3.3/3.4

Question 1

Capacity utilisation

Answer 1

The proportion of a business capacity that is actually being used over a specific period of time

Question 2

Why capacity utilisation matters

Answer 2

-useful measure of efficiency
-average cost tends to fall as output rises

Question 3

Why most operate bellow capacity

Answer 3

-lower than expected market and demand
-a loss of market share
-seasonal variations in demand

Question 4

Dangers at low capacity utilisation

Answer 4

-production is rushed
-less time for quality control
-employees suffer
-added workload and stress

Question 5

Decision trees benefits

Answer 5

-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

Question 6

Decision tree drawbacks

Answer 6

-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

Question 7

Critical path analysis

Answer 7

A management tool which helps a business to identify how long a project will take and what the critical tasks of the project are

Question 8

Flow calf.

Answer 8

Flow = LFT - duration - est

Question 9

Uses of cpa

Answer 9

• estimate + minimise project time
• support project costing + evaluation
• plan + organisation resources
• prioritise tasks

Question 10

Benefits of cpa

Answer 10

• most importantly- helps to reduce the risk of+ costs of complex projects
  -encourages careful assessment of the require of each activity in a project

Question 11

Disadvantages of critical path analysis

Answer 11

-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

Question 12

Ethics

Answer 12

Moral guidelines which cover acceptable behaviour within a business

Question 13

Ethical behaviour

Answer 13

Ethical behaviour is doing what is morally right

Question 14

Benefits of behaving ethically

Answer 14

-higher revenue - demand from positive consumer support
-improve brand + business awareness/recognition
-better employee motivation + recruitment
-new sources of finance

Question 15

Drawbacks of acting ethical

Answer 15

-higher costs
-higher overheads e.g training
- a danger of building up false expectations

Question 16

Stakeholder concept

Answer 16

-businesses do not have an unquestioned right to operate in society
-business relies on inputs from society + socially created institutions

Question 17

Arguments for csr (stakeholder concept)

Answer 17

-ethical thing to do
-improves business image/reputation
-necessary in order to avoid excessive regular
-socially responsible actions can be profitable
-helps attract investors

Question 18

Arguments against csr (shareholder concept)

Answer 18

-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

Question 19

Possible results of following shareholder approach:

Answer 19

-growing global competition on price
-short term performance pressures from shareholders
-constant reconstructing + down sizing