Theme 1 LOAS Flashcards
(137 cards)
1
Q
mass market benefit
A
-produce product that appeals to range of demographics
-increased sales vol
-increased output
-increased orders from suppliers
-discount for bulk buying
-lower unit variable costs
-increased gross profit
2
Q
mass market drawback
A
-less specialised in meeting needs of specific demographic
-reduced knowledge of customers
-less likely to meet needs
-price elastic
-as lack differentiation
-pressure to lower prices
-lower sales rev
-lower GP
3
Q
niche market benefit
A
-can develop specialist understanding of target demographic
-effectively meet needs
-create holiday that it tailored to them
-more effective than mass market
-differentiation
-porter comp adv
-increased sales
4
Q
niche market drawback
A
-focused on specific needs of specific segment
-suitable only to that segment
-limited protentional sales
-lower sales rev
-reduced inflows
-lower net cash flow
-reducing current ratio
-risk of liquidation
-less attractive to investors
5
Q
online retailing benefit
A
-may be beneficial
-as product will be available to customers from anywhere in world without leaving home
-increases accessibility
-combined with rising popularity of purchasing online
-lead to increased SV
-more raw materials required
-purchasing EOS LOA
6
Q
online retailing drawback
A
-may not be beneficial
-as customers can more easily find alternatives online
-can easily compare prices of products
-making them more sensitive to changes in price
-price elastic LOA
7
Q
dynamic market benefit
A
-dynamic markets are fast changing
-meaning customer trends appear quickly
-if business is able to adapt to trends quickly
-may be able to differentiate
-by gaining first mover advantage
-allow them to charge higher prices
-whilst competitors are still trying to adapt
-leading to increased revenue
-increased GP + RP
-able to invest into market research to predict next change
8
Q
dynamic market drawback
A
-dynamic markets change rapidly
-products and services need to change to keep up with trends in market
-requires high investment into r&d
-e.g paying high wages of scientists
-leads to increased outflows
-lower net cash flow
-reduced cash reserves
-poor liquidity
-may be unable to pay day to day bills
-forced to sell NCA
-unable to operate
9
Q
product orientation benefit
A
-involves focusing on developing the product
-lots of interest into r&d of function of product
-improved innovation having unique features
-differentiate from competitors
-customers willing to pay higher prices
-price inelastic LOA
10
Q
product orientation drawback
A
-can be expensive
-lots of investment into r&d is needed to innovate
-increased FC
-e.g paying high wages of scientists
-leads to lower OP
-reduced RP
-less capital to reinvest into further r&d
-may be unable to effectively differentiate
-unable to pursue porters differentiation strategy
11
Q
market orientation benefit
A
-involves focusing on customer wants and needs
-allows business to create products based on customer trends
-and use market research to quantify demand
-allowing them to produce products which are likely to have high SV
-benefit from marketing EOS
-FC of market research spread more
-lower unit FC
-increased OP
-able to reinvest in conducting further market research
12
Q
market orientation drawback
A
-however market research is needed to find out customer needs
-high amount of investment needed into market research
-e.g questionnaires and focus groups with large sample
-in order to find out wants and needs
-leads to increased outflows on wages
-lower net cash flow
-reduced cash reserves
-poor liquidity
-may be unable to pay day to day bills
-forced to sell NC
-unable to operate
13
Q
primary research benefit
A
-involves collecting new data
-which is up to date and specific
-e.g. focus groups
-allows business to effectively identify customers wants and needs
-create product which meets needs
-building customer loyalty
-inelastic LOA
14
Q
primary research drawback
A
-can be expensive
-may need to hire specialist researchers to conduct research
-e.g focus groups using large sample
-in order to find out wants and needs
-leads to increased outflows on wages
-lower net cash flow
-liquidity LOA
15
Q
secondary research benefit
A
-research presented in report format
-has already been completed
-therefore doesn’t require researchers to be recruited
-as wont be requirement to do focus groups
-significantly reduces outflows
-improving net cash flow
-leading to increased current assets
-ability to pay debt and avoid failure
16
Q
secondary research drawback
A
-research has been completed in past for a different purpose
-may not be time or business relevant
-making invalid suggestions on how business can improve
-leading to inappropriate product portfolio
-leading to low sales
-lower GP
-risking operating loss
-forcing business to use cash reserves to pay expenses
-lower liquidity
-less attractive to investors
-as suggests business may struggle to pay bills
-struggle to raise capital for future expansion
17
Q
quantitative data benefit
A
-data collected in statistical form
-using closed questions
-these can be completed independently
-and easily analysed
-specialist researchers unlikely to be needed
-reducing costs of wages for conducting research
-cash can instead be invested into using larger sample
-leading to more reliable data collected
-more likely to produce product which meets needs
-purchasing EOS LOA
18
Q
quantitative data drawback
A
-data presented in statistical form
-resulting in limited depth
-respondents cant explain why they made certain choices
-making it difficult to develop new ideas
-limiting innovation
-less likely to develop unique and competitive products
-elastic LOA
19
Q
qualitative data benefit
A
-invites participant to give more detailed response
-can lead to deeper understanding of customer wants and needs
-resulting in business being able to produce a product that more effectively meet needs
-increasing customer loyalty
-inelastic LOA
20
Q
qualitative data drawback
A
-gathering large volume of detailed responses will require significant number of researchers
-significantly increasing FC
-may mean that a lower volume of data is collected as business may not have cash to pay for researchers
-resulting in unreliable results as less people are asked
-resulting in wrong product being produced or wrong price being charged
-elastic LOA
21
Q
market segment benefit
A
-through segmentation business can target market research at specific group
-rather than trying to create product for all customers
-can help business understand customer needs more effectively
-meaning they can adapt their design mix to better meet needs
-ensuring business product is more differentiated
-price inelastic LOA
22
Q
market segmentation drawback
A
-need to create multiple products
-to meet needs of different segments
-e.g using geographical segmentation to create different products for customers in different countries
-unable to benefit from marketing EOS
-as each product will be targeted at smaller groups of customers
-FC or r&d to produce product spread over less
-higher unit FC
-lower OP
23
Q
cost of production - factors leading to change in supply
A
-reduced cost of production
-increased profit margins
-increased incentive to supply
-increased supply of…
-rightwards shift in supply
24
Q
external factors - factors leading to change in supply
A
-external factors
-prevent business from supplying
-reduced ability to supply
-fall in supply of…
-leftwards shift in supply
25
luxury goods drawback
-business is vulnerable to change in average incomes
-if many people lose their jobs incomes fall
-lead to significant fall in demand for goods as consumers switch to cheaper alternatives
-leading to fall in revenue + GP
-could lead to them making an OP loss putting pressure to reduce expenses
-may have to sell NCA
-reducing scale
26
normal goods benefit
-business sells normal goods is likely to have stable predictable sales
-when incomes change demand doesnt change much
-unlikely to see significant fall or rise in profits when incomes change
-unlikely to make a loss and can keep up with loan repayments
-could result in them getting low interest rates on loans leading to lower expenses
-business is attractive to banks and its a safe investment
27
inferior goods benefit
-when unemployment is high incomes will be lower and therefore demand of inferior goods will increase
-business may need to be flexible to able to respond to unexpected change in income so they can increase production on good to meet demand
-leads to an increase in GP
-flexibility to help reduce production when income rise again
-help ensure they can reduce operating expenses when demand falls therefore avoiding loss
28
benefit of using market map
-help to identify gaps in the market
-once identified can conduct r&d
-and design product that matches characteristics of
-product is likely to be unique
-lack of substitutes mean product will be inelastic
-inelastic LOA
29
market map drawback
-market maps are based on consumer opinions
-to ensure decisions on opinions are valid
-business needs to collect date from large sample
-may require large number of researchers
-to collect and analyse data and display in market map
-if business recruits researchers it will significantly increase outflows
-if outflows are greater than inflows
-may lead to negative net cash flow
30
benefit of design mix - aesthetic/function
-if business improves aesthetic/function of design mix
-through r&d into improved functionality or market research to identify trends
-product is likely to become differentiated
-gain comp adv according to porter
-inelastic LOA
31
drawback of design mx - aesthetic/function
-to improve aesthetics/function will require significant investment into r&d or market research
-increasing outflows
-if outflows exceed inflows
-negative net cash flow
-placing strain on cash reserves
-business has difficulty making payments to suppliers
-may have to sell NCA
-disruption to operations
32
benefit of design mix - economic manufacture
-if business designs product with economic manufacture as priority
-e.g through using less robust raw materials
-reduce cost of sales
-can pursue cost leadership according to porter
-gain comp adv
-can reduce SP
-significant increase in demand if elastic
-increasing sales
-purchasing EOS
33
drawback of design mix - economic manufacture
-if business designs product with economic manufacture as priority
-e.g using less robust raw materials
-may mean that product they design becomes less robust
-damage business reputation
-consumers may switch to alternative
decrease demand
-decrease sales + OP
-less profit to retain and reinvest
34
benefit of design mix - social trends
-changing design mix to reflect social trends
-product now aligned with social trends
-better meets needs
-customers more loyal
-inelastic LOA
35
drawback of design mix - social trends
-to identify relevant social trends
-requires significant investment into market research
-to ensure data is valid must be collected from large sample
-need to recruit specialist researchers to collect and analyse data
-increasing outflows
-placing strain on cash reserves
-liquidity LOA
36
benefit of concern over resource depletion
-business may e.g stop using rare wood when making product
-swap to more sustainable wood
-changing aesthetic of product due to concern over resource depletion
-aligning with customer values
-better meeting needs
-differentiated
-inelastic LOA
37
drawback over concern of resource depletion
-adapting design due to concern over resource depletion
-meaning business needs to find alternatives supplier for raw materials
-charge high price for new material
-increasing cost of sales
-reducing GP + OP
-less profit to retain
-less investment into...
38
above the line promotion benefit
-above the line such as tv advertising
-is more effective for large businesses
-as its accessible and appeals to wider audience
-across multiple market segments such as multiple geographical regions
-meaning its likely to generate higher SV
-FC of promotion can be spread over more units
-lower unit FC
-higher OP
39
above the line promotion drawback
-above the line such as tv advertising
-requires significant amount of cash as tv companies require payment upfront
-reduced net cashflow leading to lower cash reserves
-reduction in current assets
-struggle to pay current liabilities e.g suppliers
-pressure to sell NCA
-disruption to operations
40
ways to build a brand - USP through language
-effective use of language
-e.g using language which implies that product is superior from comp
-makes product inelastic
-business can set higher price
-inelastic LOA
41
ways to build a brand - advertising
-effective communication with customers
-e.g from case study - symbols/slogans
-improved brand awareness
-increased sales
-purchasing EOS
42
ways to build brand - sponsorship
-building association with an event or organisation which portrays shared image
-find example of what organisation represents
-explain how this can give positive brand image
-differentiated from other products who dont have that image
-inelastic LOA
43
changes in branding and promotion to reflect social trends
-grow in use of online use
-increased audience online each year
-communicate to them through social media influencers who are currently popular
-brand associated with popular influencer
-increased sales
-purchasing EOS
44
emotional branding
-appeal to someone's emotions
-e.g empathy for animals
-by communicating how ethical company is
-differentiated
-inelastic LOA
45
price skimming benefit
-temporary high price for a price inelastic good at start of products life
-that will be paid by early adopters
-very high sales rev per item sold
-increased GP
-increased OP
-increased RP that can be used for investment in r&d
-superior products
-further increase sales and profit
-purchasing EOS
46
price skimming drawback
-high price
-lower demand particularly in elastic market
-lower volume sold
-FC of r&d associated with advanced product will be spread over less units
-higher unit FC for r&d
-making it less affordable
-potentially leading to less advanced r&d process
-less advanced good and lower demand
47
penetration pricing benefit
-low price of start at products life
-significantly increase in demand especially if elastic
-as % change in demand will be greater than change in price
-lead to increased volume sold
-increased brand awareness
-repeat purchases
-increased sales rev
-increased GP in long term
48
penetration pricing drawback
-price might be lower than cost of sales
-potential loss on each product sold
-gross loss
-OP loss causing business to pay expenses with cash reserves
-reducing cash in current assets
-reducing ability to pay current liabilities
-may have to sell NCA
-disruption to operations
49
cost plus pricing benefit
-mark up added to cost of production for each product
-prices are flexible when costs change
-so price will increase if cost of product increase in order to maintain profit margins
-leads to business ensuring they dont make a loss on products sold
-unlikely to experience OP loss
-cash reserves not strained
-able to maintain sufficient working capital
-able to keep up with day to day bills
50
cost plus pricing drawback
-however cost plus pricing doesnt consider external factors
-e.g in very elastic market a competitor could reduce their mark up
-in order to offer lower SP than business
-lead to significant number of customers switching to comp offering cheaper prices
-leading to fall in sales
-as cost plus pricing wouldnt respond to this
-fall in revenue
-fall in OP
51
predatory pricing benefit
-price is reduced in order to attract customers from comp
-who are then unable to compete
-leading to failure and them closing down
-reduces level of comp in market creating a monopoly
-customers have less choice
-making market price inelastic
-inelastic LOA
52
predatory pricing drawback
-involves setting extremely low prices
-which could be lower than cost of production
-would lead to very low GP or potential losses
-would strain cash reserves in order to cover day to day running costs
-leading to lower current assets and poor current ratio
-meaning business would have poor liquidity
-liquidity LOA
53
psychological pricing benefit
-using psychological pricing e.g £99
-may convince consumers that products are more affordable
-leading to increase in sales
-FC can be spread over more units
-lower unit FC
-increasing OP + RP
-improving competitiveness
54
psychological pricing drawback
-using psychological pricing may not be effective
-as it doesnt consider factors that can affect PED of products
-therefore choosing psychological price may lead to business setting price thats too high
-if product doesnt have high differentiation
-may result in significant decrease in demand
-reducing SV + OP
-can retain less and reinvest less
55
competitive pricing benefit
-may be effective as ensures business isnt outpriced by another
-particularly important in very comp price elastic market
-where this is significant choice
-increasing buyer power
-prices need to remain competitive to avoid customers switching
-ensures business have high SV
-purchasing EOS
56
competitive pricing drawback
-business charge similar prices to comp
-prices dont give comp adv
-forcing business to become differentiated in another way
-e.g through having unique product
-this will increase costs through r&d
-increased costs combined with low comp price
-potential OP loss
57
traditional distribution benefit
-choosing to sell through intermediaries e.g wholesalers
-makes product more widely available
-increasing accessibility
-more customers may purchase product
-increasing SV
-purchasing EOS
58
traditional distribution drawback
-however intermediaries may have high levels of buyer power
-means they can dictate terms to business
-e.g lower prices and longer periods of trade credit
-therefore reducing inflows
-lower net cash flow
-reduced cash reserves
-liquidity LOA
59
direct distribution benefit
-choosing to sell direct to customers
-increases amount of control over customer experience
-able to offer better customer service
-increased differentiation
-increased customer loyalty
-inelastic LOA
60
direct distribution drawback
-however selling direct to customers requires high investment
-as business will need to set up own distribution network
-will need to purchase NCA
-e.g delivery vans
-using lots of cash
-reduced cash reserves
-liquidity LOA
61
development/introduction stage of product life cycle
-when product is at intro/development stage
-significant cash investment into market research and r&d
-and promotion to raise awareness of new product
-significantly reduce cash reserves as will be no inflows from sales during development and low inflows during intro
-will have reduced current assets and low current ratio
-liquidity LOA
62
growth stage of product life cycle
-when product is in growth stage
-sales will start to increase
-therefore business will be able to make better use of production capacity
-improve capacity utilisation means FC spread more
-lower unit FC
-may be able to reduce SP
-demand increases significantly
-further increase sales rev
63
maturity stage of product life cycle
-product in maturity will see sales at highest
-as sales vol is highest business will achieve EOS
-link to appropriate EOS
64
decline stage of product life cycle
-during decline stage sales will start to fall
-less inflows from sales
-reduced cash reserves
-low current assets
-low current ration
-may not be able to meet current liabilities
-may be forced to sell NCA and disrupt operations
65
decline stage of product life cycle benefit
-however if sales begin to decline
-due to changing trends
-business may be able to sell obsolete assets such as machinery used in production
-generate cash that could be used to invest into r&d or market research for new products
-that are in development stage
-to ensure they have balanced product portfolio
-so they have spread risk
-less vulnerable to changes in trends
66
extension strategy of product life cycle
-when product reaches decline stage of product life cycle
-business can introduce extension strategy e.g adapting product or advertising to new segment
-extends maturity stage
-SV remains high
-EOS can be achieved - LOA
67
extension strategy drawback
-however extension strategy will require significant investment
-means business will have less cash to invest into development stage of new products
-e.g less prototypes can be developed
-new products less likely to meet needs or reach intro stage
-business hasnt spread risk
-business more vulnerable to changes in trends
68
boston matrix - question marks
-question mark product has low sales but potential for high market growth
-will need significant cash investment into market research + r&d
-and promotion to raise awareness of new product
-significantly reduce cash reserves and no inflows from sales during development and low inflows during intro
-reduced current assets and low current ratio
-less cash available to meet current liabilities
-risk of sale of asset to raise cash
69
boston matrix - stars
-star products have low market share but high market growth
-sales will be increasing
-business will be able to make better use of production capacity
-improved capacity utilisation means FC spread over more
-lower unit FC
-potential to set lower SP
-demand increases significantly
-further increase in sales rev
70
boston matrix - dogs
-dog products will have low market share and low market growth
-less cash inflows from sales
-reduced cash reserves
-low current assets
-low current ration
-business may not be able to meet current liabilities
71
boston matrix - dogs however
-dog products have low market share and low market growth
-however they may be established products that require little investment into promotion or r&d
-unit cost is very low
-business can maintain profit margin
-can retain this profit
-use RP to invest into question mark products
-potential to be future star or cash cow
-ensuring product portfolio remains balanced and risk is spread
72
dog product as source of finance
-dog products may be lower profitability/making a loss
-due to low sales causing low output
-low capacity utilisation
-FC spread over less units
-high unit FC
-potentially leading to a loss
-product needs to be withdrawn from market
-sell NCA associated with production
-increasing cash to be invested into facilities for r&d
73
boston matrix - cash cow
-cash cow products have high market share and high market growth
-sales volume is highest and can achieve EOS
-link to appropriate EOS
74
product life cylce, boston matrix, balanced portfolio benefit
-if business has products in all stages of PLC/boston matrix
-will have balanced portfolio
-means they have spread risk across multiple products
-less vulnerable to changes in customer trends
-likely to have consistent inflows from sales
-maintain high level of cash reserves
-current ratio will be high
-keep up with payments to suppliers
-less likely to sell NCA and no disruption to operations
75
product life cycle, boston matrix, balanced portfolio drawback
-creating and maintaining balanced portfolio will require significant investment into all marketing activities
-e.g r&d, market research, promotion
-will require significant cash reserves
-may need to seek additional sources of finance
-link to drawback of source of finance relevant
76
b2b businesses benefit
-b2b marketing strategy means business is likely to use below to the line promotional methods to build lasting relationships
-so they can receive repeat orders
-can produce reliable cash flow forecasts as more certain on regular inflows
-improve reliability of business plan
-more attractive to banks
-secure loan with lower interest rates
-increased current assets
-good liquidity
77
b2b businesses drawback
-b2b strategy targets smaller pool or potential customers
-as less businesses than individual customers
-meaning that business may have lower output
-lower capacity utilisation
-FC spread over less
-increased unit FC
78
b2c businesses benefit
-b2c strategy targets a wider pool of potential customers
-as there are more customers and businesses
-if marketing strategy is successful increased likelihood of high SV
-purchasing EOS LOA
79
b2c businesses - drawback
-b2c strategy targets wider pool of potential customers
-however pool of consumers is larger so likely to be greater number of substitutes targeting same customers
-market will be more elastic
-elastic LOA
80
treating staff as asset - benefit
-if business treats staff as asset e.g investing in training or improving working conditions
-it will ensure hygiene factors are present (herzburg)
-allowing business to introduce motivating factor
-meaning their staff are likely to be motivated
-link to benefit
81
treating staff as asset - drawback
-if business treats staff as asset e.g investing in training or improving working conditions
-need to allocate significant cash to HR budget
-less cash to allocate to other budgets e.g r&d
-less cash invested means products may be poorly designed
-e.g poor functionality
-product may not meet needs
-fall in sales
-fall in GP
82
treating staff as cost - benefit
-if business treats staff as cost e.g lack on investment in training
-hygiene factors may not be present (Herzburg)
-lack of hygiene factors will mean staff demotivated
-link to impact e.g high labour turnover
83
flexible workforce - benefit
-flexible working e.g flexi time or home working
-allow employees time to work around other commitments
-ensures that love and belonging needs are met - maslow
-if needs are met they will become more motivated
-link to benefit
84
flexible work force - drawback
-flexible working e.g flexi time or home working
-mean employees are completing daily tasks at different times of day in different places
-which may mean team working is difficult to implement
-make it difficult to create task culture
-business unable to use team working to generate innovate ideas
-less differentiated
-elastic LOA
85
collective bargaining - benefit
-allows employees to negotiate conditions as organised body
-improved relationships between employees and employers
-hygiene factors present according to herzburg as working conditions improved
-business can introduce motivating factor e.g empowerment
-increased employee motivation
-link to benefit
86
collective bargaining - drawback
-if business allows employees to negotiate conditions as organised body
-likely that business may have to make changes in working conditions
-means business will need to allocate cash to HR budget
-less cash invest into marketing activities e.g r&d
-less likely to meet needs
-lower sales vol
-less likely to achieve EOS
87
internal recruitment - benefit
-ensures employees already know and share values of business
-can maintain strong culture
-positive working relations with mangers
-ensuring employees love and belonging needs are met - maslow
-employees are motivated to work towards same goals
-productivity remains high or excellent customer service
-link to EOS or PED
88
internal recruitment - drawback
-recruiting internally will create another vacancy that business will need to fill
-limit businesses ability to increase capacity
-limiting capacity may reduce ability to achieve EOS
-FC spread less
-increasing unit FC
-reducing OP
-pressuring business to increase SP
89
external recruitment - benefit
-wider pool of potential customers to recruit from
-increase chance of introducing new ideas or skills
-more likely to design differentiated products
-or increase productivity
-or continue to offer exceptional customer service
-link to EOS or PED
90
external recruitment - drawback
-more likely to increase expenses
-as business needs to advertise externally or use external recruitment agency
-increase expenses
-reduce OP
-less profit to retain and reinvest into building scale
-or pressure to increase SP, leading to decrease in demand
-fall in rev
91
on the job - benefit
-on job training will reduce expenses
-as will not need to utilise specialist external trainer
-who is likely to charge high prices for service
-can maintain high OP margin
-will have more profit to retain into building scale
-or wont be pressured into increasing prices
92
on the job drawback
-on job training may mean employees are completing tasks through trial and error
-may result in employees not being skilled in short term
-drop in productivity/poor customer service
-FC spread less/lack differentiation
-EOS/PED
93
off the job - benefit
- off the job training likely to be provided by specialist trainer
-employees provided with superior knowledge of skills
-compared to being trained on job by non specialist
-employees with superior knowledge or skills likely to return to business more productive
-or deliver exceptional customer service
-in long term
-EOS or PED
94
off the job - drawback
-off job training will mean employees are absent from role for period of time
-during this time may experience drop in productivity/may lead to poor customer service
-experience fall in output/damage brand
-FC of production spread less/reduced loyalty
-EOS or PED
95
centralised organisation structure - benefit
-decisions for organisation made by single power source such as leader or directors
-no delegation or consultation
-ensures quick decision making
-able to quickly adapt to changing trends
-increased differentiation
-inelastic LOA
96
centralised structure - drawback
-cnetralisation
-no delegation or consultation
-employees dont feel valued by organisation
-as they arent included in decision making process
-esteem needs not met - maslow
-demotivated
-impact
97
de-centralised structure - benefit
-different parts of organisation e.g managers or department managers have authority to make decisions suitable for their area
-more adaptable to needs of their staff or customers
-ensures quick decision making
-able to quickly adapt to changing trends
-increased differentiation
-inelastic LOA
98
de-centralised structure - drawback
-as key decisions will need to be made by lower ranking managers
-will need to be of appropriate skill to ensure correct decisions made
-will require significant investment in training
-increased outflows
-lower net cash flow
-liquidity LOA
99
tall structure - benefit
-increased number of layers in organisational chart
-increased number of managers leading to narrow span on control
-improved levels or supervision from managers
-more effective feedback to employees
-improved skill
-increased productivity/quality
-EOS or PED
100
tall structure - drawback
-increased number of managers
-increased cost of salaries as managers are paid more than average employees
-increased FC
-lower OP margins
-lower RP
-less cash available for investment into NCA
-limiting scale
101
flat structure - benefit
-less managers leading to wider span of control
-reduced supervision of employees
-opportunity for more delegation of managerial responsibility
-enhanced challenge for employees
-improved job enrichment
-satisfy esteem needs - maslow
-improved motivation and quality of work - PED LOA
102
flat structure - drawback
-less managers leading to wider span of control
-increased number of subordinates for managers
-poor communication between managers and subordinates
-less effective feedback/support on performance
-reduced productivity as employees less able
-FC spread less
-higher unit FC
103
matrix structure - benefit
-employees are organised in teams
-where ideas are more important than hierarchy or position
-effective collaboration between employees
-improved team working leading to improved motivation - mayo
-more effective ideas developed in organisation
-improved innovation
-differentiation - PED LOA
104
matrix structure - drawback
-less emphasis on hierarchy with no clear lines of accountability/responsibility
-less guidance/support from authoritative line manager
-ineffective staff development
-reduced level of expertise of employees
-less effective ideas
-product/service less advanced
-lower inflows leading to lower net cash flow
-liquidity LOA
105
taylors theory
-through taylors scientific management staff are given effective training to do specific job
-means they will become more skilled in given area
-able to produce more so will be motivated to do so if paid for every item they produce
-increased output per worker
-increased productivity
-FC spread more
-lower unit FC
106
mayos theory
-through having more managers will be more supervision
-lead to employees feeling their actions are valued as manager is showing interest in work
-argued by mayo to be an effective motivational factor as workers produced more when watched - hawthorne effect
-increased productivity
-FC spread over more
-lower unit FC
107
maslows theory
-job enrichment gives employees greater responsibility by increasing complexity of tasks
-enrichment likely to improve motivation as will feel trusted to complete challenging tasks
-employees esteem needs met according to maslow
-ensure staff become satisfied in job which improved wellbeing
-likely to reduce labour turnover
-lower labour turnover will ensure business doesnt experience significant recruitment costs
108
herzburgs theory
-business can make investments into working conditions
-will mean they can choose motivational factor
-help to meet one of herzburgs hygiene factors
-provide a foundation in which to motivate staff by other factors e.g employee recognition
109
autocratic leadership - benefit
-autocratic means all decisions are made by leader
-no delegation or consultation
-ensures quick decision making
-able to quickly adapt to changing trends
-increased differentiation
-inelastic LOA
110
autocratic leadership - drawback
-autocratic means all decisions are made by leader
-no delegation or consultation
-employees dont feel valued by organisation
-as not included in decision making process
-esteem needs not met - maslow
-may become demotivated
-explain impact
111
paternalistic leadership - benefit
-paternalistic means leaders will consider employee welfare when making decisions
-whilst still maintaining full control of decision making
-employees esteem needs are met - maslow
-as welfare is important to leader, employees feel valued
-increasing motivation
-explain impact
112
paternalistic leadership - drawback
-paternalistic means leaders will consider employee welfare when making decisions
-employee input may be listened to but decision making still controlled by leader
-may mean ideas suggested by subordinates ignored by leader
-reduction in innovation by business
-less differentiated
-loss of comp adv
-elastic LOA
113
democratic leadership - benefit
-democratic means leaders involve employees in decision making
-means employees will have greater level of responsibility
-means employees feel recognised by leader
-maslow esteem needs met
-increasing motivation
-explain impact
114
democratic leadership - drawback
-democratic means leaders involve employees in decision making
-may delay the decision making process
-business fails to adapt to changing trends
-loss of first mover advantage
-less differentiated
-loss of comp adv
-elastic LOA
115
laissez faire leadership - benefit
-laissez faire delegate full responsibility for decision making to employees
-means employees will have greater level of responsibility
-means employees feel recognised by leader
-maslow esteem needs met
-increasing motivation
-explain impact
116
lassiez faire leadership - drawback
-lassiez faire delegate full responsibility for decision making to employees
-means employees will have greater level of responsibility
-to ensure effective decision making employees must posses necessary skills
-if not, employees may feel overwhelmed with lack of direction
-hygiene factors not present - herzburg
-demotivated
-explain impact
117
entrepreneurial characteristic - creativity
-creativity one important characteristic on an entrepreneur
-help them to innovate + create unique ideas
-differentiate
-build strong brand
-loyal customers
-inelastic LOA
118
business objective - survival
-to achieve objective of survival
-business must ensure it has good liquidity
-whereby they have sufficient current assets to meet current liabilities
-achieved by increasing inflows
-so business isnt forced to sell NCA
-no disruption to operations
-reduced chance of failure
119
businesses objective - profit maximisation
-to achieve objective of profit maximisation
-business must either increase revenue or decrease costs
-business can retain more profit
-and reinvest in...
120
business objective - sales maximisation
-to achieve objective of sales maximisation
-business can change price dependent on PED
-increase sales revenue
121
business objective - social objective
-to achieve a social objective
-business must operate ethically
-business can become price inelastic
-PED LOA
122
business objective - market share
-to achieve increased market share
-business needs to increase sales volume/revenue as % of total market value
-business can change price
-increased sales
-increased market share
123
business objective - cost efficiency
-to achieve cost efficiency
-business needs to identify areas where costs can be reduced
-achieve cost leadership strategy according to porter
-gain comp adv
124
business objective - employee welfare
-to achieve improved employee welfare
-business needs to invest into improved working conditions
-herzburg
-increased motivation
125
business objective - customer satisfaction
-to achieve customer satisfaction
-business will invest into market research to identify customer wants and needs
-adapt product to meet needs
-better meet needs
-inelastic
126
sole trader - benefit
-only owners of business
-can maintain full control over day to day running
-able to establish strong power culture
-maintaining consistency throughout business
-build strong brand
-differentiate
-inelastic LOA
127
sole trader - drawback
-unlimited liability
-increased risk of investment
-if debt exceeds assets
-may need to sell personal possessions
-increased risk will make investment less attractive
-leading to reduced investment
-less capital
-reduced assets
128
partnership - benefit
-knowledge and experience from partners
-improved innovation
-differentiation
-price inelastic LOA
129
partnership - drawback
-unlimited liability
-increased risk of investment
-if debt exceed assets
-may need to sell personal possessions
-increased risk will make investment less attractive
-leading to reduced investment
-less capital
-reduced assets
130
LTD - benefit
-LTDs can chose own shareholders
-chose people who match their objectives e.g passion for innovation
-might mean less focus on short term results as share goals on r&d + long term investment
-can reinvest more capital into r&d rather than being pressured to pay dividends
-able to pursue objectives
-differentiate
-inelastic LOA
131
LTD - drawback
-LTDs unable to sell shares on stock market
-can make it difficult to raise large amount of capital
-may find it difficult to build scale
-limits amount of r&d
-less innovation
-less differentiated
-elastic LOA
132
PLC - benefit
-gone through stock market flotation
-shares are advertised and accessible to public
-can sell large volume of shares leading to significant amount of capital generated
-increased cash available to invest in NCA to build scale
133
PLC - drawback
-shares sold to public
-more pressure from shareholders for short term profits
-business may neglect long term objectives for short term returns
-to satisfy shareholders by using profit to pay regular dividends
-neglecting investment into r&d to develop innovative products
-products become less differentiated
-elastic LOA
134
franchisor - benefit
-means allowing independent businesses to use brand name
-means franchisee provides capital to open new branches
-reducing capital required for expansion
-franchisor able to expand quicker
-benefit from marketing EOS
135
franchisor - drawback
-however franchisors risk damaging brand reputation
-as franchisor isnt responsible for the day to day running of outlet
-franchisee may fail to uphold high levels of customer service
-due to lack of supervision from franchisor
-poor customer service could affect reputation of other outlets
-customers switch to rival business
-reducing sales rev
-reducing GP
136
franchisee - benefit
-means paying to use another businesses brand name
-have access to well-known brand
-already have customers who have brand loyalty
-more price inelastic
-franchisee can charge higher prices than independent business as customers willing to pay
-increased rev + profit margins
-more RP to reinvest in opening further franchises
137
franchisee - drawback
-means paying to use another businesses brand name
-lead to higher costs as fees and royalties need to be paid
-increased outflows
-lower net cash flow
-reducing cash reserves
-liquidity LOA
