Understanding Business Flashcards by Marc Darroch

Methods to max customer satisfaction 4

Research customer wants
Customer comment cards
Produce products customers want
Charge fair prices

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Why should firm try to max customer satisfaction 5

More likely to max sales
Complaints reduced which saves time
Customer loyalty
Good rep, grant may be easier to get
Avoids bad press

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What is the 4 sectors of industry

Primary
Secondary
Tertiary
Qiatinery

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What is primary sector

Extraction of raw mats

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What is secondary sector

Development of products or raw mats

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What is tertiary sector

Sectorninvolved in providing service

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What is quatenery sector

Consists of industries proving info services

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What is the sectors of economy

Private
Public
Third

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Describe social enterprise

Set up to support cause
Profits reinevtesd

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What is thus ord OWNED , CONTROLLED AND FINANCED by - LTD

Owned by shareholders
Controlled by director or manager in charge of specific area
Financed by share capital from friends n fam

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What is thus ord OWNED , CONTROLLED AND FINANCED by - PLC

Owned by shareholders
Controlled by board of directors
Financed by share capital the stock market

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What is thus ord OWNED , CONTROLLED AND FINANCED by - charity

Owned by board of trustees
Controlled by manager of shop
Finanaced by donations

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What is thus ord OWNED , CONTROLLED AND FINANCED by - government org

Owned by government offices
Controlled by local councillors
Finance by tax revenue

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Benefits of LTD 3

Raise more capital than sole graders and partnerships
Shareholders have limited liability
Annual accounts don’t have to be made public

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Disadvantages of ltd 3

Profits shared with other shareholders
Consent of other shareholders needed before shares sold
Expansion limited to freinds and fam

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Advantages of PLC 4

Shares sold on stock exchange
Firm ran by board of directors
Raise very large amount of capital from selling hsares
Can accesses larger loans for cheaper as less risky investment than a sole trader or partnership

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Disadvantages of PLC 4

Shareholders can freely sell shares
Dividends must be shared with tons of shareholders
Could be subject to financial takeober
Annual accounts must be published which costs and can give potential investors bad view

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Charity advantages 4

Funded by donations
Attract good employees
Exempt from some taxes
Lower wage costs as staff often volunteers

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Negatives of a charity

High staff turnover
Lesser marketing budget than other firms

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Government funded org advantages 3

Funded by taxes
Ran by ministers who aren’t always experts in feild
Accountable to public so can’t take large risks

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Government funded org disadvantages 2

Slow to make decisions
Cannot chase profit as an objective

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What is unlimited kiability

Means owners or partners have full responsibility for business debts

Positives of having objectives 3

Firm can measure performance against goal
Objectives influence future decisions (makes firm think twice)
All workers follow a common goal

Ways to be social responsible 5

Recycle
Donate to charity
RSPCA AND FAIR TARDE N THAT
treating staff fairbby giving fair wages and hours
Equal opportunities policy (pay men n women equal )

Advantages of being socially responsible 4

Good rep Employees more motivated Can boost sales Can attract a new market segment

Costs of being socially responsible

Additional costs Firm may focus on being it too much and loose focus of more important goals like sales n profits Firm need to make sure stance is implied through allsegments if firm (eg marketing and finance)

What’s the 2 methods of growth

Organically Inorganicallly

Give 3 methods of organic growth

New machines that increase outpu Advertising to increase customer base New product development

What is organic growth

Growing from inside firm

What is inorganic growth

Growth from outsude firm, ie buying iver or merging with another firm

Advantages of organic growth

No loss of control of firm Launch if new products mean firm can gain new market segments Opening new physical branches means can reach new customers if it’s in new location Expanding existing premises can increase space for products n boost sales E-commerce means business can trade 24/7 worldwide

What is horizontal growth

When two firms on same stage of production join together Ie a retailer buys over another retailer

Pros of horizontal integration 4

Common knowledge of market Reduces number of competitors Similar skilled employees Easier to get bulk buying discounts

Cons of horizontal integration 2

Firm not spreading risk If firm raise prices too much due to less competitors to the point it’s unfair on customers gov can step in

What is vertical integration

When a firm acquires a firm on different stage of production either forwards or backwards

What is backwards vertical intergrstionn

When a firm merges with a supplier

What is forward vertical integration

When a firm merges W it’s customers

Pros of backwards vintergartiom 2;

Control supply of raw mats Removes profit margin supplier would demand

Pros of forwards intergrstion 1

Control image and distribution of products

Cons of vertical integration

May be difficult to get bulk buying discounts More risky as firm lack knowledge or skills in new area

What is divestment

A method of growth where firm sells off some assets such as a factory or smaller oats of business to raise finance

What is a political factor

Any action taken by government

What is an economic factor

Current state of economy that will influence a business

What is a social cultural factor

1) population trends 2) cultural trends and buying habits

What is a technological factor

Latest developments with tech that influence how firm operates

What is an environmental factor

Involves any law or action to promote the uphold the upkeep of environment

What is a competitive factor

Actions of competitors that force the firm to react

What is a completion policy

Prevent and reduce companies that holdback or limit competition Basically when a firm dominates the market too much

What is 3 implications of competition policy

Firms prevented from merging or acquiring other business if they become too large Firms will be monitored to ensure they’re prices aren’t too high Companies can complain to CMA if they see other business being anticompetitive ie agreeing with another business to lower prices to knock a firm out the market

What’s a stakeholder

Any Person or org that has an intrest in the succes of a firm

Name 4 internal stakeholders

Shareholders Employees Managers Owners

Name 5 external stakeholders

Bank Suppliers Government Customers Local community

Stakeholder conflict example

Manager wants employees to work extra hours WHERE AS employees want to work required payed hours

Interdependent stakeholders example

Managers want employees to produce as many goods as possible AND SO employees want firm to train them on how to use machines properly AND SO …. THEREFORE