3.3/3.4 Flashcards
Capacity utilisation
The proportion of a business capacity that is actually being used over a specific period of time
Why capacity utilisation matters
-useful measure of efficiency
-average cost tends to fall as output rises
Why most operate bellow capacity
-lower than expected market and demand
-a loss of market share
-seasonal variations in demand
Dangers at low capacity utilisation
-production is rushed
-less time for quality control
-employees suffer
-added workload and stress
Decision trees benefits
-choices are set out in logical way
-potential options and choices are considered at the same time
-use of probabilities the “risk” of the options to be addressed
Decision tree drawbacks
-probabilities are just estimates - always prone to error
-uses quanititative data only - ignores qualitative aspects of decisions
-assignment of probabilities + expected values prone to bias
Critical path analysis
A management tool which helps a business to identify how long a project will take and what the critical tasks of the project are
Flow calf.
Flow = LFT - duration - est
Uses of cpa
- estimate + minimise project time
- support project costing + evaluation
- plan + organisation resources
- prioritise tasks
Benefits of cpa
- most importantly- helps to reduce the risk of+ costs of complex projects
-encourages careful assessment of the require of each activity in a project
Disadvantages of critical path analysis
-reliability of cpa largely based on accurate estimates and assumptions made
-doesn’t guarantee the success of the business
-resouces may not be as flexible as management hope when they come to address the net work float
Ethics
Moral guidelines which cover acceptable behaviour within a business
Ethical behaviour
Ethical behaviour is doing what is morally right
Benefits of behaving ethically
-higher revenue - demand from positive consumer support
-improve brand + business awareness/recognition
-better employee motivation + recruitment
-new sources of finance
Drawbacks of acting ethical
-higher costs
-higher overheads e.g training
- a danger of building up false expectations
Stakeholder concept
-businesses do not have an unquestioned right to operate in society
-business relies on inputs from society + socially created institutions
Arguments for csr (stakeholder concept)
-ethical thing to do
-improves business image/reputation
-necessary in order to avoid excessive regular
-socially responsible actions can be profitable
-helps attract investors
Arguments against csr (shareholder concept)
-the only social responsibility of business is to create shareholder wealth
-the efficient use of resources will be reduced if businesses are restricted in how they act
Possible results of following shareholder approach:
-growing global competition on price
-short term performance pressures from shareholders
-constant reconstructing + down sizing
