all cards Flashcards

1
Q

Define Business Growth

A

when a business increases the scale of its operations

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2
Q

What are the two ways a business can achieve growth?

A

A business can achieve growth through internal and external methods.

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3
Q

Define internal growth and give 2 examples

A

when a business expands from within

Eg. making new products or entering new markets

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4
Q

Define external growth and give 1 example

A

when a business expands from the outside

Eg. joining with another business

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5
Q

What might a business have to do to make new products?

A

Innovation and research and development

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6
Q

Define Innovation

A

The act of creating new products or service

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7
Q

Define research and development

A

Finding out what consumers want and then making this product/services

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8
Q

How might a business enter new markets? (2)

A
  • Selling existing products to a new group of people

- Change elements in the products’ marketing mix

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9
Q

Define e-commerce

A

using the internet to carry out business transactions

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10
Q

Advantages of internal growth (2)

A
  • Can be financed through internal funds (so no interest to pay)
  • Easier to control
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11
Q

Disadvantages of internal growth (1)

A

Takes a long time to build market share this way

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12
Q

What are the two methods of external growth?

A

Mergers and takeovers

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13
Q

Define mergers

A

When two or more businesses join together to operate as one business

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14
Q

Define takeovers

A

When a business buys another business and incorporates it into their own business

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15
Q

Advantages of external growth (3)

A
  • Can gain market share more quickly
  • Companies gain greater skills, knowledge and experience
  • Reduces competition
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16
Q

Disadvantages of external growth (2)

A
  • Difficult to control as companies have different ways of working and operating.
  • Can be more expensive initially
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17
Q

What are the 4 types of business ownership

A

Sole trader
Partnership
Private Limited Company
Franchise

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18
Q

Define Public limited company PLC

A

An incorporated business that can sell shares to the public

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19
Q

4 PLC facts

A

Limited liability
Anyone who buys these shares become part-owner of the business
These shareholders have a voting right which is proportional to the number of shares they own
If someone gains 51% of the shares in a business they have control of the business

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20
Q

Advantages to a PLC (2)

A
  • Ability to raise additional finance

- Limited liability

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21
Q

Disadvantages to a PLC (2)

A
  • Risk of hostile takeovers

- Less privacy in terms of financial performance

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22
Q

Define Multinational companies

A

A business with operations in more than one country

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23
Q

1 MC fact

A

They produce and or sell goods and services abroad

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24
Q

Advantages of MC (3)

A
  • Wider target market
  • Ability to take advantage of cheaper labor and utilities abroad
  • Can spread risk between operations in different countries
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25
Q

Disadvantages of MC (2)

A
  • Loss of focus on key markets

- Cultural and language differences between different countries

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26
Q

What are the internal sources of finance?

A

Retained profit and selling assets

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27
Q

Define retained profit

A

The amount of revenue left over after costs have been deducted to pay shareholders dividends or fund future business activities.

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28
Q

Advantages of retained profit (2)

A
  • There is no need to repay the finance

- No interest charges

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29
Q

Disadvantages of retained profit (2)

A
  • Amount available might be limited

- Shareholders may be annoyed about the lack of dividends

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30
Q

Define selling assets

A

The process by which a business sells items that it owns in order to raise finance

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31
Q

Advantages of selling assets (1)

A
  • Immediate money
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32
Q

Disadvantages of selling assets (2)

A
  • Loses the asset itself

- Expensive if the business needs to buy or lease the asset again later on

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33
Q

What are the external sources of finance

A

Loan capital and share capital

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34
Q

Define loan capital

A

Finance borrowed from a financial institution such as a bank

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35
Q

Advantages of loan capital (1)

A
  • Secured against asset
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36
Q

Disadvantages of loan capital (2)

A
  • Has to be repaid over a specific period of time

- Interest charged

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37
Q

Define share capital

A

Finance raised by selling a percentage of the business to external investors

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38
Q

Advantages of share capital (1)

A

Can sell shares to anyone so easier to get finance

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39
Q

Disadvantages of share capital (2)

A
  • May lose control of the business

- Shareholders and investors will always want dividends and an increase of value in shares

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40
Q

What is the only way you could get share capital?

A

To get share capital a business needs to become a public limited company (PLC)

They change to a PLC by issuing shares for sale on a stock exchange.
This is called stock market flotation.

This stock exchange is where shares in a PLC can be bought and sold.

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41
Q

Define globalization

A

When businesses operate on an international scale and gain international influence or power.

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42
Q

How do businesses conduct globalization?

A

They do this by:
Selling to
Buying from
Operating in multiple countries

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43
Q

Define imports

A

Goods from abroad are brought into a country; money moves out of the country

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44
Q

Advantages of imports (3)

A
  • Some goods would not otherwise be available
  • Lower costs due to lower labor or raw materials costs
  • Perceived higher quality of goods
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45
Q

Disadvantages of imports (4)

A
  • Arrival of imports creates competition domestically which may have a negative impact on demand for local goods.
  • Possibly good may be unavailable
  • Takes time to find where to import from
  • Takes time to get to the business
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46
Q

Define exports

A

The flow of goods out of a country to another country, money moves into the country

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47
Q

Advantages of exports (2)

A
  • Gives domestic businesses a wider target market

- Expanding your markets means being less dependent on any single one.

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48
Q

Disadvantages of exports (4)

A
  • Will have to adhere to laws in other countries.
  • Can lose focus on your home markets and existing customers.
  • Businesses will be managing more remote relationships that are far away.
  • May have less control than a business is used to in home markets.
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49
Q

Define barriers

A

things that can prevent a business from engaging in international trade

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50
Q

Define tariffs

A

A tax imposed by a country on imported goods and services

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51
Q

Tarrifs aim…

A

Aims to reduce the demand of imports by making it more expensive and promote domestic goods

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52
Q

Define trading bloc

A

A group of countries that agree to act together to promote trade between themselves

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53
Q

4 trading bloc facts

A
  • Gives member nations preferential treatment in trading to encourage it
  • Countries normally located close together
  • Benefit from sharing workers and knowledge
  • Creates barriers for countries working outside the bloc
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54
Q

How might a business compete internationally?

A

Through the internet using e-commerce

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55
Q

Reasons for changes in price

A
  • Different currencies
  • Potential fluctuations in exchange rates
  • Tariffs
  • Different standards of living and average incomes of potential customers.
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56
Q

Reasons for changes in place

A
  • Availability of technology
    such as e-commerce that can be used to reach global markets.
  • Cultural differences
    such as whether people shop at markets market stalls, independent stores, or supermarkets
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57
Q

Reasons for changes in promotion

A
  • Language differences

- Cultural differences

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58
Q

Reasons for changes in product

A
  • Cultural differences
  • Physical differences
  • Technological differences
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59
Q

Define Aims

A

Broad, long term targets that an entrepreneur has at the back of their mind.

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60
Q

Define Objectives

A

Clear measurable goals that a business intends to achieve.

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61
Q

What are the reasons business aims and objectives change?

A

Market conditions, technology, performance, legislation, internal reasons

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62
Q

What is meant by market conditions?

A
  • The size of the market itself

- The degree of competition

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63
Q

Define Degree of competition

A

the number of businesses competing in a particular market

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64
Q

What are the two types of performance?

A

Financial and non financial

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65
Q

What is Legislation?

A

The laws that determine how a business operates

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66
Q

How might a business follow the ‘Health and Safety at work act’ of 1974?

A
  • Training
  • Safety procedures
  • Equipment
  • Hazard signs
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67
Q

What does the ‘equality act 2010’ do?

A

Protects individuals from unfair treatment and promotes a far more equal society

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68
Q

How might a business promote equality? (5)

A
  • Equal opportunities
  • Harassment policy and procedure
  • Grievance procedure
  • A maternity policy
  • An equal pay policy
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69
Q

Define Ethics

A

Moral principals or standards that guide the behavior of a person or business

70
Q

What is meant by fair trade?

A

Suppliers are getting the money they deserve for their products

71
Q

What are the benefits of behaving ethically? (3)

A
  • Consumers willing to pay higher prices
  • Attracts positive media attention
  • Easier to recruit, employees happier to work in the company
72
Q

What are the possible drawbacks of behaving ethically? (2)

A
  • Higher costs

- Danger of building up false expectations

73
Q

What are the positives a business can achieve by behaving in an environmentally friendly way? (4)

A
  • Competitive advantage
  • Builds brand loyalty
  • Improves business reputations
  • Avoids negative media attention
74
Q

To ensure businesses limit their negative impact on the environment they normally carry own a green audit.

Define Green audit

A

A detailed review of a business’s impact on the environment either conducted by the business itself or by an independent organization.

75
Q

Define Sustainability

A

Acting to ensure that natural resources are used responsibly, to protect the environment for future generations.

76
Q

Define Finite Resources

A

Aka non- renewable

a resource that does not renew itself quickly enough to meet society’s consumption of it

77
Q

Define Pressure Groups

A

A group of people who join together to try and influence government policy or business policy for a certain cause

78
Q

Define Viral marketing

A

Using online sites to share a message and encourage other people to share too.

79
Q

Define Lobbying

A

trying to influence the government

80
Q

What does an effective marketing mix need to do?

A
  • Meet customer needs
  • Achieve marketing objectives
  • Be balanced and consistent
  • Have a competitive advantage
81
Q

What are the three aspects that make up the design mix?

A
  • Function
  • Aesthetics
  • Costs
82
Q

Define Function

A

How well a product does it’s job and how easy it is to use the product

83
Q

Define Aesthetic

A

Refers to the look and feel of the product

84
Q

Businesses have to design products that are financially viable.
What is meant by this?

A

This means that producing the product for a cost that allows the business to make a profit

85
Q

Advantage of products being financially viable

A
  • Higher profit margin for business
86
Q

Disadvantage of products being financially viable

A

Product may be less functional

87
Q

What are the stages of products life cycle?

A

Introduction, growth, maturity, decline

88
Q

Define Extension strategies

A

Steps taken by a business to modify a product to appeal to more customers and maintain sales over a longer period in the productions life cycle.

89
Q

List 6 examples of extension strategies

A
  • Updating the product or design
  • Updating packaging
  • Lowering price
  • New advertising campaign
  • Targeting and selling to a new segment
  • Introducing new varieties
90
Q

Define Differentiation

A

The process of developing a distinctive or unique product

91
Q

Ways a business may do differentiation are…

A
  • Unique functions competitors dont have
  • Unique styles of function
  • Create and use distinctive branding
  • Consistent high customer service
  • High quality product
92
Q

Differentiation increases the competitiveness of a business, this adds value which then allows a business to charge a higher price.

A

93
Q

What is meant by Price in the marketing mix?

A

Refers to the amount charged by a business for its products and services

94
Q

What are some factors businesses think about when setting a price to their products and services? (7)

A
  • Competitors
  • Costs
  • Market
  • The economy
  • Quality
  • Stage in the product lifestyle
  • Differentiation and USP
95
Q

Define Pricing Strategy

A

A way in which the business decides on the price of a product or service.

96
Q

What are the two types of pricing strategies + examples?

A
  • A high volume pricing strategy eg. producing a lot of product for low cost
  • A high margin strategy eg. maximizing the difference between cost and price
97
Q

List the 8 pricing strategies

A

Penetration, skimming, cost based, destroyer, psychological, price discrimination, competitor based, loss leader

98
Q

Describe Penetration pricing

A

1) Price starts low when the product is released to gain popularity
2) As the product grows and becomes more well known, the price rises

99
Q

Advantages of Penetration pricing (2)

A
  • Attracts customers from competitors

- Encourages word of mouth

100
Q

Disadvantages of Penetration pricing (2)

A
  • Less revenue due to low prices

- Customers may be lost if prices are raised

101
Q

Describe Price Skimming

A

1) Charging a high price when the product is launched - to give the impression of higher quality
2) As the product becomes more well known, the price is reduced to make it more appealing to all

102
Q

Advantages of Price Skimming (3)

A
  • More revenue from charging high prices
  • Gives the perception of quality
  • Can cover research and development costs
103
Q

Disadvantages of Price Skimming (2)

A
  • Some people will not buy because prices are too high

- Similar products may be available for lower prices

104
Q

What is meant by Cost based pricing?

A

Where the business adds a selected percentage on to the cost of a good

105
Q

Advantages of Cost based pricing (3)

A
  • Easy to calculate
  • Price increase can be justified with rising costs
  • You know you make a profit on each item sold
106
Q

Disadvantages of Cost based pricing (3)

A
  • Might be too expensive
  • Ignores what competitors are doing with pricing
    The business might not control costs
107
Q

Define Destroyer pricing

A

A pricing strategy where a product or service is set at a very low price intending to drive competitors out of the market or create barriers to entry for potential new competitors

108
Q

Advantages of Destroyer pricing (2)

A
  • Beat competitors

- Customers

109
Q

Disadvantages of Destroyer pricing (2)

A
  • Not much revenue

- Need large amount of sales to profit

110
Q

Define Psychological pricing

A

Where the business will price their product a little lower than a whole amount

111
Q

Advantages of Psychological pricing (1)

A
  • Attracts customers
112
Q

Disadvantages of Psychological pricing (1)

A
  • Can be misleading
113
Q

Define Price Discrimination pricing

A

Where a business will charge a different price for the same product to different segments of the market

114
Q

Advantages of Price Discrimination pricing (1)

A
  • Targets all market segments
115
Q

Disadvantages of Price Discrimination pricing (1)

A
  • Takes time to research
116
Q

Define Competitor based pricing

A

Involves the setting of prices based on what rivals are charging

117
Q

Advantages of Competitor based pricing (1)

A
  • Avoids price war
118
Q

Disadvantages of Competitor based pricing (1)

A
  • A business might not be able to gain market share quickly
119
Q

Define Loss leader pricing

A

An aggressive pricing strategy in which a company sells selected goods below cost price in order to attract customers who will then hopefully buy other goods from them too

120
Q

Advantages of Loss leader pricing (1)

A
  • Market share
121
Q

Disadvantages of Loss leader pricing (1)

A
  • Not much revenue/profit
122
Q

What is meant by Place in the marketing mix?

A

Refers to how a business gets its products to its customers, including how they access it and how it is delivered, also referring to the physical location of the business.

123
Q

What are the two ways customers can access the products and services of a business

A

Retailing and Etailing

124
Q

How can Retailing be defined?

A

Involves selling products or services through a shop or other physical building that customers can visit

125
Q

Advantages of Retailing (2)

A
  • Allows customers access to face to face support

- Customers can trial, experience or try on a product/service before they buy it.

126
Q

Disadvantages of Retailing (2)

A
  • Owning or renting a physical shop can be expensive
  • Manufacturers selling to retailers have to add a markup to the price of the product to make sure both are making money on the product.
127
Q

Define Markup

A

the amount of money added to the cost price of a product/service to make the final retail price.

128
Q

Define Etailing

A

When products and services are sold directly to a customer through a website.

129
Q

Advantages of Etailing (3)

A
  • Reduce rent, electricity, etc costs
  • Business can access national/international market
  • Small businesses can startup more easily
130
Q

Disadvantages of Etailing (4)

A
  • Customers are sometimes worried about buying online as they can’t check the product’s quality.
  • Fake websites
  • Businesses have to manage their own distribution costs.
  • Website doesn’t automatically guarantee sales - marketing is needed to ensure visits.
131
Q

What is a Third Party platform and what doe sit do?

A

An ecommerce website or service that is run by an unrelated business.
They take a percentage of the sale price of each item.

132
Q

What is meant by Promotion in the marketing mix?

A

The ways in which a business communicates its products and services to its customers.

133
Q

List 6 promotion strategies

A
  • Advertising
  • Special offers
  • Publicity
  • Product trials
  • Branding
  • Sponsorship
134
Q

What is used in Advertising?

A
  • Colour
  • Humor
  • Emotive language
135
Q

Advantages of advertising (3)

A
  • Wide coverage
  • Control of message
  • Very influential and can change customers’ opinions.
136
Q

Disdvantages of advertising (2)

A
  • Often expensive

- One way communication

137
Q

What does the choice of advertising used by a business depend on?

A
  • Size of the business
  • Nature of the market
  • Type of product
138
Q

What is meant by Sponsorship?

A

When a business supports an event activity, person or organization.

139
Q

Advantages of sponsorship (4)

A
  • Sponsor’s name and products are given publicity.
  • Being associated with a successful performer looks good.
  • Sponsors are seen as supporting the community or country.
  • Sponsorship reduces the amount of tax paid by the company.
140
Q

Disdvantages of sponsorship (4)

A
  • Can be very expensive
  • May not reach your target market
  • Team may have a losing season or lose popularity.
  • Person/business being sponsored may do something wrong which could reflect badly on the company.
141
Q

What is meant by Product Trials?

A

Free access to or the giveaway of a product

142
Q

Advantage of Product Trials

A

Encourages people to try new product

143
Q

Disadvantage of Product Trials

A

Expensive

144
Q

What is meant by Publicity?

A

Any communication about a business that is created by the business, it’s customers or a third party.

145
Q

Advantage of Publicity

A

Can be effective in generating interest as customers most likely to trust an independent source.

146
Q

Disadvantage of Publicity

A

Hard to influence the message being given if given by customers or third party

147
Q

What is meant by Special offers/Sales promotions?

A

Sales promotions are short term special offers, usually in the form of a discount, used by a business to attract customers to buy a product or service.

148
Q

What do Special offers/Sales promotions do? (3)

A
  • Boost sales
  • Entice people to shops
  • Clear stock
149
Q

What is meany by Brand?

A

A brand is the personality or image of a product, which is generated through marketing activities.

150
Q

What can developing a strong brand create?

A
  • Loyalty
  • Added value
  • Differentiation
151
Q

How has technology affected promotion?

A
  • Targeted advertising
  • Social media and viral advertising
  • Apps
  • Emails and newsletters
152
Q

2.3

A
153
Q

How would a business a startup achieve customer interest?

A

At the first stage a business will often achieve customer interest through marketing.

154
Q

What techniques are used to achieve customer interest? (4)

A

Branding
Sponsorship
Sales promotion and offers
Advertising

155
Q

What are the two different sales approaches that can be used to gain customer interest?

A

Hard sales approach and soft sales approach

156
Q

What is meant by Hard sales approach?

A

Sales employees approach and engage customers to talk to them about the business’s products to encourage them to buy.

157
Q

What is meant by Soft sales approach?

A

Sales employees make customers aware that they are available if the customer needs information or support but lets them look on their own.

158
Q

Why is speed and efficiency important?

A

This is important to the sales process as some customers may decide not to buy if it takes too long for that product to be made and delivered.

159
Q

What is meany by customer engagement?

A

The interaction between the business and the customer during the sales process.

160
Q

Define Post sales support

A

The support given by a business to its customers after customers have bought the product or service.

161
Q

What are the ways in which a business provides good customer service? (4)

A
  • Honesty
  • Meets legal standards
  • Sells products that are free from defects
  • Has friendly and helpful employees
162
Q

Why is it important to provide good customer service? (6 reasons)

A
  • Ensures customer loyalty
  • Gives business a competitive advantage
  • Builds brand awareness
  • Reduces conflict
  • Reduces employee turnover
  • Reduces costs
163
Q

Define Business operations

A

The activities that allow a business to produce and deliver products and services to its customers.

164
Q

What are the 3 resources a business uses in its operations?

A

1) Labour (skill and efforts of its workforce)
2) Capital (the money needed to run the business)
3) Materials (the raw materials used in production)

165
Q

What are the 3 production methods?

A

1) Job production
2) Batch production
3) Flow or Mass production

166
Q

Define Job production

A

The production of one product (unit) at a time specific to an individual customer.

167
Q

Advantages of Job production (2)

A
  • High quality

- Can charge higher prices

168
Q

Disadvantages of Job production (2)

A
  • Slower to produce

- Individual cost of one unit may be high

169
Q

Define Batch production

A

A manufacturing process in which products are produced in groups batches and not a continuous stream.

170
Q

Advantages of Batch production (2)

A
  • Cost savings may be achieved by buying in a bulk

- Still allows customer some choice

171
Q

Disadvantages of Batch production (2)

A
  • Takes time to switch production of one batch to another

- Size of batch dependent on capacity allocated