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a293 Flashcards

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1
Q

define productivity

A

the quantity of products a business can produce in a given amount of time using its existing resources

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2
Q

define efficiency

A

a measurement of how effective a business is at producing a good in terms of time quality and waste

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3
Q

define mechanisation

A

when machinery is used in a business but labour is still required to work the machines e.g. combine harvester

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4
Q

define automation

A

when machinery is used and a computer controls it. Workers programme and supervise the work that machines do

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5
Q

what does CAD stand for and what does it mean

A

computer aided design- using a computer to design products

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6
Q

what does CAM stand for and what does it mean

A

computer automated manufacture- the machines used to make a product are controlled by a computer

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7
Q

what does CIM stand for and what does it mean

A

computer integrated manufacture- every aspect of production including finance and stock control is controlled by a computer

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8
Q

advantages of technology in business:

products

A

-large amounts can be made which can lead to economies of large scale production

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9
Q

what happens to the productivity of workers when there is technology in business - advantage

A

it improves and the output per each worker increases and so labour costs fall for each product

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10
Q

why can quality of production be improved with machines - advantage

A

because machines are less likely to make mistakes which may attract new customers

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11
Q

how can technology make production flexible- advantage

A

machines can be programmed to produce a variety of products

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12
Q

why are machines safe for humans- advantage

A

because they can do repetitive or dangerous jobs

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13
Q

give a very big disadvantage for having technology in business

A

it is very expensive to buy and install machines

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14
Q

why is have technology a DISADVANTAGE for workers and the business

A
  • workers may need training in order to learn how to work with the machines which is bad for the business as this can cost a lot of money
  • the business may have to recruit skilled workers
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15
Q

having technology in business can make some workers …..

disadvantage

A

redundant

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16
Q

why is having technology good for the long run

A

becuause it may increase the sales of the business sand it will be cheap to produce each product

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17
Q

why is technology bad for the short run

A

it is very expensive

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18
Q

define: quality product

A

a product or service that meets customer’s expectations and is therefore ‘fit for purpose’

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19
Q

define: quality standards

A

the expectations of customer expressed in terms of the minimum acceptable production or service standards

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20
Q

why is checking quality important

A
  • customers may not want buy ‘poor’ quality products
  • customer may buy from another producer
  • gives business a bad reputation
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21
Q

if a product is bad quality why is this bad for production

A

because it may disrupt production and may stop the whole thing as the business cannot let any problems happen to the other products

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22
Q

give 3 methods of quality control

A
  • traditional quality control- quality control vs quality assurance
  • total quality management (tqm)
  • kaizen- continuous improvement
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23
Q

define quality control

A

a system of checking the quality of finished goods

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24
Q

what does quality control check

A

completed goods for faults, Quality inspectors measure or test every product, samples from each batch, or random samples.

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25
Q

what is the aim of quality control

A

to ensure the business is achieving

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26
Q

What happens to BreakEven if costs increase

A

Their breakeven goes up so you would have to sell more

27
Q

What happens to BreakEven if costs go down

A

Breakeven goes down so you would have to sell less to cover costs

28
Q

If price goes up what happens to breakeven

A

Breakeven goes down

29
Q

If price goes DOWN what happens to Breakeven

A

It goes up so you would have to sell more

30
Q

Why do businesses use breakeven (3)

A
  • helps to workout forecast sales and work out how to make enough profit
  • may help to get a loan from the bank
  • make judgements about prices and costs
31
Q

What are the limitations of breakeven (2)

A
  • forecast figures could be different in reality

- number of competitors may change- so business may have to change price

32
Q

Limitations of breakeven: why might the firm reduce prices

A

To sell at high levels of output and to actually sell something

33
Q

Limitations it breakeven: as firm gets bigger …

A

As the firm gets bigger they may beed to buy more machines, get bigger premises or take on extra staff

34
Q

Limitations of breakeven: products

A

Some products may need to be sold at different prices and BE only works for one product

35
Q

What happens if a business is selling more than their breakeven level of sales

A

It is making a profit

36
Q

If a business is selling less than their breakeven level of sales what do they make

A

A loss

37
Q

Give 3 advantages of small scale production

A
  • you can offer a personal service (coffee shop)
  • specialised products made
  • can charge lots of money
38
Q

Give 2 advantages of large scale production

A
  • average costs of producing goods will be lower than firms who produce on a small scale
  • business will be able to sell goods at a lower price and make a higher profit margin on each product sold
39
Q

What is economies of scale

A

The advantages of producing large quantities of output. These advantages should reduce unit cost

40
Q

What is breakeven

A

A business will breakeven when it sells enough products so that its total sales revenue is equal to its total costs (the business is not making a profit or a loss)

41
Q

What is TECHNICAL economies of scale

A

When a business saves on production costs by using better methods and equipment

42
Q

What is MANAGERIAL economies of scale

A

When a business employs specialist managers who improve efficiency

43
Q

What is FINANCIAL economies of scale

A

When a business does not have to pay out as much money to raise finance e.g. lower interest payments therefore lower costs

44
Q

What is RISK-BREAKING economies of scale

A

When a business has a range of products or services, so it is not dependant on one product

45
Q

What is PURCHASING economies of scale

A

When a business is given a discount for buying large quantities (bulk buying) therefore lower costs and higher profit margins

46
Q

What is MARKETING economies of scale

A

When a business saves on advertising and transport costs

47
Q

What is diseconomies of scale

A

When a business becomes too big and average costs start to rise

48
Q

2 reasons why diseconomies of scale occurs

A
  • management and control problems- decisions take a long time
  • workers may lack motivation- workers may feel left out or not worthy enough (industrial relations problems)
49
Q

Why is it important to calculate average cost

A
  • helps to decide what price to charge

- to make a profit- price must be more than average cost

50
Q

Lower costs =

A

Higher profits

51
Q

Lower costs means profit can br lowered =

A

More sales, still make a profit and take customers away from rivals

52
Q

How to reduce average costs (3)

A
  • reduce variable costs per unit e.g find cheaper materials but i must not affect quality
  • increase efficiency of labour- more jobs per hour
  • achieve economies of large scale production
53
Q

What are variable costs (2)

A
  • money spent on items that are directly linked to the number of items made and sold
  • variable costs DO change with output
54
Q

What is variable cost per unit

A

The variable cost of making one product

55
Q

Give 3 examples of variable costs

A
  • raw materials
  • parts and components
  • stock and ingredients
56
Q

What are foxed costs

A
  • money spent on items that are needed no matter how many goods or services
  • foxed costs DO NOT change with output
57
Q

Give 4 examples of fixed costs

A
  • rent
  • insurance
  • bills
  • salaries
58
Q

Give the 3 main methods of increasing sales revenue

A
  • increase selling price
  • decrease selling price to increase quantity sold
  • increase quantity sold without changing the price(more advertising)
59
Q

What is PEICE ELASTIC

A

A change in price which results in a greater change in demand (lose lots of customers)

60
Q

What is PRICE INELASTIC

A

A change in price which results in a smaller change in demand (less customers lost or none at all)

61
Q

What does lowering or raising prices depend on (3)

A
  • number of competitors
  • is the product a luxury or a necessity
  • how much people spend on the product out of their income
62
Q

JIT-what can be done to avoid problems with the supply of stock (4)

A
  • hold a small buffer stock
  • locate close to suppliers
  • computerised order systems
  • thoroughly check suppliers for reliability before working with them
63
Q

3 benefits if JIT

A
  • costs are reduced- no warehouse
  • stock does not go out of date
  • stock should not run out
64
Q

3 problems of JIT

A
  • huge reliance on suppliers you need excellent coordination between business and suppliers
  • stock control must be excellent
  • if delivery of stocks are delayed production will stop

gcse business a293 (5 decks)

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