concerns about resource depletion?
The Design mix may change to reflect minimisation and design products using fewer materials.
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How will the product design mix change as a result of increased concerns about ethical sourcing?
Businesses may change their producers and production processes.
60
Define ethical sourcing
Ethical sourcing means that products are produced without exploitation of workers or environmental damage.
61
Define Promotion
Promotion helps to build brand awareness and loyalty which can lead to repeat purchases
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Name 7 Methods of Promotion
1. Advertising
2. Direct Marketing
3. Sales Promotions
4. Personal Selling
5. Sponsorship
6. Public Relations (PR)
7. Digital Communications
63
Define Advertising
Advertising is promotion through paid channels such as TV and Radio.
64
2 Pros of advertising
1. Can reach large audiences
2. Can create a specific brand image
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3 Cons of advertising
1. Can be expensive
2. Effectiveness of advertising is difficult to measure
3. Many people ignore ads
66
Define Direct Marketing
Direct marketing is communicating directly with customers through email, text, or other means
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2 Pros of Direct Marketing
1. Can target specific audiences and personalise their message
2. Direct marketing is measurable, which allows businesses to track their results and adjust their strategy
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2 Cons of Direct Marketing
1. Customers may perceive it as spam
2. Can be costly if the business doesn't have an established customer database
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Define Sales Promotions
Sales promotions encourage the purchase of a product by offering temporary incentives or discounts
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2 Pros of Sales promotions
1. Can help clear out stocks
2. Encourages impulse purchases
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2 Cons of Sales promotions
1. Can be expensive if the product requires heavy discounting
2. Can attract deal seeking customers who aren't loyal to the brand
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Define Personal selling
Personal selling occurs when a salesperson interacts with potential customers one-on-one
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1 Pro of personal selling
Allows businesses to build relationships with customers and understand their specific needs
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2 Cons of personal selling
1. Can be expensive due to the cost of hiring and training sales staff
2. Difficult to scale to large audiences
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Define sponsorship
Sponsorships are agreements where a business provides financial support to an organization for marketing exposure
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2 Pros of a sponsorship
1. Can build brand awareness and credibility
2. Can create emotional connections with target audiences
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2 Cons of a sponsorship
1. Can be expensive for high-profile events or celebrities
2. May be subject to negative publicity if the sponsored entity experiences a scandal
78
Define Public Relations (PR)
PR is building relationships with the public and managing reputation.
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3 Pros of using PR
1. Can enhance a businesses reputation
2. Can lead to increased brand loyalty and repeat sales
3. Can be cost-effective compared to other promotional methods
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3 Cons of using PR
1. Can be time consuming
2. Difficult to measure the impact of PR on profits
3. Could be seen as fake by the target markets
81
Define Digital Communications
Digital Communications is any form of marketing that is delivered electronically. (Social Media)
82
1 Pro of Digital Communications
1. Can be highly targeted to specific market segments
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3 Cons of using Digital Communications
1. Can be easily ignored
2. May require investment in data infrastructure
3. May not be effective for reaching older markets
84
List the 3 types of Branding:
1. Manufacturer branding
2. Product branding
3. Own-label branding
85
Define Manufacturer branding
Manufacturer branding is the use of a company name or logo to promote all the products or services offered by the company
86
2 Pros of Manufacturer branding
1. Creates strong brand recognition and trust
2. Can use existing reputation to introduce new products easily.
87
1 Con of Manufacturer branding
1. If a brand is damaged, it can have a negative impact on all the products offered under that brand
88
Define Product branding
Product branding is the use of a unique name, design, or symbol to promote a specific product
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2 Pros of Product branding
1. Differentiates product from competition
2. Builds consumer loyalty and trust
90
1 Con of product branding
1. Cost of creating and promoting a new brand for every product can be expensive
91
Define Own-label product
An own-label product is the use of a retailer's name to promote a specific product or service.
92
3 Pros of own-label products
1. Helps retailers differentiate themselves from competition
2. Allows retailers to offer products at a lower price than branded products
3. Can help build brand loyalty
93
1 Con of own-label products
1. Own-label products may have lower perceived quality than branded products
94
List 3 benefits of branding:
1. Higher perceived value
2. Can charge premium prices
3. Reduced PED (Price elasticity of demand)
95
4 Ways to build a brand
1. USP's (Unique selling points)
2. Advertising
3. Sponsorship
4. Social Media
96
How can businesses use social media to build a brand?
Brands can build a loyal following and create a community around their brand.
97
Define USP
USP's are features that make a product stand out from it's competitors
98
Define Viral marketing
Viral marketing is a strategy where businesses use online platforms to promote their products by creating content that is trending
99
Define Emotional branding
Emotional branding is where businesses build strong emotional connections with their customers by appealing to their values and emotions
100
List 6 types of pricing strategies
1. Cost-plus pricing
2. Price skimming
3. Penetration pricing
4. Predatory pricing
5. Competitive pricing
6. Psychological pricing
101
Define Cost-plus pricing
Cost-plus pricing is when a business calculates the cost of production and then adds a markup
102
Define Price skimming
Price skimming is when a business sets a high price for a product when it's first introduced into the market, which is then gradually reduced to ensure sales continue
103
Define Predatory pricing
Predatory pricing is when the business sets prices so low that it drives competitors out of the market
104
Define Competitive pricing
Competitive pricing is when businesses sets it's prices based on competitors prices.
Competitive pricing is effective for maintaining market share in a highly competitive market
105
Define Penetration pricing
When a business sets a low price for a new product when it is first introduced, which then quickly captures market share.
Once they have enough customers, the business will start to raise the price
106
Define Psychological pricing
Adjusting prices to have a better perceived value, like setting a price at £9.99 instead of £10.
107
How do price comparison sites affect prices?
Retailers may use pricing mechanisms to monitor the prices of competitors and adjust prices automatically
108
Define external finance
External finance is sourced from outside of the business
109
5 sources of external finance
1. Family and Friends
2. Banks
3. Peer-to-peer funding
4. Business angels
5. Crowdfunding
110
2 advantages of family and friends as a source of external finance
1. Very cheap source of funds
2. No control given up
111
1 disadvantage of family and friends as a source of external finance
Relationships may be damaged if the finance is not repayed
112
How are banks a source of external finance?
Banks provide different kinds of loans to businesses
113
2 benefits of using banks as a source of external finance
1. May offer short term finance like overdrafts and long term finance like loans
2. Banks can provide free advice to businesses to use their finance
114
3 disadvantages of using banks as a source of external finance
1. A business plan is usually required to access bank loans
2. Interest payments
3. Businesses may need to provide security to banks to get a loan
115
What is peer-to-peer funding as a source of external finance?
Peer-to-peer funding is when a large number of private investors lend to a business.
116
2 Advantages of peer-to-peer funding
1. Loans can be acquired quickly
2. No control of business given up
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2 Disadvantages of peer-to-peer funding
1. Borrowers are charged a small fee to access the loan
2. Interest payments as compensation
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What are business angels as a source of external finance?
Business angles are individuals who specialise in making investments in expanding businesses
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2 Benefits of using business angels
1. Business angels more willing to take risks than banks
2. Business angels offer advice and guidance
120
2 Disadvantages of using business angels
1. Business angels involved in decision making as they own a share of the business
2. Business angels take a share of the profits
121
What is crowdfunding as a source of external finance?
Crowdfunding is finance provided by a large number of small investors
122
2 benefits of using crowdfunding
1. Creates a customer base
2. A good credit rating is not required so new businesses can access easily
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2 drawbacks of using crowdfunding
1. Businesses need to provide a detailed business plan.
2. Potential negative impact on reputation if the money is not spend well
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7 methods of gaining finance
1. Loans
2. Overdrafts
3. Share capital
4. Venture capital
5. Leasing
6. Trade credit
7. Grants
125
What is a loan?
A loan is a sum of money that is borrowed and repaid with interest over a period of time
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What is an unsecured loan?
An unsecured loan is when no asset is required to gain access to the loan
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What is a secured loan?
A secured loan requires the borrower to provide an asset to the lender to be used as collateral.
128
3 benefits of using loans
1. Interest rates are fixed
2. Repayments are made in equal instalments, helping budgeting
3. Control over decision making is retained
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3 Drawbacks of using loans
1. Interest rates depends on the businesses credit rating
2. Non-current liabilities are increased in the balance sheet
3. Missed payments may lead to property being repossessed
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What is an overdraft?
An overdraft is an arrangement for business current account holders to spend more money than it has in their account
131
1 benefit of using an overdraft
A short-term source of finance which helps cash-flow
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1 drawback of using an overdraft
very high interest rates
133
What is share capital?
Share capital is finance raised from the sale of shares in a limited company
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What are shareholders?
Shareholders are the owners of shares and they are entitled to a share of the company's profit in the form of dividends
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What are dividends?
Dividends are a sum of money paid each year by a company to its shareholders from its profits
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2 benefits of using share capital
1. Large amounts of capital can be raised
2. No interest payments
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1 drawback of using share capital
Shareholders have a vote each year on deciding the board of directors
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What is venture capital?
Venture capital is funds provided by investors
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drawback of venture capital
Venture capitalists often take a stake in the company
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What is leasing
Leasing is when a business uses an asset, such as machinery, in return for regular payments
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Benefit of leasing
The business does not own the asset so is not responsible for maintenance or repair costs
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Drawback of leasing
One drawback of leasing is that it is usually more expensive in the long run than buying an asset
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What is trade credit?
Trade credit is an agreement made with suppliers to buy supplies which are paid at a later date
144
Benefit of trade credit
Trade credit is usually interest free
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Drawback of trade credit
Discounts for early payment will not be available
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What is a grant?
A grant is when the government gives money to the business
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Benefit of grants
Grants do not need to be repaid
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Drawback of grants
The business must use the finance for it's intended purpose
149
What is a distribution channel?
A distribution channel refers to the various intermediaries through which goods/services move from the manufacturer to the customer
150
What is a wholesaler
A wholesaler is a business which buys large quantities of goods from producers and sells them in smaller quantities to retailers
151
What is a four stage distribution channel
Producer, wholesaler, retailer, and consumer
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What is a three stage distribution channel
Producer, retailer, and consumer
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what is a three stage distribution channel used for?
For products with high demand
154
Define profit margin
Profit margin is the percentage of the selling price which is profit
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What is a two stage distribution channel
Producer, and consumer
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Where is the two stage distribution channel most common?
Products that are sold online
157
How has distribution channels changed as a result of social trends?
1. Online retailing
2. Drop-shipping
3. Consumers increasingly value experiences over material goods
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What is dropshipping?
Dropshipping allows businesses to sell products without holding stock, as the products are shipped directly from the producer to the customer
159
What is the product life cycle?
The product life cycle describes the different stages a product goes through from its conception to its eventual decline in sales
160
What are the 5 stages of the product life cycle?
1. Development
2. introduction
3. Growth
4. Maturity
5. Decline
161
Define cash flow
Cash flow is the movement of money into and out of a business over time
162
Describe development on the first stage of the product life cycle
During developement, the focus is on designing and developing the product, which means cash flow is negative as the business incurs high costs
163
Describe introduction on the product life cycle?
The introduction stage begins when the product is launched, where sales growth is slow as the product is still unknown to most customers
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What is growth on the product life cycle?
The product enters the growth stage when sales begin to increase rapidly
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What is maturity on the product life cycle
Maturity is when product sales peak and sales begin to slow
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What is decline on the product life cycle?
Decline starts when sales begin to fall as the product becomes obsolete or is replaced by newer products
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What are extension strategies on the product life cycle?
Extension strategies are techniques used by businesses to extend the life of a product beyond its natural life cycle
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What are the two types of extension strategies?
1. Product-related extension strategies
2. Promotion-related extension strategies
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What are product related extension strategies?
product related extension strategies involve changing a product to make it more appealing to customers
170
In what 3 ways can a business use product related extension strategies?
1. Product improvements
2. Line extensions
3. Repositioning
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What are promotion-related extension strategies?
When the marketing and promotion of a product is changed
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What 2 ways can a business use promotion-related extension strategies?
1. Changes to advertising
2. Sales promotions
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What is the boston matrix?
The boston matrix is a tool used by businesses to analyse their product portfolio and make strategic decisions about each product
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What are the four categories of the boston matrix?
- Cash cow
- Question mark
- Star
- Dog
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What are the 4 categories of the boston matrix based on?
Their market share and market growth rate
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What is the cash cow on the boston matrix?
Cash cows are products with a high market share in a mature market
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What is the question mark on the boston matrix?
- The question mark are products which have a low market share in a high growth market.
- These products have potential to become stars if the business invests in their development.
178
What is the Star on the boston matrix?
Star products have a high market share in a high growth market.
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What is a dog on the boston matrix?
Dog products have a low market share in a low growth market
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What are the implications of cash cow products on the boston matrix
- Cash cows generate significant positive cash flow
- Minimal investment needed as they are a stable source of income
- Revenue from cash cows can be used to fund new projects
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What are the implications of question mark products on the boston matrix
- Negative cash flow initially
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What are the implications of star products on the boston matrix
- Positive cash flow and potential for more growth
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What are the implications of dog products on the boston matrix
- Generate little revenue
184
What 3 things does customer loyalty help with?
1. Repeat purchases
2. Charging higher prices
3. Reduced marketing costs
185
What are 3 ways a business can achieve customer loyalty?
1. Customer service
2. Loyalty cards
3. Branding
186
What are loyalty cards?
Loyalty cards offer rewards or discounts for frequent purchases
187
How are staff considered an asset to a business? (2)
Staff are an asset to a business as:
They have knowledge and skills which can increase productivity
They can help build a positive brand reputation through customer service.
188
5 reasons staff can be considered to be a cost to a business?
1. Hiring and training workers
2. Paying salaries of full time workers
3. Paying wages of hourly staff
4. Company benefits
5. Redundancy payments
189
What are redundancy payments?
Redundancy payments occur when a job role is no longer needed and a worker is dismissed, usually with compensation
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What is flexible working?
Flexible working is the development of a culture where workers are equipped to do different roles
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4 ways to develop a flexible workforce
1. Multi-skilling
2. Part-time and temporary contracts
3. Flexible hours and home working
4. Outsourcing
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What is multi skilling?
Multi-skilling is the process of training workers to fulfill multiple job roles within a business
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2 advantages of multi-skilling
1. Reduces labour costs
2. Increase in productivity
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2 disadvantages of multi-skilling
1. May require investment in training
2. May not be suitable for jobs which require high levels of expertise
195
What is part time working?
Part time working is when someone works less than 30 hours per week
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What is temporary working?
Temporary working is when someone works whenever the business needs them
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2 benefits of using part-time and temporary contracts?
1. Can help staff retention
2. May improve productivity as staff can work during their most productive hours
198
2 disadvantages of using part-time and temporary contracts
1. Can create problems in communication and collaboration
2. Managing flexible workers can be more difficult
199
What is outsourcing?
Outsourcing is hiring an external business to perform a specific task
200
2 benefits of outsourcing?
1. Business can access specialised skills
2. May reduce labour costs
201
2 Disadvantages of outsourcing
1. Loss of control over quality
2. Ethical concerns over labour treatment in other countries
202
What is flexible hours
Flexible hours allows employees to schedule working hours around their individual needs
203
2 benefits to the business of home working
1. Reduces costs as business can use smaller offices
2. High quality workers can be attracted from around the world
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2 benefits of home working for the employee
1. Transport costs are eliminated
2. Reduced stress
205
2 disadvantages of home working for the business
1. Cost of giving workers laptops may be high
2. Workers may not be focused
206
2 disadvantages of home working for employees
1. Staff may feel isolated
2. Household costs may increase
207
What is dismissal?
Dismissal is the termination of employment by an employer against the will of the employee
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What legal procedures must a business follow when making workers redundant?
The business must provide notice and pay redundancy compensation
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What is recruitment?
Recruitment is the process of identifying potential job candidates who are suitable for a particular role
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What is selection in the recruitment process?
Selection is the process of choosing the best candidate
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What are the 5 steps of the recruitment process?
1. Define the role
2. Determine the best source of candidates
3. Advertise
4. Receive applications
5. The selection process
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In the recruitment process, what is defining the role?
Defining the role includes identifying what is required using a job description and job specification
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What is a job specification?
A job specification outlines the qualifications and skills required from a candidate for a job
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What is a job description?
A job description outlines the duties and responsibilities of a job
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In the recruitment process, what does determining the best source of candidates include?
Whether the business should use internal or external recruitment
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What is internal recruitment?
Internal recruitment is the process of hiring employees from within the organisation
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3 benefits of using internal recruitment
1. No need for induction training
2. No need to advertise for jobs
3. Can motivate employees, improving loyalty
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3 drawbacks of internal recruitment
1. Can cause conflict between employees
2. Creates a vacancy which needs to be filled
3. Missed opportunity for new skills to be introduced
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What is external recruitment?
External recruitment is the process of hiring employees from outside the organisation
220
2 drawbacks of external recruitment
1. More expensive
2. Greater degree of uncertainty
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In the recruitment process, what does the selection process include?
Interviews and assessment tasks
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What are selection costs
Selection costs are the expenses incurred in the process of selecting candidates, including background checks and visa costs
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What are the 3 different types of training?
1. Induction training
2. Off the job training
3. On the job training
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What is induction training?
Induction training is a type of training that new employees receive when they start working for a company
225
2 benefits of induction training
1. Improves employee confidence and motivation
2. Reduces time taken for new employees to become productive
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one drawback of induction training
1. Can be time consuming and expensive
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What is on the job training?
On the job training takes place when employees are working in their jobs
228
2 benefits of on the job training
1. Training is tailored to employee's specific job role
2. Can be cost-effective as training takes place during working hours
229
one drawback of on the job training
1. Can disrupt the workplace and the trainer must devote time to training employees
230
What is off the job training?
Off the job training is a type of training that takes place outside of the workplace
231
2 benefits of off the job training
1. Can be cost-effective if training is provided online
2. Training can be tailored to employee's specific needs
232
2 drawbacks of off the job training
1. Can be expensive to organise if travel is required
2. Employees may miss work while training
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What is hierarchy
Hierarchy refers to the levels of authority within an organisation
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What is chain of command
Chain of command is the formal line of authority that flows down from top-management to lower-level employees
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What is span of control
Span of control refers to the number of employees that a supervisor can effectively manage
236
What is a centralised structure?
In a centralised structure, decision making authority is concentrated at the top of the business
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What is a decentralised structure?
In a decentralised structure, decision making authority is distributed throughout the business, with lower-level employees having more decision making power
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What are tall organisational structures?
Tall structures are characterised by multiple levels of management and a more centralised decision making process
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3 benefits of a tall organisational structure
1. Promotes specialisation within each department
2. Offers opportunities for promotion
3. A clear hierarchy
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3 drawbacks of a tall organisational structure
1. Can create communication barriers
2. Decision making can be slow as information must be passed up the chain of command
3. This can lead to high levels of bureaucracy
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What are flat organisational structures?
Flat structures are characterised by fewer levels of management and a decentralised decision-making process
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3 benefits of a flat organisational structure
1. Promotes collaboration
2. Faster decision making
3. Encourages creativity and innovation
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2 drawbacks of flat structures
1. May not provide clear opportunities for promotion
2. Employees may have to take on multiple roles, leading to burnout
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What are matrix organisational structures?
Matrix structures are built around specific products or projects with specialist teams that focus on a specific task
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2 benefits of matrix structures
1. Promotes collaboration
2. Specialisation
246
2 drawbacks of matrix structures
1. Can create confusion over roles if multiple managers are involved
2. Conflicts over priorities
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What are 3 benefits of employee motivation?
1. Higher productivity
2. Increased reliability of workers
3. Less staff turnover
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What is turnover rate
Turnover rate is a measure of the number of staff leaving over a given period of time
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What is Taylor's theory of scientific management?
Taylor's theory of scientific management focuses on specialisation and providing workers with clear instructions and training to achieve maximum efficiency
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How are workers incentivised in taylor's scientific theory?
Through bonuses or piece rate pay
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2 advantages of taylor's scientific theory of motivation
1. Greater productivity
2. Quick decision making through clear hierarchy
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1 disadvantage of taylor's scientific theory of motivation
1. Reduction in worker satisfaction
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What is Mayo's theory of human relations?
Mayo's theory of human relations suggests that the key to improving productivity lies in improving relationships between workers in the workplace
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3 ways businesses use Mayo's theory of human relations
1. Empowering employees in decision making
2. Providing feedback and recognition to employees
3. Offering development programmes
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3 benefits of Mayo's theory of human relations
1. Improved job satisfaction
2. Increased productivity
3. Better communication
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3 disadvantages of mayo's theory of human relations
1. Time-consuming
2. Lack of control
3. Potential for conflict
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What is Maslow's hierarchy of needs?
Maslow's hierarchy of needs is a theory of motivation that outlines five tiers of human needs that must be met for individuals to meet their full potential
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What are the 5 tiers of maslow's hierarchy of needs
1. Physiological needs
2. Safety needs
3. Love and belonging needs
4. Esteem needs
5. Self-actualisation needs
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What are physiological needs on maslow's hierarchy of needs?
Physiological needs are met when businesses can provide necessities for their employees (Clean water and food)
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What are safety needs on maslow's hierarchy of needs?
Safety needs are met when Businesses can provide job security, fair pay, and safe working conditions
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What are love and belonging needs on maslow's hierarchy of needs?
Love and belonging needs are met when businesses can encourage teamwork and create a sense of community within the workplace
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What are esteem needs on maslow's hierarchy of needs?
Esteem needs are met when businesses can provide recognition for employee's accomplishments and provide a positive work culture that values individual contributions
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What are self-actualisation needs on maslow's hierarchy of needs?
Self-actualisation needs are met when businesses can offer opportunities for employees to pursue their passions and interests
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3 advantages of maslow's hierarchy of needs
1. Higher employee satisfaction
2. Increased productivity
3. Lower turnover rates
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2 disadvantages of maslow's hierarchy of needs
1. Expensive
2. Time consuming
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What is Herzberg's two factor theory
Herzberg's two factor theory suggests that employee motivation is affected by hygienes and motivators
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In Herzberg's two factor theory, what are hygiene factors?
Hygiene factors are elements which can decrease motivation if they are not present
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In Herzberg's two factor theory, what are motivators?
Motivators are elements that lead to motivation
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3 ways a business can use hygiene factors to decrease job dissatisfaction
1. Pay fair wages and salaries
2. Offer good working conditions
3. Offer contracts which provide job security
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2 ways a business can use motivator factors to increase satisfaction
1. Build a recognition and rewards culture
2. Offer opportunities for growth
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What are financial incentives
Financial incentives are payments given to employees in return for improved performance
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List 5 methods of financial incentives
1. Piece rate pay
2. Commision
3. Bonus
4. Profit share
5. Performance-related pay
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What is piece rate pay and what motivational theory does it relate to?
Piece rate pay is when employees are paid according to the number of units they produce.
Taylors scientific management theory
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What is commision and what motivational theory does it relate to?
Commision is when a percentage of sales revenue is paid to workers who sell services.
Hygiene factor in herzberg's theory
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What are bonuses and what motivational theory does it relate to?
Bonuses are an additional payment given to staff as a reward for achieving a specific goal
Esteem needs in maslow's hierarchy
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What are profit shares and what motivational theory does it relate to?
Profit shares are when a portion of the company's profits are distributed amongst staff
Motivator in herzberg's theory
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What is performance related pay?
Performance related pay is when staff are paid based on their performance, which motivates them to work harder
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What are non-financial incentives?
Non-financial incentives are rewards not directly related to money
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List 8 non-financial incentives
1. Delegation
2. Consultation
3. Empowerment
4. Team working
5. Flexible working
6. Job enrichment
7. Job rotation
8. Job enlargement
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What is delegation?
Delegation involves transferring responsibility from a manager to their staff
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What is consultation?
Consultation involves seeking the input of staff on decisions that affect their work
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What is empowerment?
Empowerment involves giving staff the authority to make decisions without first receiving management approval
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What is team working?
Team working involves creating opportunities for staff to work collaboratively.
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What is flexible working?
Flexible working involves providing staff with an option to work remotely or adjust their hours to suit their lifestyle
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What is job enrichment?
Job enrichment involves adding more challenging tasks to a job
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What is Job rotation?
Job rotation involves moving staff between different roles in a business
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What is Job enlargement
Job enlargement involves expanding staff's duties to include more responsibilities
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Define leadership
Leadership is about having a vision, sharing that vision with others and providing direction
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Define management
Management is the day-today organisation of the business
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What are the 4 different types of leadership styles?
1. Autocratic
2. Paternalistic
3. Democratic
4. Laissez-faire
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What is the autocratic leadership style?
Autocratic leadership is when the leader has complete control over decision-making, with little or no input from others
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What is the paternalistic leadership style?
Paternalistic leadership is when the leader takes on a parental role, making decision in the best interest of their staff
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What is the democratic leadership style?
Democratic leadership is when the leader involves their team in the decision making process
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What is the laissez-faire leadership style?
Laissez-faire is when the leader takes a hands-off approach and allows their team to manage their own work
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When is an autocratic leadership style most suitable?
When there is a need for quick-decision making
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When is a paternalistic leadership style most suitable?
When staff are inexperienced who need more guidance and support
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When is a democratic leadership style most suitable?
When a business wants to encourage creativity and employee engagement
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When is a laissez-faire leadership style most suitable?
When staff are more experienced and require minimal supervision
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Define entrepreneur
An entrepreneur is a person who is willing and able to create a new business and take risks in the process
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What 3 things must an entrepreneur do?
1. Organise resources
2. Make business decisions
3. Take risks
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Define intrapreneurship
Intrapreneurship refers to the practice of promoting entrepreneurial thinking within a business
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What does intrapreneurship allow businesses to do?
Intrapreneurship allows businesses to tap into the creative potential of their employees and generate new products or processes that create competitive advantage
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What culture does intrapreneurship create?
Intrapreneurship creates a culture of ownership and engagement, which increases motivation
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How would a business promote intrapreneurship?
Businesses may provide incentives for successful projects
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4 barriers to entreprenuership
1. Entrepreneurial capacity
2. Access to finance
3. Lack of training / know how
4. Fear of failure
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Explain entrepreneurial capacity
Entrepreneurial capacity refers to the ability to think creatively, take risks, and identify business opportunites
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Explain access to finance
entrepreneurs struggle to secure the funding necessary
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Explain lack of training / know how
They may struggle to develop a business plan, attract customers, or manage their finances well
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Explain fear of failure
They may fear financial loss or stigma of failure
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List 3 skills required by an entrepreneur
1. Communication
2. Problem solving
3. Numeracy
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List 3 characteristics required by an entrepreneur
1. Creativity
2. Hard working
3. Self confidence
312
List 2 financial reasons for setting up a business
1. Profit maximisation
2. Profit satisficing
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List 4 non-financial reasons for setting up a business
1. Ethical stance
2. Social entrepreneurship
3. Independence
4. Home working
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What is profit maximisation
People want to create a business that generates lots of revenue and profit for themselves and their shareholders
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What is profit satisficing
Profit satisficing occurs when the entrepreneur wants to reach a satisfactory level of profit
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What is social entrepreneurship
social entrepreneurship is when a business is made to help fix a social or environmental problem while also earning a living
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What is the traditional transition of objectives of a new start up?
1. Effective cash flow
2. Profit maximisation
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List 6 common business objectives
1. Sales maximisation
2. Market share
3. Cost efficiency
4. Employee welfare
5. Customer satisfaction
6. Social objectives
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What is sales maximisation?
Sales maximisation is a focus on generating maximum revenue possible
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What is market share
Market share is the percentage of total sales in a given market that a company holds
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What is cost efficiency?
Cost efficiency refers to a company's ability to produce its products at the lowest possible cost
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What is employee welfare
Providing a safe working environment
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Define social objectives
Social objectives are a company's commitment to addressing social or environmental issues
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What is a sole trader?
A business that has a single owner
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3 benefits of sole trader
1. Complete control over business
2. All profits go to owner
3. Easy to set up
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3 flaws of sole trader
1. Unlimited liability
2. Limited access to finance
3. Limited skill set of owner
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What is a partnership
A partnership is when two or more people join together to form a business
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3 benefits of partnerships
1. Shared decision making
2. More skills and knowledge
3. Increased access to finance
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3 flaws of partnerships
1. Unlimited liability
2. Profits shared equally
3. Potential conflicts
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What is a Private limited company (LTD)
A Private limited company is when the ownership of a business is broken down into a number of shares, which can be bought by family, friends, and venture capitalists
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3 benefits of private limited companies
1. Limited liability
2. Access more finance
3. Professional reputation
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3 flaws of private limited companies
1. Expensive and time-consuming to set up
2. Annual finance reporting
3. Lack of control
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What is franchising
Franchising is a business model where a franchisee buys the rights to operate a business, where they operate under the franchisor's system
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What is a social enterprise
A social enterprise is a business that has the purpose to create social or environmental impact, where profits are usually invested back into the business
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What is a lifestyle business
A business that prioritises a work-life balance
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Why might a business convert to a PLC (Public limited company)
To acquire more capital
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What is a PLC?
A PLC is a business which floats on the stock market
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5 benefits of a PLC
1. Access to capital
2. Shared risks
3. Increased liquidity (Shares can be sold easier on a stock market)
4. Extended decision making
5. Greater public profile
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Define trade-off
A trade off occurs when having more of one thing may mean having less of another
