AS lvls essay q Flashcards
What are the weaknesses of family business?
- Lack of continuity from the younger family members due to them being uninterested
- Favouritism of a family member. Can cause other non family employees jealous leading to low job satisfaction
Advantage of segmenting market
- ## Reduces risk in deciding what to produce and where to supply – hence minimises waste.
Disadvantages of empowerment
- Employees prefer other methods of motivation
- Empowerment/training and development makes employees attractive to
other businesses (poaching). - Managers are Theory X not Theory Y.
Explain the problems a sole trader might have if they change the legal structure to a partnership
- A sole trader would lose total control of the business as would have to
share ownership with the other partners. This would affect the way the business operates. - Conflict may arise between the different partners due to different
objectives or idea of importance within the business
Explain limitations to a business of using market segmentation.
- Cost taken to research the needs of the different segments.
- Production and inventory management costs may be higher than those
for producing one type of product.
What are some internal sources of finance?
- Retained earnings
- Sale of unwanted assets
- Working capital
Benefits of internal sources of finance:
- No approval needed (different from bank loans & overdraft where approval from banks are needed)
- No legal obligations needed (bcs no consultation of third parties needed which makes it easier for the business)
- Most dependable & permanent resource than external sources (because does not rely on preference of creditors, market conditions, etc.)
Disadvantages of internal sources of finance:
- Uncertainty (Bcs internal sources of finance rely on how much profit a business is making, is not recommended for businesses with low revenue and profit)
- Decreased earnings from profit to shareholders making them unsatisfied
- Reduces liquidity (
Different types of flexibility:
- Ability to change levels of production
- Hold high stocks
- Range of products
Why does flexibility of operations not enough to increase sales?
Amount of sales can be affected by other things such as:
- Service from employees
- Prices of products
- Quality of products
Explain the link between corporate objectives and marketing objectives of a business.
Example corporate obj: increased market share, growth, survival
Example of marketing obj: increased sales, market share
Marketing obj is a more specific objective that businesses must achieve in order to achieve its corporate objectives.
Advantages of bank overdaft:
- Flexibility (It gives a business the flexibility to borrow and pay back throughout the
year, when needed, instead of repaying a fixed sum for a loan every
month) - Quick Access (Overdrafts can be set up relatively quickly, providing businesses with immediate access to funds in times of need)
- Control (Businesses have control over how much they borrow and when they repay the overdraft, providing them with greater financial autonomy)
Disadvantages of bank overdraft:
- Interest Rates (Overdrafts often come with higher interest rates compared to other forms of financing, making them expensive if not managed properly)
- Risk of Withdrawal (Banks can withdraw overdraft facilities at any time if they think is too risky, which could leave the business in a vulnerable position if they are not prepared)
- For short term cashflow issues only
Explain two advantages to employees of performance-related pay.
- Satisfied customers because of good service from employees
- Can increase employee morale/job satisfaction as workers feel rewarded for their hard work.
Explain two disadvantages to employees of performance-related pay.
