Analysing the Strategic Position of a Business (3.7) Flashcards

Question

Ratio Analysis is when a business assesses...

Answer 1

When a business assesses the strengths and weaknesses of their finances.

Answer 2

Describes the financial position of a company at a particular point in time. - Summary of assets (things a company owns). - Liabilities (things a company owes). - Tells where capital invested has come from e.g. retained profit and share capital.

Answer 3

What the business owns with a lifespan of more than a year. They are used repeatedly as part of the firm's operations and will not regularly be sold. - e.g. Land, machinery, vehicles. Add these up together to get total.

Answer 4

Assets owned by the business that are likely to be turned into cash within one year. These assets continually change form. e.g. Receivables (debtors, people who owe you money = customers), Inventories (stock), Cash. Add together to get total.

Answer 5

Short-term debts of the business, will have to be repaid within one year. e.g. Payables (creditors = people you owe, e.g. suppliers).

Answer 6

Current Assets - Current Liabilities

Answer 7

Debts that need to be repaid, but not within one year. Also known as : creditors falling due after a year. e.g. Long-term loans & mortgages.

Answer 8

Total assets - non current liabilities. SHOULD BALANCE WITH TOTAL EQUITY

Answer 9

Shows how the asset and business have been financed. e.g. Share capital, Reserves (retained profit)

Answer 10

Share Capital + Reserves. NET ASSETS = TOTAL EQUITY.

Answer 11

Tells us about the liquidity of a business. - A firms ability to pay its short-term liabilities (debts). - Ideally, a business will have £2 of current assets to be able to pay every £1 of current liabilities it owes (2:1) Current Assets - Current Liabilities

Answer 12

Tangible Assets : Non-current assets that exist physically. Intangible Assets : Non-current assets that don't have a physical presence but still have value. - Most common is goodwill, which includes value of firm's name, copyright, patents etc.

Answer 13

Describes the income and expenditure of a business over a period of time, usually a year. - Revenue, Cost of Sales, Gross Profit, Expenses, Operating Profit, Profit for the Year. GP : revenue - cost of sales OP : GP - expenses PFTY : operating profit - interest and taxation

Answer 14

Measure whether a business can pay its short-term liabilities (debts). - Includes Current Ratio & Gearing.

Answer 15

Estimates whether the business can pay debts due within one year out of the current assets. Current Assets / Current Liabilities - Then answer is expressed x : 1 - Recommended is 2:1, but things like JIT mean firms are able to operate at a lower level. - If too high, firm's aren't investing enough to further expand the business. (BALANCE SHEET)

Answer 16

Shows what proportion of capital invested in the business comes from loans. non-current liabilities ------------------------------ x 100 total equity + non-current liabilities - If a business has a value higher than 50%, It is highly geared, not very good as it means a firm has borrowed a lot of money, high interest repayment. - 25% is considered low, means a firm has raised capital through alternative finances e.g. retained profits. (BALANCE SHEET)

Answer 17

Lets owners/potential investors understand how efficient the business is at producing profit based on capital invested. - Helps shareholders to gain idea of potential return on investment, however, unlikely shareholders would get 100% of profit made. operating profit or profit before tax ------------------------------------------------- x 100 (total equity + non-current liabilities) (BALANCE SHEET+ INCOME STATEMENT)

Answer 18

Measures how efficiently the business manages its current assets and liabilities, which will also impact a firm's liquidity. - Includes inventory (stock) turnover, Receivables (debtors) days and Payables (creditors) days.

Answer 19

Inventory (stock) Turnover : Measures how quickly inventory is converted into sales. cost of goods sold / average inventory held (INCOME STATEMENT & WILL GET TOLD) - Measured as a number, not ratio. The number of times the average value of stock held is sold. - Higher the figure the better for the firm's cash flow and liquidity as it implies they are selling goods & shifting stock more quickly.

Answer 20

Shows the number of days it takes to convert receivables into cash, i.e. how long it takes to collect debts from customers - Most of the time, the shorter the better but it depends. Receivables (debtors) ------------------------------ x 365 Revenue - Firms that offer long credit periods will have high figures. - Businesses that deal mainly in cash or do not offer credit sales will have lower figures. (BALANCE SHEET+INCOME STATEMENT)

Answer 21

Ratio shows the number of days it takes to pay any payables owed, i.e. how long it takes to pay the suppliers. Payables ------------------ x 365 Cost of Sales -A firm that receive long credit periods will have high figures; those that pay suppliers in cash will have low figures. - A firm will want a high figure, preferably higher than their receivable days, so they are not paying their debts too quickly and before they receive their revenue, this should improve their liquidity and cashflow. (BALANCE SHEET+INCOME STATEMENT)

Answer 22

Long-term goals, what a business wants to achieve.

Answer 23

There to inspire, puts corporate aim into words.

Answer 24

- Change in leadership. - Business size. - Activities undertaken by the business. - Nature of owners/stakeholders. - Competitors. - Economy.

Answer 25

Medium-long term targets for the whole enterprise.

Answer 26

- Business ownership. - Power of stakeholders. - Ethics. - Business culture. - Resource constraints. - Pressure for short-termism (just focusing on short term goals). - External environment.

Answer 27

Objectives for each department.

Answer 28

Profit, growth, survival, cash flow, social and ethical objectives.

Answer 29

Medium/long-term plan of action developed to achieve the business' objectives. - Can only be put in place once an organisation has outlined its missions/aims and objectives. - Can be clearly defined plans (for large companies) or a sequence of business decisions made over time with the aim to reach a particular goal (for a small business).

Answer 30

Short-term plans for implementing strategy. - These are more day to day activities.

Answer 31

1) Mission/Corporate Aim 2) Corporate Objectives 3) Functional objectives 4) Strategies 5) Tactics

Answer 32

Allows a business to make decisions on their future. - A technique that allows an organisation to assess their overall position, or the position of one of its divisions, products and activities.

Answer 33

Strengths, Weaknesses, Objectives, Threats. - S&W are internal. - T&O are external.

Answer 34

Political, economical, technological, legal and environmental.

Answer 35

+ Leaders can analyse what a business needs to do to counter threats/target opportunities. + Competitive advantage through developing strengths/fixing weaknesses. + Highlights current + potential threats. + Will support a business to help achieve it's objectives through supporting decision making.

Answer 36

- Time-consuming. - External factors can change rapidly.

Answer 37

- Labour costs are normally a high % of costs. - Efficiency/profitability is closely linked to productive use of labour. - Competitiveness depends on unit costs.

Answer 38

- Extent and quality of fixed assets e.g. equipment/IT. - Ability and motivation of workforce. - Method of production. - External factors e.g. reliability of suppliers.

Answer 39

- Marketing : Sales growth, market share, brand loyalty, social media presence, sales volume, portfolio analysis (BM). Operations : capacity utilisation, VC per unit, time to make products, age + condition of machinery, process used). HR : Absenteeism, labour turnover, labour costs as % of revenue, staff morale, retention rates, HR training and recruitment.

Answer 40

The unique strengths of a business that cannot easily be replicated by a competitor. - These are strengths critical to the success of a business, e.g. specific piece of technology or understanding their customers. - Should be adapted and changed to meet demands of the market. - Allows business to gain a competitive advantage. --- Example of Apple : I.O.S, branding, loyal customers.

Answer 41

- There's not always widespread agreement on desirable levels. - Usually quantitative. - Non-financial methods usually interdependent. - Financial methods often reflect what has happened and what will happen.

Answer 42

Management who describe themselves as this tend to emphasise certain performance methods, such as : - Share price. - Revenue price. - Gross and operating profit. - Unit costs and productivity. - Return on capital employed. NEED TO HAVE BOTH ST + LT (PIE)

Answer 43

- Customer loyalty. - Reputation. - Labour turnover. - Sustainability and social responsibility. - Quality & innovation etc. --- Could include : stock market investors focussing on mainly latest financial performance, reliance on bonuses based on ST performances & frequent changes in leadership & strategy.

Answer 44

- Management bonuses/financial incentives based on achievements of short-term objectives. - Low or falling investment in R & D. - High dividend paying rather than reinvesting profits. - Overuse of takeovers rather than internal growth.

Answer 45

Tendency for management to focus on LT gains. - These measures show the ability of a business to sustain or grow its current operations. e.g. core competences, quality, market share, innovation and people. - Disadvantages is that it takes longer to earn money from this approach which shareholders may not like. NEED TO HAVE BOTH LT + ST (PIE).

Answer 46

An attempt to help firms measure business performance using both financial and non-financial data. - Enables managers to understand clearly how their business is performing, believes looking at non-financial indicators helps predict future performance whereas financial focuses on just the previous accounting period. --- Example : Tesco Clubcard, combines customers with financial.

Answer 47

Financial : generating revenue, profit and shareholder management. Internal Processes : considers systems in place to ensure the business is successful, lead time/unit costs. Learning & Growth : focus on the resources & infrastructure, e.g. effectiveness of teams + innovation, technology investment. Customer : Extent to which the customer is satisfied, levels of returns. e.g. Tesco

Answer 48

+ Measurable. + Links performance to long-term (mission & vision). + Involves all stakeholders in the business. + Highly flexible, KPI's chosen by business. - Doesn't consider sustainability (out-dated). - Have to monitor frequently, time-consuming/expensive. - Difficult to have balance between the four perspectives.

Answer 49

Believes that firms should have three separate bottom lines. - 'Profit', ensuring that the bottom line in the profit & loss account is as high as it can be. - 'People', ensuring an organisation undertakes business in a way that ensures that staff and other stakeholders are considered, socially responsible, e.g. fair wage and conditions, customers have their feedback listened to. - 'Planet', conducting business in an environmentally sustainable manner, business often forced between lower-cost option or environmentally-friendly alternative, very difficult to measure, e.g. carbon footprint & waste management. e.g. Ikea : fair wages, invests in renewable energy.

Answer 50

+ Entices ethically conscious customers & investors. + May result in increased LT profitability. + Competitive advantage from being socially responsible. + May boost employee retention, improve brand reputation and customer loyalty. - Might create potential conflict, benefits of social and environmental actions that a business engages in are LT, however could have negative impacts on profits in the ST. - Most shareholders focus on ST (profit) results. - Hard to reliably measure - no KPI's.

Answer 51

- POLITICAL : Competition policy, regulation, tax. - ECONOMICAL : Interest rates, ecnomic growth, consumer spending and income. - SOCIAL : Demographic change, pressure groups. - TECHNOLOGICAL : New productive processes, new technology. - LEGAL : Employment law, minimum wage, health and safety. - ENVIRONMENTAL : Sustainability, pollution and carbon emissions.

Answer 52

The government actions that impact on the strategic and functional decisions made by the business. - They will impact heavily on the competitive environment and the infrastructure that allows businesses to operate effectively. - The gov want to grow the economy, people will have to pay taxes.

Answer 53

Involves creating and enacting laws in order to protect individuals, businesses and society as a whole.

Answer 54

Look to promote fair competition in markets and stop the abuse of customers by businesses due to monopoly power. - This means anticompetitive prices such as price fixing between businesses are illegal. - Mergers and takeovers are monitored and won't be allowed if deemed that they significantly reduce competition.

Answer 55

A monopoly exists where there is only one business in the market. - At least 25% market share. - Monopolies can exploit consumers by charging high prices, therefore, they're regulated in order to protect the customer. - Market Power is the ability of a business to set price above those that would be charged if there were competition.

Answer 56

- Lower price, increased competition leads to a fall in market share. - Improved quality, in order to maintain a customer base within a competitive market, businesses will strive to better the quality of their products. - Increased choice for customers. - Innovation, businesses invest in R&D to draw in new customers, will benefit society as a whole, e.g. technological developments.

Answer 57

- Equality Act protects things like age, disability, gender, race, pregnancy etc. - Employment Relations Act allows Trade Union membership. - Labour market law is designed to protect workers from discrimination within the workplace and make it easier for businesses to recruit workers. - Wage Discrimination occurs when businesses pay workers a different wage rate for providing the same job.

Answer 58

- Environmental Law : Help to ensure that businesses do not have a negative impact on the environment. - e.g. Limits to emission levels, guidelines on waste disposal and quotas on finite resources. - Government can inspect businesses and impose fines on those failing to comply. - Environmental Protection Act and Environment Act aim.

Answer 59

- Government looks to promote enterprise in the economy as it creates jobs and leads to economic growth. - Enterprise is the term that can be applied to any business. - Support start-ups : Provide employments, businesses will pay taxes, can help start-ups becoming environmentally friendly. - Can provide grants and training (e.g. financial, marketing, etc) to businesses.

Answer 60

- Regulation undertaken by the government to create competitive markets. - Government creates rules and sanctions in order to modify the economic behaviour of firms. - Privatisation leads to monopoly power as most firms privatised operate in markers with barriers to entry such as economies of scale, this can be countered through regulation and regulation. - Deregulation : Opening up of markets to new competition through the removal of rules and regulations that created barriers to entry.

Answer 61

- Government will look to improve the infrastructure to help businesses operation more effectively, e.g. improve transport network and increase the provision of utilities. - Pollution Permits : Allow businesses to produce a legal level of pollution every year, permits are tradable on the market and if a business doesn't use all of theirs, they can sell them to other businesses, provides financial incentive to reduce pollution. - UK Trade and Investment (UKTI) helps businesses export to foreign markets and helps foreign companies in setting up production in the UK.

Answer 62

GDP (Gross Domestic Product) measures the value of goods and services produced in an entire economy over a period of time (usually a year). - Calculated the measure the economic performance of a country/area/whole world. - Calculated in Real Terms, meaning its adjusted so that inflation is ignored.

Answer 63

Consists of the key economic factors that influence the behaviour of businesses and their customers.

Answer 64

- Businesses could import fewer products. - Increase the quality of labour by training staff. - Cutting taxes. - Investment. - Cutting interest rates.

Answer 65

+ Growth in GDP means higher revenue & profitability. + Gives potential for economies of scale. + Sustained growth increases confidence and therefore supports business plans for future. - However, could lead to shortages of raw materials and skilled labour due to growth. - If growth is too fast, can lead to a recession.

Answer 66

--- BOOM : A period characterised by high levels of consumer spending, business confidence, increasing prices etc. - Consumer demand likely to be higher. - Shortages of labour (including labour so people will demand higher wages). - Profits and dividends increased. --- RECCESSION : A sustained decline in economic activity that occurs after a peak in the business cycle. - Fall demand and business confidence. - Can be caused by a drop in consumer spending, usually due to higher prices or lower incomes.

Answer 67

--- SLUMP : Also known as a depression, is a prolonged period of economic decline when a country's real GDP is at its lowest point. - Unemployment will be high. - Low business confidence. - Increasing number of businesses failing. - Lack of demand so prices lower. --- RECOVERY/UPTURN : Stage of economic cycle when an economy starts to grow again after a recession. - Increasing business confidence. - Rising investments. - Employment increases.

Answer 68

The price of one country's currency in terms of other currencies. --- Determined by supply and demand. - An INCREASE in the value of a currency is called an APPRECIATION, this means the currency is worth more, e.g. £1 = $1.60 - A DECREASE in the value of a currency is called a DEPRECIATION, this means the currency is worth less, e.g. £1 = $1.40 --- EXAMPLE : £120 into USD (£1-$1.8) 120x1.8= $216

Answer 69

--- SPICED = Strong pound, Imports Cheaper, Exports Dearer. - Businesses that import will be able to buy cheaper raw materials, they could utilise this and reduce prices, help in LT. - Businesses that export may see less demand. --- WPIDEC : Weak Pound, Imports Cheaper, Exports Dearer. - Greater demand from abroad for UK goods. - Input prices will increase if raw materials are imported. - If the business has a price elastic product it will be able to pass the increase in costs onto the consumer.

Answer 70

- Could mean it costs more for raw materials. - People will have less confidence, spend less, luxury goods will suffer lots. - Supply issues. - Demand will be impacted. SO, EXCHANGE RATES CAN PROVIDE THREATS & OPPORTUNITIES. --- Businesses can overcome these issues by looking at predictions, planning, taking advantage of when SPICED/WPIDEC if it suits them and use time series analysis.

Answer 71

--- FUNCTIONAL : - May affect budgets, may have to reevaluate them. - May have to increase/decrease prices. - May have to change suppliers/distribution channels. --- STRATEGIC : - May affect their long-term goals of expanding their operations abroad. - May need to restructure business. - May have to retrench. - May take advantage, export more

Answer 72

Inflation is a general rise in prices or a fall in the value of money. - The rate of inflation shows how inflation has changed.

Answer 73

--- Retail Price Index : A measurement of a 'basket' of goods and services representative of what people buy in the UK. --- Customer Price Index : Similar to RPI but mainly excluding housing costs.

Answer 74

--- Cost Push Inflation occurs when there is an increase in the costs of production, causes firms to increase prices, e.g. wages. --- Demand and Pull is the process by which prices rise because there is excess demand in the economy. An increase in demand means an increase in price.

Answer 75

Views regarding future inflation. - These can influence wage-setting behaviour and pricing in the economy. - Potential Positives : Could prepare businesses e.g. switch to cheaper supplier, provide competitive advantage, increase consumer & business confidence, anticipate changes. - Potential negatives : Could make bad decisions, can't predict everything e.g. covid, doesn't take extern factors into account.

Answer 76

- Higher demand (especially for luxury goods). - More investments. - Decreased cost of goods, could charge lower. - Could increase wages, increase motivation. - Get better raw materials.

Answer 77

- Lower demand (luxury brands will suffer the most). - Lower business & consumer confidence. - Invest less. - May have to get supplies from cheaper suppliers, could reduce quality. - May have to decrease wages (cut costs) or retrench. - Have to increase prices to cope with this.

Answer 78

Deflation is the opposite of inflation, so when there's not enough demand so companies reduce their prices. Could Cause : - Fall in productivity. - Lower prices. - Rise in unemployment.

Answer 79

- Income Tax goes up, less disposable income. - Corporation Tax ??? - VAT goes up, less consume income.

Answer 80

- Sets tax rates, sets government spending. --- It's used to achieve a wide variety of objectives : - Keep inflation on target (2%). - Stimulate economic growth and employment during times of recession. - Maintain a stable economic cycle that minimises boom and bust. --- Government can spend money on : Education, business grants, welfare benefits, health, infrastructure. MUST HAVE BALANCE OF SPENDING AND TAX.

Answer 81

- Fiscal Policy is said to be 'expansionary' if the government is trying to positively stimulate economic activity. - Helps lower unemployment, give people more money to spend, HOWEVER, can cause inflation. --- Methods include : - Cutting tax may increase disposable income. - Raising government spending, e.g. on infrastructure or increasing pay of public sector workers. - Increasing the budget deficit, e.g. increasing borrowing, this can be spent on a variety of projects, however increases debt.

Answer 82

- Fiscal Policy is said to be 'contractionary' if the government is trying to constrain demand, reduce debt or control inflation. - Rein in economic growth to a sustainable level, complete opposite of EFP. --- Methods include : - Increasing taxes, may discourage spending and reduce demand which will help control inflation. - Cutting government spending, - Cutting the budget deficit may help to stabilise economic growth as reduced debt payments in future can be reinvested into the economy.

Answer 83

- Is the manipulation of the rate of interest, the money supply and exchange rates to influence the level of economic activity. - Main target is to maintain low inflation. - Delegated to the Bank of England who control money supply and set interest rates. - MPC meet every month to decide interest rates, they consider GDP, unemployment, exchange rates, house prices etc. - In theory, if inflation remains at the target level of 2%, it will give confidence to consumers (spending), businesses (investing) and workers (wages).

Answer 84

How will HIGH Interest rates affect : - Consumer saving (increase), consumer borrowing (decrease), investments (decrease), house prices (increase). - How will LOW interest rates impact : - Consumer saving (decrease), consumer borrowing (increase), investments (increase), house prices (decrease).

Answer 85

International Trade is the exchange of goods and services between countries.

Answer 86

Free Trade exists when there are no restrictions on the flow of goods and services between countries, e.g. EU. - No government intervention.

Answer 87

+ Improved international competition, means more choice for customers & potential lower prices to remain competitive. + Encourages reward and innovation. + Job creation in imports and exports. + Economic growth. + Businesses can access new markets. - More competition for domestic businesses. - Loss of domestic jobs if domestic business go bust.

Answer 88

Protectionism is when a government protects domestic businesses and jobs from foreign competition by giving subsidies, while improving tariffs and quotas on imported goods.

Answer 89

- Tariffs : Tax/duty that raises the price of imported products and causes the level of imports into a country to fall. - Quotas : Quantitative (volume) limits on level of imports/value of imports. - Non-Tariff Barriers : Subtle controls, e.g. changing regulations. - Embargos : Forbidding trade with a particular country.

Answer 90

+ Helps domestic businesses improve profit. + Protects domestic jobs. + Helps small businesses. - Less choice for customers, may mean higher prices. - Businesses may struggle to expand into other countries. - No place for surplus of goods.

Answer 91

Social Environment is influenced by the make-up of humans within a specific area or business. - This influences the behaviour of businesses and customers. - Demographics can include : Gender, age, ethnic background etc.

Answer 92

Urbanisation is the general movement of people towards cities and away from rural areas, (move towards jobs). - Puts pressure on infastructure, i.e. traffic congestion. - Cities have responded by redesigning.

Answer 93

- Demographic changes are changes in the structure of the UK population over times in terms of things like age, sex and race. - Increase in global population, UK businesses can move into new markets. - An increase in average age of UK society, business will have to change their product range to satisfy older people, e.g. Dove & M&S bring out anti-wrinkle cream. - An increasingly diverse racial and religious population due to increased migration (e.g. Five Guys have a Halal store in Birmingham).

Answer 94

+ Higher demand potential sales. + Greater pools of workers. + A more diverse workforce so new ideas, more skilled. + New target audiences & markets, e.g. increased disposable income and aging population benefit travel firms such as Royal Caribbean Cruises & M&S & Dove. Threats : - Aging population could lead to lack of new employees and decreased efficiency, e.g. B&Q employ lots of older people. - Resistance to change/adaptation within business. - Increased competition targeting new markets.

Answer 95

- More single person households. - Convenience. - Connected and mobile consumer. - Information overload, reviews. - Social conscience.

Answer 96

- Customers are better informed, e.g. can compare prices/reviews. - Multichannel Distribution widens customer choice, can look online. Businesses have adapted marketing to reflect changes in consumer lifestyle and buying behaviour : - Viral marketing, use SM. - Social Media. - Emotional branding, tap into consumer feeling.

Answer 97

- Increased demand for gyms and healthy foods. - Led to a whole industry developing around health. - Allowed for highly differentiated niche markets with specialist businesses developing new products.

Answer 98

Corporate Social Responsibility is a businesses decision to accept responsibility to its stakeholders for its social, environmental and ethical actions. - Stakeholders include employees, customers, suppliers and the environment. - One measure of CSR can be a business' willingness to accept responsibility above and beyond its legal duty. - A business will create a CSR report to set targets that will be used to meet its social responsibilities and to assess how far it has met its previous targets.

Answer 99

- McDonald's Planet Champion Programme trains employees to find ways of reducing the environmental impact of the company. - They also run daily litter picking patrols as well as employing full time 'litter champions'.

Answer 100

Financial Benefits : + Ability to attract investment. + Mistakes and bad PR is expensive. HR Benefits : + Attract wider pool of applicants. + Motivation of staff. Marketing Benefits : + Greater customer loyalty. + Potential for differentiation and USP, allowing for charing premium prices. + Positive reputation. Operational Benefits : + Positive relationship with suppliers.

Answer 101

Financial Costs : - Looking after employees. - Ethical suppliers and environmentally friendly practices. Corporate Objectives : - Short-term shareholders' returns. - Growth - entering new markets. Opportunity Costs : - Time spent on CSR, policies, reports and monitoring.

Answer 102

From bottom to top : - Economic Responsibilities (be profitable, the foundation upon which all others rest). - Legal Responsibilities (obey the law). - Ethical Responsibilities (obligation to do what is right and just). - Philanthropic Responsibilities (be a good corporate citizen, contribute to community, improve quality of life).

Answer 103

- An increase in the proportion of population living in cities. + More employment & market opportunities. + More skilled people moving to cities. + Easier access to basic services and infrastructure. - High cost of living. - For those who are unemployed or in casual, unskilled jobs, can be difficult to escape poverty.

Answer 104

Is the increase in how interconnected the world businesses are. - Allows businesses to operate all over the world. - Allows businesses to make strategic decisions about where to get raw materials as well as manufacturing products. - More opportunities to grow in international markets.

Answer 105

- Improved transport. - Containerisation. - Improved technology & communication. - Growth of trading blocks, e.g. EU. - Growth of multinational companies. - Reduced tariff barriers.

Answer 106

+ Competitive advantage. + Migration (skilled workers?) + Global economic cycles. - Increased competition. - Migration (loss of skilled workers).

Answer 107

Are developing countries with fast development, but not yet fully developed economies, e.g. China and India. + Cheaper labour, e.g. Premier Inn moved call centres to the Philippines because not many people book on phone now, cut costs. + Create jobs to move countries out of poverty and therefore spending money, creating economic activity. + Offer quick growth & returns.

Answer 108

The stakeholder concept argues that businesses should take account of its responsibilities to stakeholders rather than just focus on shareholders. - If it's Shareholder focused, it will have profit maximisation as main objective.

Answer 109

- Apple now have AI on their updates (could create a bad brand image but very quick and easy). - Self-checkout services, reduces costs but less customer service. - McDonalds using touch screen to order, older generation may struggle but quicker. - Teams calls for business meetings (cheaper but may effect communication & efficiency & motivation).

Answer 110

- Automation : Replacing labour with technology in the manufacturing process. - CAD : Using computer generated images to design and test new products. - CAM : Using technology to plan and control the manufacturing process. - Electronic Point of Sale : Laser scanning technology using bar codes to help planning by updating sale records.

Answer 111

- In LT, could reduce costs. + More efficient, less room for error and quicker customer service. + Innovation. + Improved communication. Threats : - Always changing, costly, maintenance too. - People may lose their jobs, less disposable income and could cause bad publicity. - Have to have skilled staff or train them, costly. - Poorer customer service.