2.1 Flashcards
Objectives of growth
Increased sales/turnover/growth/profit/dividends, employee welfare, market power, environment
Define economy of scale
Reduction in the cost of production due to an increase in the scale of output
How would you price to increase profits
High price
How might you price to gain a competitive advantage
Cut prices
Name the external economies of scale
Impact the whole industry
Community of labour/supplier
Efficient technologies
Internal economies of scale
Technical Managerial Purchasing Marketing Financial
How can Eos lead to a higher standard of living
People have a higher purchasing power
Prices lower
More bought
Monopoly VS monopsony
Monopoly - influence on the market
Monopsony - influence on the supplier market
What is the minimum efficient scale
Lowest level of output at which costs are minimised
If costs increase, diseconomies of scale occur
Negatives of Eos
Indefinite
Diseconomies of scale
Communication inefficient
Skill shortage
Management quit
Benefits of a strong culture
Loyal staff
Creative
High moral - high productivity
Organic VS inorganic
Organic is within
Inorganic is merger or takeover
Advans of organic growth
Cheaper
Less chance of a culture clash
High morale - workers have a chance to reach the top
Advans of inorganic growth
Quicker
Higher market power
Shared overheads (rationalisation)
Economies of scale
Benefits of r&d
Competitive advantage
Growth
Market share
What makes up the digital economy
Infrastructure (networks) E business (Skype calls) E commerce (selling goods and services) Social media
Advans of digital economy
Easy access to markets
Cut out distribution channels
More power to buyers
What is structural change in the digital economy
Reallocation of resources
Demand is falling - producers leave
Demand is rising -
Producers enter
What is micro marketing
Target small groups (individuals) with personalised recommendations or promotions
Benefits and drawbacks of online shopping
Open all the time
More efficient
Returns simple
Impulse buying
Security
Expensive
How small firms compete
USPS Flexible to demand Customer service Niche Good relationships with stakeholders