all cards Flashcards
1
Q
Define Business Growth
A
when a business increases the scale of its operations
2
Q
What are the two ways a business can achieve growth?
A
A business can achieve growth through internal and external methods.
3
Q
Define internal growth and give 2 examples
A
when a business expands from within
Eg. making new products or entering new markets
4
Q
Define external growth and give 1 example
A
when a business expands from the outside
Eg. joining with another business
5
Q
What might a business have to do to make new products?
A
Innovation and research and development
6
Q
Define Innovation
A
The act of creating new products or service
7
Q
Define research and development
A
Finding out what consumers want and then making this product/services
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
9
Q
Define e-commerce
A
using the internet to carry out business transactions
10
Q
Advantages of internal growth (2)
A
- Can be financed through internal funds (so no interest to pay)
- Easier to control
11
Q
Disadvantages of internal growth (1)
A
Takes a long time to build market share this way
12
Q
What are the two methods of external growth?
A
Mergers and takeovers
13
Q
Define mergers
A
When two or more businesses join together to operate as one business
14
Q
Define takeovers
A
When a business buys another business and incorporates it into their own business
15
Q
Advantages of external growth (3)
A
- Can gain market share more quickly
- Companies gain greater skills, knowledge and experience
- Reduces competition
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
17
Q
What are the 4 types of business ownership
A
Sole trader
Partnership
Private Limited Company
Franchise
18
Q
Define Public limited company PLC
A
An incorporated business that can sell shares to the public
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
20
Q
Advantages to a PLC (2)
A
- Ability to raise additional finance
- Limited liability
21
Q
Disadvantages to a PLC (2)
A
- Risk of hostile takeovers
- Less privacy in terms of financial performance
22
Q
Define Multinational companies
A
A business with operations in more than one country
23
Q
1 MC fact
A
They produce and or sell goods and services abroad
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
25
Disadvantages of MC (2)
- Loss of focus on key markets
| - Cultural and language differences between different countries
26
What are the internal sources of finance?
Retained profit and selling assets
27
Define retained profit
The amount of revenue left over after costs have been deducted to pay shareholders dividends or fund future business activities.
28
Advantages of retained profit (2)
- There is no need to repay the finance
| - No interest charges
29
Disadvantages of retained profit (2)
- Amount available might be limited
| - Shareholders may be annoyed about the lack of dividends
30
Define selling assets
The process by which a business sells items that it owns in order to raise finance
31
Advantages of selling assets (1)
- Immediate money
32
Disadvantages of selling assets (2)
- Loses the asset itself
| - Expensive if the business needs to buy or lease the asset again later on
33
What are the external sources of finance
Loan capital and share capital
34
Define loan capital
Finance borrowed from a financial institution such as a bank
35
Advantages of loan capital (1)
- Secured against asset
36
Disadvantages of loan capital (2)
- Has to be repaid over a specific period of time
| - Interest charged
37
Define share capital
Finance raised by selling a percentage of the business to external investors
38
Advantages of share capital (1)
Can sell shares to anyone so easier to get finance
39
Disadvantages of share capital (2)
- May lose control of the business
| - Shareholders and investors will always want dividends and an increase of value in shares
40
What is the only way you could get share capital?
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.
41
Define globalization
When businesses operate on an international scale and gain international influence or power.
42
How do businesses conduct globalization?
They do this by:
Selling to
Buying from
Operating in multiple countries
43
Define imports
Goods from abroad are brought into a country; money moves out of the country
44
Advantages of imports (3)
- Some goods would not otherwise be available
- Lower costs due to lower labor or raw materials costs
- Perceived higher quality of goods
45
Disadvantages of imports (4)
- 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
46
Define exports
The flow of goods out of a country to another country, money moves into the country
47
Advantages of exports (2)
- Gives domestic businesses a wider target market
| - Expanding your markets means being less dependent on any single one.
48
Disadvantages of exports (4)
- 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.
49
Define barriers
things that can prevent a business from engaging in international trade
50
Define tariffs
A tax imposed by a country on imported goods and services
51
Tarrifs aim…
Aims to reduce the demand of imports by making it more expensive and promote domestic goods
52
Define trading bloc
A group of countries that agree to act together to promote trade between themselves
53
4 trading bloc facts
- 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
54
How might a business compete internationally?
Through the internet using e-commerce
55
Reasons for changes in price
- Different currencies
- Potential fluctuations in exchange rates
- Tariffs
- Different standards of living and average incomes of potential customers.
56
Reasons for changes in place
- 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
57
Reasons for changes in promotion
- Language differences
| - Cultural differences
58
Reasons for changes in product
- Cultural differences
- Physical differences
- Technological differences
59
Define Aims
Broad, long term targets that an entrepreneur has at the back of their mind.
60
Define Objectives
Clear measurable goals that a business intends to achieve.
61
What are the reasons business aims and objectives change?
Market conditions, technology, performance, legislation, internal reasons
62
What is meant by market conditions?
- The size of the market itself
| - The degree of competition
63
Define Degree of competition
the number of businesses competing in a particular market
64
What are the two types of performance?
Financial and non financial
65
What is Legislation?
The laws that determine how a business operates
66
How might a business follow the 'Health and Safety at work act' of 1974?
- Training
- Safety procedures
- Equipment
- Hazard signs
67
What does the 'equality act 2010' do?
Protects individuals from unfair treatment and promotes a far more equal society
68
How might a business promote equality? (5)
- Equal opportunities
- Harassment policy and procedure
- Grievance procedure
- A maternity policy
- An equal pay policy
69
Define Ethics
Moral principals or standards that guide the behavior of a person or business
70
What is meant by fair trade?
Suppliers are getting the money they deserve for their products
71
What are the benefits of behaving ethically? (3)
- Consumers willing to pay higher prices
- Attracts positive media attention
- Easier to recruit, employees happier to work in the company
72
What are the possible drawbacks of behaving ethically? (2)
- Higher costs
| - Danger of building up false expectations
73
What are the positives a business can achieve by behaving in an environmentally friendly way? (4)
- Competitive advantage
- Builds brand loyalty
- Improves business reputations
- Avoids negative media attention
74
To ensure businesses limit their negative impact on the environment they normally carry own a green audit.
Define Green audit
A detailed review of a business's impact on the environment either conducted by the business itself or by an independent organization.
75
Define Sustainability
Acting to ensure that natural resources are used responsibly, to protect the environment for future generations.
76
Define Finite Resources
Aka non- renewable
| a resource that does not renew itself quickly enough to meet society's consumption of it
77
Define Pressure Groups
A group of people who join together to try and influence government policy or business policy for a certain cause
78
Define Viral marketing
Using online sites to share a message and encourage other people to share too.
79
Define Lobbying
trying to influence the government
80
What does an effective marketing mix need to do?
- Meet customer needs
- Achieve marketing objectives
- Be balanced and consistent
- Have a competitive advantage
81
What are the three aspects that make up the design mix?
- Function
- Aesthetics
- Costs
82
Define Function
How well a product does it's job and how easy it is to use the product
83
Define Aesthetic
Refers to the look and feel of the product
84
Businesses have to design products that are financially viable.
What is meant by this?
This means that producing the product for a cost that allows the business to make a profit
85
Advantage of products being financially viable
- Higher profit margin for business
86
Disadvantage of products being financially viable
Product may be less functional
87
What are the stages of products life cycle?
Introduction, growth, maturity, decline
88
Define Extension strategies
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
List 6 examples of extension strategies
- Updating the product or design
- Updating packaging
- Lowering price
- New advertising campaign
- Targeting and selling to a new segment
- Introducing new varieties
90
Define Differentiation
The process of developing a distinctive or unique product
91
Ways a business may do differentiation are...
- Unique functions competitors dont have
- Unique styles of function
- Create and use distinctive branding
- Consistent high customer service
- High quality product
92
Differentiation increases the competitiveness of a business, this adds value which then allows a business to charge a higher price.
...
93
What is meant by Price in the marketing mix?
Refers to the amount charged by a business for its products and services
94
What are some factors businesses think about when setting a price to their products and services? (7)
- Competitors
- Costs
- Market
- The economy
- Quality
- Stage in the product lifestyle
- Differentiation and USP
95
Define Pricing Strategy
A way in which the business decides on the price of a product or service.
96
What are the two types of pricing strategies + examples?
- 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
List the 8 pricing strategies
Penetration, skimming, cost based, destroyer, psychological, price discrimination, competitor based, loss leader
98
Describe Penetration pricing
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
Advantages of Penetration pricing (2)
- Attracts customers from competitors
| - Encourages word of mouth
100
Disadvantages of Penetration pricing (2)
- Less revenue due to low prices
| - Customers may be lost if prices are raised
101
Describe Price Skimming
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
Advantages of Price Skimming (3)
- More revenue from charging high prices
- Gives the perception of quality
- Can cover research and development costs
103
Disadvantages of Price Skimming (2)
- Some people will not buy because prices are too high
| - Similar products may be available for lower prices
104
What is meant by Cost based pricing?
Where the business adds a selected percentage on to the cost of a good
105
Advantages of Cost based pricing (3)
- Easy to calculate
- Price increase can be justified with rising costs
- You know you make a profit on each item sold
106
Disadvantages of Cost based pricing (3)
- Might be too expensive
- Ignores what competitors are doing with pricing
The business might not control costs
107
Define Destroyer pricing
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
Advantages of Destroyer pricing (2)
- Beat competitors
| - Customers
109
Disadvantages of Destroyer pricing (2)
- Not much revenue
| - Need large amount of sales to profit
110
Define Psychological pricing
Where the business will price their product a little lower than a whole amount
111
Advantages of Psychological pricing (1)
- Attracts customers
112
Disadvantages of Psychological pricing (1)
- Can be misleading
113
Define Price Discrimination pricing
Where a business will charge a different price for the same product to different segments of the market
114
Advantages of Price Discrimination pricing (1)
- Targets all market segments
115
Disadvantages of Price Discrimination pricing (1)
- Takes time to research
116
Define Competitor based pricing
Involves the setting of prices based on what rivals are charging
117
Advantages of Competitor based pricing (1)
- Avoids price war
118
Disadvantages of Competitor based pricing (1)
- A business might not be able to gain market share quickly
119
Define Loss leader pricing
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
Advantages of Loss leader pricing (1)
- Market share
121
Disadvantages of Loss leader pricing (1)
- Not much revenue/profit
122
What is meant by Place in the marketing mix?
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
What are the two ways customers can access the products and services of a business
Retailing and Etailing
124
How can Retailing be defined?
Involves selling products or services through a shop or other physical building that customers can visit
125
Advantages of Retailing (2)
- Allows customers access to face to face support
| - Customers can trial, experience or try on a product/service before they buy it.
126
Disadvantages of Retailing (2)
- 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
Define Markup
the amount of money added to the cost price of a product/service to make the final retail price.
128
Define Etailing
When products and services are sold directly to a customer through a website.
129
Advantages of Etailing (3)
- Reduce rent, electricity, etc costs
- Business can access national/international market
- Small businesses can startup more easily
130
Disadvantages of Etailing (4)
- 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
What is a Third Party platform and what doe sit do?
An ecommerce website or service that is run by an unrelated business.
They take a percentage of the sale price of each item.
132
What is meant by Promotion in the marketing mix?
The ways in which a business communicates its products and services to its customers.
133
List 6 promotion strategies
- Advertising
- Special offers
- Publicity
- Product trials
- Branding
- Sponsorship
134
What is used in Advertising?
- Colour
- Humor
- Emotive language
135
Advantages of advertising (3)
- Wide coverage
- Control of message
- Very influential and can change customers' opinions.
136
Disdvantages of advertising (2)
- Often expensive
| - One way communication
137
What does the choice of advertising used by a business depend on?
- Size of the business
- Nature of the market
- Type of product
138
What is meant by Sponsorship?
When a business supports an event activity, person or organization.
139
Advantages of sponsorship (4)
- 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
Disdvantages of sponsorship (4)
- 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
What is meant by Product Trials?
Free access to or the giveaway of a product
142
Advantage of Product Trials
Encourages people to try new product
143
Disadvantage of Product Trials
Expensive
144
What is meant by Publicity?
Any communication about a business that is created by the business, it’s customers or a third party.
145
Advantage of Publicity
Can be effective in generating interest as customers most likely to trust an independent source.
146
Disadvantage of Publicity
Hard to influence the message being given if given by customers or third party
147
What is meant by Special offers/Sales promotions?
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
What do Special offers/Sales promotions do? (3)
- Boost sales
- Entice people to shops
- Clear stock
149
What is meany by Brand?
A brand is the personality or image of a product, which is generated through marketing activities.
150
What can developing a strong brand create?
- Loyalty
- Added value
- Differentiation
151
How has technology affected promotion?
- Targeted advertising
- Social media and viral advertising
- Apps
- Emails and newsletters
152
2.3
153
How would a business a startup achieve customer interest?
At the first stage a business will often achieve customer interest through marketing.
154
What techniques are used to achieve customer interest? (4)
Branding
Sponsorship
Sales promotion and offers
Advertising
155
What are the two different sales approaches that can be used to gain customer interest?
Hard sales approach and soft sales approach
156
What is meant by Hard sales approach?
Sales employees approach and engage customers to talk to them about the business’s products to encourage them to buy.
157
What is meant by Soft sales approach?
Sales employees make customers aware that they are available if the customer needs information or support but lets them look on their own.
158
Why is speed and efficiency important?
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
What is meany by customer engagement?
The interaction between the business and the customer during the sales process.
160
Define Post sales support
The support given by a business to its customers after customers have bought the product or service.
161
What are the ways in which a business provides good customer service? (4)
- Honesty
- Meets legal standards
- Sells products that are free from defects
- Has friendly and helpful employees
162
Why is it important to provide good customer service? (6 reasons)
- Ensures customer loyalty
- Gives business a competitive advantage
- Builds brand awareness
- Reduces conflict
- Reduces employee turnover
- Reduces costs
163
Define Business operations
The activities that allow a business to produce and deliver products and services to its customers.
164
What are the 3 resources a business uses in its operations?
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
What are the 3 production methods?
1) Job production
2) Batch production
3) Flow or Mass production
166
Define Job production
The production of one product (unit) at a time specific to an individual customer.
167
Advantages of Job production (2)
- High quality
| - Can charge higher prices
168
Disadvantages of Job production (2)
- Slower to produce
| - Individual cost of one unit may be high
169
Define Batch production
A manufacturing process in which products are produced in groups batches and not a continuous stream.
170
Advantages of Batch production (2)
- Cost savings may be achieved by buying in a bulk
| - Still allows customer some choice
171
Disadvantages of Batch production (2)
- Takes time to switch production of one batch to another
| - Size of batch dependent on capacity allocated
