3.1.3 Businesses operate within an external environment Flashcards
9 what is competition
causes a business to create better products
causes lower prices and more risk of lost sales and more complaints
9 what is good about competition?
motivation
better prices for customers
9 what is bad about competition
customers may shop else where
harder to create a USP
9 what determines competitiveness
how many other business in a market
target market
location, economy
prices, size
brand and reputation
competitive environment
9 what is enterprise
taking a risk and branching out
9 how is investing in new technology competitive?
competition?
demand?
costs?
replacing human jobs with machines
competition- improved speed, reduced costs
demand- up as cost savings
costs- up short term, down long term
9 how is improved operational procedures competitive?
competition?
demand?
costs?
better organisation
competition- improved speed, reduced costs
demand- up as cost savings
costs- up short term, down long term
9 how is effectiveness of marketing mix competitive?
competition?
demand?
costs?
price, place, promotion and product work
competition- better meeting needs
demand- up, meet needs better than others
costs- up
9 how is innovation through R and D competitive?
competition?
demand?
costs?
market research and meetings customer needs
competition- better meeting needs
demand- up, meet needs better than others
costs- up
9 how is incentive schemes for staff competitive?
competition?
demand?
costs?
bonuses, share schemes etc
competition- up, staff offer better service
demand- up, improve service level
costs- up
9 how is financial planning and control competitive?
competition?
demand?
costs?
tight spending control
competition- up, use savings to fund training
demand- up, if price down
costs- down
9 how is quality procedures competitive?
competition?
demand?
costs?
control and improve quality
competition- up, reputation is reliable
demand- up, USP is improved
costs- up in short, down in long
9 how is staff skills, education & training competitive?
competition?
demand?
costs?
train staff to do jobs better
competition- up, superior service offers more
demand- up if price down
costs- up in short, down in long
9 how is enterprise competitive?
competition?
demand?
costs?
entrepreneurial skills and management
competition- up, gap in the market
demand- up, spot opportunity and use it
costs- depends on idea
9 should organisations be private?
NO
equitable access
accountability to government and population
economies of scale
9 should organisations be private?
YES
funding
profit motive creates efficiency
better services
define fairness
want it, work for it
9 what is demand
amount of a product or service that customers are willing and able to buy at any given price over a period of time
can be measured in volume or value
9 what is price
price up = demand down (opposite is true)
consumers think more carefully about if it’s required
9 what is tastes and fashion
overtime, fashion and peoples tastes change
clothes swing in and out of fashion regularly
change in lifestyle options too
9 why does the price of other goods matter
demand can be influenced by something else entirely, increase due to a variety of products, buy together so rise and fall together
substitutes- DvD or download
compliments- fish and chips
9 why does marketing and advertising matter
successfully done, major impact on demand for a good or service and it creates awareness for a product
9 why do seasonal factors matter to demand
significant period of demand in a year
porridge in winter, ice cream in summer
fluctuations in demand
9 why is government action relevant to demand
encourage demand by subsidising products
discourage demand through taxation
introduce own campaigns
minium wage and legislation etc
9 what is subsidy/subsidising
payment by the government to suppliers that allows prices to be reduced for consumers
done through tax breaks too
9 demands are normally up because?
people afford more
depends on the type of good
9 costs demand fluctuates because
up as wages rise in line with competition
depends on capital intensive labour or machine intensive
9 what are consumer goods
goods purchased to satisfy the needs of customers
baked beans
income falls = demand falls
9 what are consumer durables
goods not instantly consumed, but used for a long time
washing machines
income falls = demand depends
9 what are consumer non-durables
good consumed at the point of use
washing up liquid
income falls = demand depends
9 what are capital goods
investments goods are items purchased by a firm because they are used in the production of other goods
machinery
income falls = demand depends
9 what are inferior goods
goods for which demand will reduce as income rises
people buy cars so buses get used less
income falls = demand rises
9 what are luxury goods
superior goods, demand rises as income rises and they can be afforded
switch from tescos value to tescos finest
income falls = demand remains
9 what are factors affecting demand?
prices
incomes
tastes and fashions
prices of other goods
competitors actions
marketing and advertising
socials and demographic
seasonal
government actions
9 why does competitors actions matter to demand
competition means demand can rise so low prices
or the opposite
9 why does social demographic matter to demand
what the population wants to buy is in relation to areas, regions, tastes and fashion, socio-economic groupings
9 what are interest rates
reward of saving, cost of borrowing
the percentage rate charged on a loan or paid on savings
bank of England sets them as a base rate
9 who is effected by interest rates
everyone
borrowers, bankers, savers
9 what are bonds
gambling against interest rates
9 what do higher interest rates mean
borrowing is more expensive
savings get a higher return
spending reduced
9 if interest rates fall, what does it mean
borrowing is cheaper
saving isn’t as valuable
spending is increased
disposable income rises
investments increase
9 if interest falls what is the effect on business costs
fall in costs
long term loans are cheaper
unit costs fall
profit margin rises
9 if interest rises what is the effect on business costs
rise in costs
prices must rise to make a profit
unit cost rises
less competitive
9 if interest falls what is the effect on business demands
decreased saving money
mortgage repayments will fall
cheaper to purchase on credit
increased investments
9 if interest rises what is the effect on business demands
increased money savings
mortgage repayments will rise
expensive to buy on credit
decreased investments
