Theme 2

Question 1

Just in time stock benefits

Answer 1

• hold limited stock so lower storage costs
• products wont perish or become obsolete
• type of lean production with focus on efficiency

Question 2

Buffer stock benefits

Answer 2

• purchasing economies of scale= lower average cost per unit
• can meet sudden demand changes
• less reliance on suppliers (less risk)

Question 3

Importance of motivation

Answer 3

• improved productivity
• lower absenteeism
• improved staff retention
• reduced recruitment costs
• improved quality

Question 4

Financial motivational methods

Answer 4

• increased remuneration
• bonus
• offer commission on sales
• promotions

Question 5

Non financial motivation methods

Answer 5

• job rotation
• job enrichment
• autonomy

Question 6

Gross profit margin

Answer 6

(Gross profit/ revenue) x100

Question 7

Net profit

Answer 7

Gross profit - expenses

Question 8

Centralised structure

Answer 8

Control and therefore decision making is made by the highest layers of management

Question 9

Decentralised structure

Answer 9

When control and therefore decision making is delegated by the highest layers of management

Question 10

Centralised benefits

Answer 10

• quicker decision making
• consistent decision making

Question 11

Decentralised benefits

Answer 11

• useful for internal recruitment
• motivating for junior managers

Question 12

Design mix

Answer 12

• function
• aesthetics
• costs

Question 13

Product life cycle

Answer 13

• research and development
• introduction
• growth
• maturity
• aim of extension strategy
• decline

Question 14

Extension strategies

Answer 14

A method for a business to increase sales in a saturated market. They are most commonly used in the maturity or decline stage of the product life cycle.

Question 15

Examples of extension strategies

Answer 15

• target a new segment
• reduce the price
• add new features to the product
• update packaging
• advertise more
• enter new markets e.g. new countries

Question 16

What document states the qualities an employer is looking for in a new employee?

Answer 16

Person specification

Question 17

Explain one impact that a pressure group can have on a business

Answer 17

Pressure groups may damage the brand image of the business. Therefore, potential customers may switch to ethical brands. As a result, the sales of a business may fall.

Question 18

Explain one disadvantage to a business of having poor customer service

Answer 18

Customers may become dissatisfied with the business. As a result, they may not make any repeat purchases. Therefore, the market share of the business may fall.

Question 19

What is employee retention?

Answer 19

Refers to keeping employees working for a business. It may be advantageous to a business as employees who have worked for a business for a long time require less monitoring and training than those who are new to the business.

Question 20

How could a business improve employee retention?

Answer 20

• introduce job rotation
• providing training

Question 21

Explain one reason why aesthetics may be important in the design mix of a product

Answer 21

This may make the product look more attractive. Therefore, customers may choose the product over those of a rival. As a result, market share many increase.

Question 22

Explain one drawback to a business introducing a system of quality assurance

Answer 22

This may involve a large amount of employee training. This is because workers at each stage of the production process are now responsible for checking their own work. Therefore, business costs may increase.

Question 23

What is procurement?

Answer 23

Getting the right supplies from the right suppliers at the right price

Question 24

Explain one reason why having a post sales service may be important to a business

Answer 24

This allows customers to resolve any problems they may have with the product. Therefore, customer loyalty should increase. Thus, the business should gain repeat purchases.

Question 25

Explain one impact on a business from reducing the size of its workforce

Answer 25

The labour costs of the business may fall. This is because the business will not have to pay as many wages/salaries to workers. Thus, the break even point of the business may fall.

Question 26

Discuss the disadvantage to a business of using a just in time system of stock control

Answer 26

• the business may run out of stocks of raw materials if suppliers do not deliver on time
• therefore, production will stop because the business will not have any buffer stocks
• as a result, customers will nit receive their orders on time
• the business will not be able to place bulk orders for raw materials
• therefore, the average variable cost of raw materials will increase
• as a result, the profit margin for the product may fall

Question 27

What is flow production?

Answer 27

Also known as continuous production. Defined by the continuous movement of items through the production process. Large numbers of the same goods are produced continuously in this production process.

Question 28

Job production

Answer 28

When individual products are made one a time to meet specific customer preferences. E.g. tailor made suits