Theme 1 and 4 Flashcards
(82 cards)
1
Q
Added value
A
The process of increasing the worth of a product by modifying it.
2
Q
Non-financial incentives
A
Intangible rewards from managers to employees: Recognition, job enlargement, job rotation
3
Q
Extension strategies
A
More advertising, price reduction, new packaging, selling in multiple markets
4
Q
Product orientation
A
- When a business develops products based on what it is good at making.
- This means improved products and reduces the need for market research.
- Less risky in quality
5
Q
Market orientation
A
When a business tailors what it makes depending on the customers needs or wants, or the market demand.
- More likely to make sales
- Fills gaps in market
6
Q
Market segmentation
A
- When a business breaks the market into distinct groups based on certain characteristics or criteria. Each segment has different preferences or demands that the business can address more effectively as it is split up.
- Some are more profitable or easier to please.
- Race, gender, location, income, interests
7
Q
Substitute good
A
Substitute goods are products that can be used in place of each other to satisfy the same need or want.
Example: Margarine is a substitute good for butter. If butter prices rise, most will switch to margarine.
8
Q
Complementary good
A
Complementary goods are products that are used together because the consumption of one enhances the value or use of the other.
Example: Cars and petrol, An increase in petrol prices might reduce the demand for cars.
9
Q
Public relations as a form of promotion:
A
- Sponsorships
- Press releases
10
Q
Boston Matrix (cash cows n stuff) -
A
Help a business measure the success of their products, and see which ones to get continue or discontinue
Market growth and market share
- Stars (high mg high ms)
- Question marks (high mg low ms)
- Cash cows (low mg high ms)
- Dogs (low mg low ms)
11
Q
Taylor’s Scientific Management theory
A
- Taylor believed workers are motivated primarily by money.
- He advocated for a “piece-rate” pay system, where workers are paid based on output.
12
Q
Mayo’s Human Relations
A
Workers are motivated by attention, communication, and a sense of belonging, maybe even more than money sometimes.
13
Q
Maslow’s Hierarchy of Needs
A
- Maslow suggested that people are motivated by a hierarchy of needs, progressing from basic to higher-level needs.
- Workers must satisfy lower-level needs before being motivated by higher-level ones.
14
Q
Herzberg’s Two Factor Theory
A
- Hygiene Factors: Prevent dissatisfaction of job but don’t motivate (e.g., pay, working conditions, company policies, health and safety)
- Motivators: Encourage satisfaction and drive performance (e.g., recognition, responsibility, and opportunities for growth).
15
Q
Non-financial reasons people set up their own business
A
- An ethical stance they have
- Independence (be their own boss)
- Home working
16
Q
Entrepreneurial characteristics
A
- Risk taker
- Creativity
- Resilience
- Decision making
- Leadership
17
Q
Income elasticity of demand (YED)
A
A measurement of how sensitive a product’s demand is depending on the customer’s income
18
Q
Price elasticity of demand (PED)
A
A measurement of how sensitive a product’s demand is depending on the price of the product
19
Q
Changes in demand
A
- Seasonality
- Trends
- Changes in price of substitute and complimentary goods
20
Q
Distribution channel
A
A network of businesses and intermediaries that move products from the manufacturer to the consumer.
21
Q
Ethical sourcing
A
A sustainable and responsible approach to obtaining raw materials from a business’s supply chain (minimising carbon footprint, workers paid fair wages)
= positive brand image
22
Q
What do legislations do
A
Regulate, protect and ensure employee satisfaction
23
Q
Tariffs
A
Taxes that are imposed on imports
24
Q
Quotas
A
Quotas are volume limits on the amount of imports allowed into a country.
25
Glocalisation
It refers to adapting a globally recognized product to suit the preferences, culture, and conditions of a local market. (McDonald's Big Mac to a Chicken Masala Mac in India)
26
Ethnocentric
An ethnocentric business is one that does not adapt its products or marketing to local markets
(Ted baker suits stay the same in all other countries)
- Means that economies of scale are achieved easier as no changes are made and just sent to another country
- Brand integrity (keeping the brand authentic and original from the start)
- However there could be a cultural mismatch
27
Geocentric
A geocentric business adapts some aspects of their product to appeal to local markets. (MTV has different languages for different countries but same music videos)
28
Polycentric
A polycentric business changes all aspects of their product to appeal to local markets (Chip brands add different flavours for different countries and different packaging) Companies let local subsidiaries be managed by local nationals using local practices.
- Appeal to local markets
- However products could be perceived as too similar to local products
- Brand identity can be lost if brand strives for too much localness
29
Brand integrity
Brand integrity refers to maintaining the original image of the brand from the start, creating authenticity and customer trust.
30
When finding out the break even point in output, do you round the decimals up or down.
UP - because you need a full number and a bit to break even. No decimals in a break even question.
31
Indicators of growth in a foreign market
- GDP per capita (per person)
- Infrastructure
- Rising incomes
- HDI
- Employment rates
32
Factors to consider when researching a new international market
- Cost of production and labour
- Disposable income rates
- Political stability
- Exchange rates - stronger foreign money can buy more goods you export to them
- Importing rules
- Local competition
- Market size
- Infrastructure (ports to export from, communication technology, highways)
33
Pull factors
- Lower production costs
- Better resources
- Gap in market
- Favourable trade agreements
34
Push factors
- Saturated market
- Lack of demand
35
Off-shoring
When a business moves part of its operations overseas
36
Outsourcing
When a business hires a third party to do a specific task for the business
37
Public limited company
A business where the company’s shares can be traded publicly on a stock exchange.
- Limited liability as shareholders are only liable for the amount they have invested into the business.
38
Private limited company
An incorporated company that sells shares to private investors and has a limited liability
39
4 P's
product, price, place, and promotion
40
Factors that contribute to increased globalisation
- Containerisation (Large container ships can carry thousands of containers at once, significantly reducing the cost per unit of goods transported)
- Communication technology
- Trade liberalisation
41
Comparative advantages
The theory that a country should specialize in products and services that it can produce more efficiently than other countries (steel in china)
42
Trade Liberalisation
The act of reducing trade barriers between countries such as tariffs, quotas and import restrictions.
43
Design mix
The design mix looks at how a combination of aesthetics, cost and function creates an appealing product.
44
Paternalistic leadership
A leadership style is where a leader acts as a parent figure to their employees, maintaining a high degree of control.
- The leader CANNOT be overruled, their say is final.
- High level of support for employees (guidance + resources)
- May be used during a time of crisis or high stress, or if staff are inexperienced.
45
Benefits of MNC's for countries overseas:
- More jobs created
- Generates tax revenue
- New technologies in the country
- More infrastructure built
46
Disadvantages of MNC's for the overseas countries:
- Exploitation of workers with low wages (sweatshops)
- Profit repatriation
- Exploitation of natural resources
- Threat to domestic businesses
47
Profit repatriation
When a significant portion of the profits earned by MNCs in domestic countries are sent back to the the company base overseas, limiting reinvestment within the domestic economy.
48
MNC (Multi-national company)
Businesses that operate in more than one country
49
Transfer pricing
The price that one division in a company charges another division overseas for goods and services provided.
50
Retained profits in an MNC are used for
Shareholder dividends
51
How do MNC's avoid tax
Because 15% corporation tax is taken out of company profits, MNC's will declare high profits in tax havens and low profits in high tax countries.
52
Circular economy
a model of production and consumption that keeps materials in use for as long as possible
- making products recyclable or reusable
- selling second hand products
- using recycled material for products
- a 'take-back' scheme where customers can return old product
53
Transfer pricing
the price that one division of a company in one country charges another division of the company in another country for goods and services provided.
54
Difference between tax avoidance and tax evasion
Tax avoidance is the legal exploitation of the tax system to minimise tax costs, whereas tax evasion is the use of illegal means to avoid paying taxes.
55
Common Ethical Issues with MNC's:
- Pay and working conditions
- Environmental impact
- Supply chain management (environment)
- Marketing (labelling)
56
Advantages of a ethnocentric approach
- Retains strong and consistent brand identity (more appealing to a specific audience)
- Less R&D costs
57
Disadvantages of a ethnocentric approach
- Limited global appeal (won't resonate with international audiences)
- Limited local relationships
58
Advantages of a geocentric approach
- Global partnerships can be made (encourages cross-cultural collaboration)
- Wider range of customers
59
Disadvantages of geocentric approach
- Localisation expenses
- Culture clash (adaptation of the business might be unappealing)
- Legal issues
60
Advantages of a polycentric approach
- Local managers understand the market, language, customs, and consumer behavior.
- Locals running the business can be trusted by the community
61
Disadvantages of a polycentric approach
- Company culture may become ununified
- Harder to control decisions from HQ, miscomms or language barriers
62
Amortisation
Amortisation is the process of paying down the debt over time in regular installment payments of interest. (used in contract deals and loan debts)
- Helps companies maintain financial stability (not paying all in one), helps companies allocate resources efficiently.
63
Product life cycle
The stages of demand a product undergoes.
- Research and development
- Introduction
- Growth
- Maturity
- Decline
64
Recruitment process
- Identifying a vacancy (or a need to replace somebody)
- Creating a job description
- Advertising the job (within the business or externally)
- Shortlisting applicants
- Interviews and assessments
- Appoint or readvertise
65
Pros and cons of a joint venture
- Shared resources and knowledge
- New market access
- Loss of control
- Culture clash
66
Social enterprise
A business that has aims and objectives which benefit society with profits being reinvested into the business and community.
67
Opportunity cost
The value of the next best alternative that you give up when you make a choice.
68
Induction training
Initial training to help new employees get familiar with business procedures.
- Tour of the workplace and meeting colleagues
- Company policy explanation
- Shadowing a colleague's job
69
Flat and wide organisational structure
Less layers, wide span of control for managers, faster communication, more autonomy
70
Tall and thin organisational structure
Many layers of organisational structure, common in larger organisations, closer supervision, slower comms, more opportunity for promotion
71
Trade unions
- A trade union is an organisation that strives for employee rights.
- Their views can be expressed through strikes, political influence, collective bargaining, and representing employees in legal matters.
- They have stronger bargaining power as a group.
72
Matrix organisational structure
A management system where employees report to multiple managers instead of the traditional one, helping to improve communication across different departments.
- Usually used for projects.
73
Are legal controls effective?
YES - legal controls are enforcable with penalties (jail, fines, sanctions)
YES - Forces public accountability for bad actions
However, government enforcing legal controls may be corrupt
However, MNC's can shift operations outside the country, dodging legal controls.
Perhaps other alternatives like pressure groups and social media campagins are better?
74
Social trends
- Ethical sourcing
- Convenience
- Online influence and ecommerce
- Diversity and inclusivity
75
Subsidy
A government payment to a producer, so they can afford to lower production costs and lower prices to maintain competitiveness. (For example, the American government pays an American clothes shop subsidy so they can charge afford to charge lower than Chinese clothes shop, therefore gaining a competitive advantage.)
76
Patent
A legal right that states that a specific product belongs to a business. Others cannot copy, sell or make the product without their permission. It can be a source of revenue through licensing.
77
The appreciation of the pound does what to import costs and export costs?
Stronger pound imports cheaper exports dearer (SPICED)
78
The depreciation of the pound does what to import costs and export costs?
Weaker pound imports dearer exports cheaper (WPIDEC)
79
Interest rates
The cost of borrowing or the reward of saving
80
Franchsing
Franchising is when a business (franchisor) allows another business or individual (franchisee) to trade under its brand name and sell its products.
- Allows franchisor to expand further very cheaply - don't have to pay wages or run shop
- Allows franchisee to start with established customers and brand reputation
- However, franchisee can't change their products or services; they have to sell what the franchisor decides - no control
- They are also very expensive to buy
- One poor franchise can damage brand image
81
Trade bloc
A trading bloc is a group of countries that have agreed to reduce or eliminate trade barriers between each other to encourage free trade.
82
Sole trader disadvantages
- Less likely to obtain large loans
- Unlimited liability
