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A-Level Business > 2nd test Blackwell Gibbins > Flashcards

2nd test Blackwell Gibbins Flashcards

1
Q

percentage change equation

A

difference
————- X 100
original

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2
Q

market power definition

A

the abliity of a firm to influence or contorl the terms and contitions on which goods are brought and sold

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3
Q

markte dominance definiton

A

a mesure of market share compared to competitiors

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4
Q

barriers to entry

Examples of barriers to entry

A

the facto that could prevent a firm from entering and competitng in a market

Large start up costs mainly capital costs

having the marketing budget to break customer loyalty

the inability to gain economies of scale

the possibility that existing businesses will star a price war

legal restrictions such as patents

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5
Q

Low barriers/high barriers entry in market styles.

A

low barriers: monopolistic competition, competitive

High barriers: Oligopoly, monopoly

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6
Q

barriers to exit

Examples Barriers to exit

A

the factors that could prevent a firm from leaving a market even if it wanted to

the difficulty of selling capital

high redundancy costs

contracts with suppliers (company will face legal challenge if these are not honoured

leases with landlords

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7
Q

Merger

A

This is where two companies join together to form a new larger business

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8
Q

Acquisition

A

this is where control of another company is achieved by buying a majority of its shares

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9
Q

+ external growth

A

may gain new management with different skills

will result in an increase in market share (and market power/dominance)

may be able to meet customer needs more effectively with combination of resources

may experience economies of scale

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10
Q
  • external growth
A

may suffer from diseconomies of scale due to size I.E. communication problems (business, shareholders)

may take on extra debt that the business could struggle to repay if the strategy isn’t successful

could result in redundancy

could result in higher prices

could result in a dominate business dictator terms and conditions

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11
Q

organic/internal growth definitnion

examples:

A

involves expansion from within a business

opening more stores - new and existing

launching new products - increased demographic

employing more workers - less shortages
increasing productive capacity

investing in new technology -speed of sales

launching existing products into new markets- more3 customers & innovation

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12
Q

+ organic growth

A

less risky than external growth - not as severe

could be finance by retained profits

its’s a sensible/steady way of growing a business

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13
Q
  • organic growth
A

growth rate could be too slow to satisfy share holders

will be difficult to achieve if market is shrinking

hard to increase market share if the business is already a market leader

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14
Q

what is the CMA

A

Competition Markets Authority
they ‘work to promote (actively encourage) coemption ‘

CMA Investigate mergers which could restrict competition and block them i.e. Sainsburys and Asda

investigates where there may be abuses of dominant positions

brings criminal proceedings against individuals who commit the cartel offence

enforces legislation to tackle practices that make it difficult for consumers to exercise choice

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15
Q

what sanctions can CMA put in place

A

The business(es) involved can be finned up to 10% of their global turnover

Customer and competitive of firm(s) involved can be sued for damages as a result of being affected by ant-competitive behaviour

individuals can be disqualified form being a company directly

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16
Q

how does CMA’s sanctions benefit the consumers

A 
results in more choice
,better value for customers
,more business competition within a given market
,better terms for suppliers
,less abuse of dominant positions
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17
Q

what is the economy

A

the total value of output produced in a economy per year

adding up the value of all goods and services produces in a year

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18
Q

what happens when the gdp goes up

what happens when the gdp goes down

A

GDP goes up - economy is growing/expanding
more wealth -house prices goes up
more jobs

GDP goes down- The economy is shrinking
job cuts
fall in house prices

growing at a slower/faster rate
shrinking at a slower/faster rate

‘purchasing power’ ‘standard of living’

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19
Q

what is the limitation of GDP

A

can only see What’s ahead cant see what in the future

‘rear view mirror.’

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20
Q

government strategies to encourage economic growth

A

encourage investment in physical capital by offering subsides or lowering taxation

improve infrastructure- better transport like roads and trains and air ports increase the speed which raw materials and finished products can be delivered and help employees get to work

invest in education to improve human capital

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21
Q

inflation definition

A

persistent general tendency of prices in the economy to rise.

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22
Q

how to measurer inflation

A

customer price index CPX - a measure that examines the weighted average price of a basket of consumer

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23
Q

what causes inflation

A

high demand
shortage of supply
rapid demand - extra staff / overtime / raw materials increasing prices to cover costs
price rise cycle

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24
Q

high inflation makes UK exports un-competitive why

A

identical products higher inflation price of exports rise unattractive to consumers abroad

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25
Q

high inflation can reduce multinational investment why

A

multinationals look to produce in a the cheapest possible location they choose a country with the lowest rates of inflation not where price of labour and raw materials is rising sharply - this would make their products un-competitive

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26
Q

high inflation creates uncertainty around profits

A

managers dislike uncertainty about the return on their investments if you invest 500,000 in a country with high inflation in 2-3 years how much is this really worth, low inflation allows manager & businesses to estimate their investments with some degree of accuracy

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27
Q

Exchange Rate definition

A

the value of one currency in terms of another

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28
Q

What is a strengthening and weakening pound mean

A

If the pound increases in value it is strengthening
£ 1.00 = $ 1.50
if the pound decreases in value it is weakening
£ 1.00 = $ 1.10

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29
Q

what is a import

A

sale leads to money going OUT of the UK

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30
Q

what is a export

A

sale leads to money going IN TO the UK

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31
Q

Pound is strong

SPICED

Pound is weak

WPIDEC

A 
Strong
Pound
Imports
Cheap
Exports
Dear - (expensive)
Weak
Pound
Imports
Dear - (expensive)
Exports
Cheap
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32
Q

Does the Bank of England set the Exchange rate

A

No. Supply and demand does

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33
Q

Interest rate definition

A

An interest rate is the reward for saving and the cost of borrowing expressed as a percentage of the money saved or borrowed

34
Q

Who sets Intrest rates in England

A

Bank of England set base interest rate or
|–> Monetary Policy Committee (MPC)

Changed in 1997 from government

35
Q

what is operations management

A

management which designes and controlls the process of productions

36
Q

added value

A

the difference between the price of finished product/service and the cost of the inputs involved in making it

37
Q

how do you add value

A

function / cost / aesthetic

38
Q

added value +

A

charge higher price

creating a point of differnec form the competition

protecting from competitors trying to steal customers by charging lower price

focusing a business more closely on its target market segment

39
Q

added value -

A

not guaranteed that the cost of adding value can be recouped

the increase in price may restrict sales

amount of completion may restrict price so cost are larger to recoup

the elasticity of product may involve price increase within the market difficult to accept

40
Q

added value equation

A

selling price - cost of inputs

41
Q

mission statement definition

A

overall goal of the business

42
Q

objective definition

A

steps towards aim

43
Q

Aim definition

A

long term plan

44
Q

what is the difference between strategic and tactical

A

strategic is long term, tactical is short term

45
Q

what is the difference between market orientated and product orientated

A

market orientated is market wants and needs for product/services, product orientated is concentrated on product improvements

46
Q

what is quality assurance
and
what is quality control

A

quality assurance - checking the product during differnet stages of production
and
quality control - checking the product at the end using a sample

47
Q

output per employees equation / productivity

A

= total output / no. employees

48
Q

factor imacting operation objectives

A

size and legal status of business

state of economy

competition

government

legislation

49
Q

external factors impacts operation stratergy

A 
political
economic
social
technology
ethical
legal
environmental
STEEPLE
50
Q

what are the 4 types of production

A

Job
Batch
Flow
Cell

51
Q

Job production

A

Productions of items that meet specific requirements of the customer, one off

Wedding cakes, wedding dresses

52
Q

+/- job production

A 
\+
charge higher price 
meets customer needs
quality
motivational for employees
flexible 
added value
-
no economies of scale
higher costs
skilled labour
costing difficult
53
Q

Batch

A

Production of many similar items that are produced together

Jumpers, bread

54
Q

+/- Batch

A

+
making in batches reduces unit cost
can still address specific customer needs
faster than gob
some EOS
some flexibility
use of specialist making can increase output and production

-
time lost switiching between batch
need to be reset/downtime
need to keep stocks of rawmaterials
potentiallly demotivation for staff
many tide up in storage
55
Q

Flow production/mass

A

involves a continues movement of items turn in the production process of high volume

56
Q

+/- flow

A 
\+
Flow production is continues
Large EOS
standardise products
increased productivity
-
inflexible
demotivating for employees
high set up cost
break down 
stock holding
supply lead time
57
Q

Cell production

A

workers are organised into multi skilled teams, each team is responsible for a particular part of the production process including quality control health and safety

58
Q

+/- Cell

A 
\+
Closeness of cell members should improve communication avoiding confusion arising from misunderstood or non-received messages
quality improvements
workers are multi skilled
can lead to efficiency
greater worker motivation, variety

-cell
the company has to encourage burs and participation or workers feel they are needed more from
the company have to invest in new raw materials
cell production may not allow a firm to use its machinery as intensivley as traditional flow
allocation of work to cells has to be efficent
employees and recruitment have to support

59
Q

what is a USP

A

Unique Selling Point

60
Q

factors that influence the selstion of the production method

A 
nature
cost of technology and machinery
workforce
finance
customers
competition
stakeholder/objective
61
Q

What is R and D

A

Research and development - the process that enables the creation of new and improved products to meet the needs of the customer

62
Q

what are grantt charts

A

a graphical representation of the order and duration of tasks within a project

63
Q

+/- grantt charts

A

+
easy to monitor
see what is happening shows time and resource
allocation

-
does not show critical activities
can’t see est and lft
cant calculate free and total float

64
Q

estimated duration of a project

A 
                                          6
65
Q

what is division of labor

A

the allocation of labour into specific tasks inserted to increase productivity

66
Q

what is specilisation

A

where workers perform specific tasks

67
Q

+/- division of labour

A

+
task should be able to be preformed qicker, increasing productivity
output will increase whilst lowering unit costs
consequently increasing profit margin

-
task become repetitive lowering moral and creating more errors and faults

68
Q

heiracrchy of objectives

A 
↓Aims
↓Mission
↓corporate objectives
↓functional objectives
↓business unit/individual targets
69
Q

aims

A

overall target and are boarder than objectives

70
Q

mission statement

A

simple statement starting the companies goals

71
Q

corporate objectives

A

objectives that tend to focus on the desired performance and results of the business

72
Q

functional objectives

A

relate to specific functions of a business such as marketing, operation, human resources and finace

73
Q

business unit / individual targets

A

similar to functional but are more focused of individuals

74
Q

+/- Sole trader

A

+
control - full control of the business

Profit retention- keep all profits

private data - information about sole traders are private, not all documents are public on companies house

-
Unlimited liability - sole traders are unicorporated, they aren’t a seperate legal identity, personal possesions can be taken to pay debts

Capital - hard to raise capital

diseconomies of scale - have to charge higher prices to cover costs

decision making - they are the only voice in the decision making process

75
Q

+/- Partnership

A

+
capital - both partners funds for capital

flexibility - easy to start up and run, less strictly regulated

shared responsibility - allows partners to make the most of their abilities

decicion making - more brains in the decicion maiking process

-
disagreements - differnt opinios of how the business is run between partners

Unlimited liability - partnerships are unincorporated, they aren’t a separate legal identity, personal possessions can be taken to pay debts

profit sharing - partners have to split profits according to their terms (sighed in deed of partnership)

76
Q

+/- Private Limited Company (LTD)

A

+
Shares - only sell shares to friends and family, no chance of hostile takeover

privacy - not all documents have to be posted on companys house

Limited Liability - LTD’s are incorpirated meaning that the owners are a seperate legal identity, debts are paid with the business investment

-
complicated to set up - first you need shares worth £50,000 and then you have to set up on companies house

complex accounts - hard to track all accounts that the business produces so a accountant is usually heird to not waste time

not fully private - This will mean that you provide information on company accounts, company records, company directors and company shareholders.

77
Q

+/- Public Limited Company (PLC)

A

+
capital - easier to rase from share’s and investors. Shares can be bought easily on the stock exchange

prestigious profile - the company looks more proffesional as a plc

Limited Liability - LTD’s are incorpirated meaning that the owners are a seperate legal identity, debts are paid with the business investment

-
not private - all accounts have to be posted on companies house

take over - as shares are sold on the stock exchange the ability of a hostile takeover is present

78
Q

what are the 3 business sectors

A

private sector
public
third

79
Q

what are the 3 market secotrs

A

primary
secondary
tertiary

80
Q

third sector

A

non-profit organisations like charities

A-Level Business (9 decks)

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