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A Levels > Business > Flashcards

Business Flashcards

1
Q

What is mass customisation?

A

The use of computer aided manufacturing (CAM) to produce individually tailored output to customers on a large scale

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2
Q

What are the benefits of mass customisation?

A

Operational flexibility, brand loyalty, eliminates intermediaries increasing profit margins, less waste as stock is customised to order, stimulating work environment with varied tasks

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3
Q

What are the drawbacks of mass customisation?

A

CAD/CAM training costs, less scope for economies of scale, slower response speed, can’t resell products

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4
Q

How can a business add value through its production process?

A

Improve product quality, adding a USP

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5
Q

How can a business add value through its distribution process?

A

Increased convenience for customers

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6
Q

How can a business add value through its marketing process?

A

Creating a brand image

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7
Q

What are the benefits of a brand increasing its added value?

A

Stand out from rivals, charge higher prices, increased profit per unit, increased market share

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8
Q

What is meant by a direct distribution channel?

A

Product is sold directly from the producer to the consumer

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9
Q

What are the benefits of a direct distribution channel?

A

No wholesaler or retailer to take a cut - can either reduce prices to stimulate demand or have increased profit margins per unit sold

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10
Q

What are the drawbacks of a direct distribution channel?

A

No bulk sales from wholesaler or retailer, increased distribution costs for producers, increased marketing costs

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11
Q

What are the benefits of a producer selling to a retailer before the product is sold to a consumer?

A

No marketing costs for producer, retailer is better known so will have more reach and in multiple locations therefore increased sales

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12
Q

What are the drawbacks of a producer selling to a retailer before the product is sold to a consumer?

A

Retailer takes margin from producer, high logistical costs if selling to many retailers

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13
Q

What are the benefits of a producer selling to a wholesaler which then sells to a retailer and then the consumer?

A

Wholesaler buys in bulk guaranteeing sales, low distribution costs as all sales are to wholesaler, marketing costs low due to retailer

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14
Q

What are the drawbacks of a producer selling to a wholesaler which then sells to a retailer and then the consumer?

A

Wholesaler and retailer seek margin, less able to provide effective customer service to consumer

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15
Q

What may impact on which distribution channel is chosen by a business?

A

How effectively the business can produce, distribute and market the product

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16
Q

What is the function of a wholesaler?

A

Buys products in bulk from producers and distributes them to retailers

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17
Q

What is strategic implementation?

A

The phase where a strategic plan is put into action

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18
Q

What are the main factors behind successful strategic implementation?

A

Effective communication, effective leadership (overcoming resistance to change), organisational structure aligning with strategic plan, critical path analysis raises awareness of timescales and sets priorities

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19
Q

What are the features of convenience products?

A

Purchased frequently, price is low % of income, mass marketed, sold in many locations, little thought put in by consumer

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20
Q

What products will tend to be classed as convenience products?

A

Essentials (e.g. food, drink)

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21
Q

What are the features of shopping products?

A

Purchased infrequently, higher % of income, more focus on segmentation in markets, sold in less places in comparison to convenience products, some thought put in by consumer

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22
Q

What is an example of a shopping product?

A

Clothes, smart watch

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23
Q

What are some features of a specialty product?

A

Purchased rarely, price is large % of income, promotion is very targeted, sold in few retailers, lots of thought put in by consumer

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24
Q

What is an example of a specialty product?

A

New car

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25
Q

What are industrial products?

A

Goods and services bought and sold between businesses

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26
Q

How will a business need to adapt its marketing mix if it is selling to other businesses rather than consumers?

A

Bulk sales, negotiation, different methods of promotion (e.g. cold calling, trade shows), fewer buyers so need to keep them satisfied

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27
Q

What is organisational culture defined as?

A

The collection of values, expectations and practices that guide and inform the actions, behaviours and decision making of employees

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28
Q

What are some examples of reasons a business may change its organisational culture?

A

Merger/takeover, rapid growth, new strategy

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29
Q

What are some problems that could occur due to a business changing its organisational culture?

A

Resistance to change, requires money and time, difficult to change in a large organisation

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30
Q

What is inflation?

A

A sustained increase in prices in an economy

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31
Q

What are the financial impacts of inflation?

A

Assets appreciate in value, erodes value of fixed repayments

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32
Q

What are the operational impacts of inflation?

A

Costs of materials and supplier costs increase, lowers profit margins

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33
Q

What are the marketing impacts of inflation?

A

Business may need to increase prices, consumers have lower real income so more likely to choose a cheaper alternative

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34
Q

What are the HR impacts of inflation?

A

Workers real wages fall, therefore will request pay rises to match this - either increased costs for business or negative industrial relations if pay rise not given

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35
Q

What are the likely impacts if government policy successfully promotes entrepreneurship?

A

Profits and tax revenue increase, increased job opportunities, increased competition leads to better efficiency, lower prices and higher quality

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36
Q

What is the role of a regulator in a market?

A

Prevent collusion, prevent abusive behaviour (predatory pricing), oversee mergers and takeovers

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37
Q

What role does governmental infrastructure play for businesses?

A

Creates jobs, increases productivity, ease of collaboration and trade if road, rail and airport links are improved

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38
Q

What impact does governmental environmental policy have on businesses?

A

Increased costs to adapt, greener reputation

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39
Q

What impact does international trade policy have on businesses?

A

Supporting imports and exports

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40
Q

What are some examples of employment law?

A

Equal Pay, ban of discrimination in terms of sex, race, sexuality or disability, employment relations (unions)

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41
Q

What are the impacts of employment law to businesses?

A

Ruined reputation and increased costs in fines if not complying, increased costs to ensure laws are followed, more motivated workforce

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42
Q

What are the impacts of environmental law to businesses?

A

Increased costs to make sure laws are followed, improved reputation if laws followed, fines if not complying

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43
Q

What are the benefits of e-commerce?

A

Increased sales as wider target market, open 24/7, cost efficient as rent doesn’t need to be paid

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44
Q

What are the drawbacks of e-commerce?

A

Increased competition, may not suit all products

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45
Q

What is enterprise resource planning (ERP)?

A

Use of computer systems to automate processes (e.g. customer orders, updating stock levels) and integrate core processes across functional areas (e.g. in HR can manage recruitment or training)

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46
Q

What are the benefits of ERP?

A

Increased efficiency, oversight of functional areas

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47
Q

What are the drawbacks of ERP?

A

Cost, may take time to integrate systems

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48
Q

What is ‘big data’?

A

Extremely large data sets that are stored to analyse existing patterns and trends

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49
Q

What are the benefits of big data?

A

Personalised marketing, tracking consumer behaviour, improving decision making

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50
Q

What is data mining?

A

Analysing large databases to generate new information such as patterns and trends

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51
Q

What are the benefits of data mining?

A

Market based analysis (if someone buys one product they’re more likely to buy a complimentary one)

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52
Q

What are the impacts of digital technology on a small business?

A

Easier to enter markets (lower barriers to entry), could find a niche more easily

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53
Q

What are the impacts of digital technology on a large business?

A

Can use big data and data mining more effectively as they have more finance, more able to obtain latest technology

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54
Q

What is meant by confidence interval?

A

The % chance that the actual value is within the estimated range

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55
Q

What are the impacts of a rise in interest rates on consumers?

A

Encourages saving, discourages borrowing - this means consumers have less disposable income and therefore less demand/sales for normal goods

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56
Q

What are the impacts of a rise in interest rates on businesses?

A

Increased cost of borrowing, more likely to turn to equity and shares for finance, redundancies due to drop in demand?

57
Q

What are the impacts of a drop in interest rates on consumers?

A

Discourages saving and encourages borrowing, increased demand for normal goods

58
Q

What are the impacts of a drop in interest rates on businesses?

A

Cheaper borrowing encourages investment, increased production, increased demand creates jobs

59
Q

What contextual points are there to consider when discussing interest rates?

A

Industry business operates in (limited impact for firms which sell essentials), size of interest rate change

60
Q

What are the impacts of social change (e.g. demographic and population change)?

A

Migration could lead to increased demand, more potential workers

61
Q

What are some examples of changes in consumer lifestyles in recent years?

A

Environmental/ethical considerations, social media, takeaway and delivery food

62
Q

What have the impacts of the growth of online businesses been?

A

Increased demand, digital marketing

63
Q

What are the opportunities presented by technological change?

A

Ease of communication, long term efficiency through automation, new technology can increase product quality

64
Q

What are the threats presented by technological change?

A

Lower barriers to entry can lead to increased competition, industries becoming obsolete, costs to keep up with tech

65
Q

What is the definition of a mission statement?

A

Qualitative description about organisation

66
Q

What are corporate objectives?

A

SMART objectives that define overall objectives of business, driven by mission statement and drive functional objectives

67
Q

What are SMART objectives?

A

Objectives that are specific, measurable, agreed, realistic and timed

68
Q

What are functional objectives?

A

Objectives of each department (e.g. HR, marketing), driven by corporate objectives however are more specific

69
Q

What are the benefits of having mission statements, corporate objectives and functional objectives?

A

Measure of success, co-ordination between management and employees, gives focus to decision making

70
Q

What are the benefits of scientific decision making?

A

Based on data, reduces risk of waste, reviews against original objectives

71
Q

What are the drawbacks of scientific decision making?

A

Slower, more expensive, is data reliable?

72
Q

What are the benefits of using intuitive decision making?

A

Quicker process, experienced manager may be able to make effective intuitive decisions

73
Q

What are the drawbacks of using intuitive decision making?

A

Increased risk, difficult to justify

74
Q

What are the main considerations when choosing between scientific and intuitive decision making?

A

How quickly decision needs to be made, reliability of data

75
Q

What are the advantages of being a flexible organisation?

A

Adaptability, innovation, efficiency

76
Q

What are the drawbacks of becoming a flexible organisation?

A

Resistance to change, cost of restructuring, risk of employee burnout through poor role definition

77
Q

What is restructuring through delayering?

A

Removing layers of management

78
Q

What are the benefits of restructuring through delayering?

A

Faster communication, more autonomy/delegation, faster decision making

79
Q

What is restructuring through flexible employment contracts?

A

Increased usage of 0 hr contracts, part time contracts and temporary employment contracts

80
Q

What are the benefits of restructuring through flexible employment contracts?

A

Ability to adjust staff levels quickly therefore flexibility

81
Q

What is restructuring through organic structures?

A

Moving away from centralised, “mechanistic” structures to decentralised, “organic” structures

82
Q

What are the benefits of restructuring through organic structures?

A

Increased agility and adaptability, cross functional collaboration

83
Q

What is restructuring through knowledge and information management?

A

Ensuring data is easy to access for decision making

84
Q

What are the benefits of increased use of knowledge and information management?

A

Increased efficiency, informed and faster decision making

85
Q

What are some factors that reduced barriers to globalisation?

A

Free trade areas reduce barriers to trade, improved transport links between countries

86
Q

What is the importance of globalisation?

A

Rise of MNCs, interconnection of economies

87
Q

What are the three methods of improving efficiency?

A

Labour efficiency (training), capital efficiency (investment in tech), enterprise efficiency (increasing output to achieve economies of scale)

88
Q

What are the drawbacks of attempting to improve efficiency through labour methods?

A

Costs of training, increased productivity could lead to higher wage demands

89
Q

What are the drawbacks of attempting to improve efficiency through capital methods?

A

Investment costs will initially be high

90
Q

What are the drawbacks of attempting to improve efficiency through enterprise?

A

Increased output may not be met by demand, leading to waste and inefficiency - diseconomies of scale

91
Q

What is sampling?

A

Obtaining data from a group of people that are representative of your target market

92
Q

What are the pros of sampling?

A

Insight into views of target market which aids decision making

93
Q

What is needed to ensure accurate sampling?

A

Adequate sample size, accurate representation of target market

94
Q

What are the pros of digital marketing?

A

Cheaper than traditional methods, more targeted, analytics, global reach

95
Q

What are the cons of digital marketing?

A

Privacy concerns, new costs (e.g. cloud), can’t try before buy

96
Q

What are the advantages of capital intensive production?

A

More reliable than workers, more cost effective in the long term

97
Q

What are the disadvantages of capital intensive production?

A

High upfront costs, machinery inflexible

98
Q

When would it make sense for a business to use capital intensive production?

A

Business has enough disposable income to invest, produces in country with high wages, standardised product

99
Q

What are the advantages of using labour intensive production?

A

Cheaper on small scales, some jobs can’t be done by machines

100
Q

What are the disadvantages of using labour intensive production?

A

Recruitment costs, people can’t run 24/7 like machines can

101
Q

When does it make sense to use labour intensive production?

A

Small scale business, low wage costs, product is bespoke/luxury

102
Q

How can a business increase its supply?

A

Hire employees on flexible employment contracts, outsourcing, purchase to order (production only starts when order received)

103
Q

When is a high gearing ratio more appropriate?

A

Times of low interest rates, want to avoid selling shares in business

104
Q

When is a low gearing ratio more appropriate?

A

High interest rates, happy to sell more shares

105
Q

What methods can be used to reduce a business’s gearing ratio?

A

Reducing non-current liabilities, increased share capital investment

106
Q

What are core competences?

A

A set of activities or skills that an organisation performs better than other functions

107
Q

What is the difference between tactics and strategies?

A

Tactics are carefully planned actions created to achieved a short term obj, while strategies are long term plans

108
Q

What is disruptive change?

A

An extreme type of change to products or processes that irreversibly alters an industry or market

109
Q

What is horizontal integration?

A

One firm joins another at the same stage of the supply chain, in the same industry

110
Q

What are the motivations for horizontal integration?

A

Economies of scale achieved through combining operations, lowering competition

111
Q

What is forward vertical integration?

A

One firm joins another firm that is closer to the consumer/further up the supply chain, in the same industry

112
Q

What are the motivations behind forward vertical integration?

A

Guarantee point of sale, can deny rivals selling at outlet

113
Q

What is backwards vertical integration?

A

Where a business joins with another firm that is further from the consumer/further down the supply chain, in the same industry

114
Q

What are the motivations behind backwards vertical integration?

A

Guaranteed source of raw materials, can block rivals from accessing raw materials, produce and components

115
Q

What is conglomerate integration?

A

Where a business joins with another firm in a different industry

116
Q

What are the motivations behind conglomerate integration?

A

Reduction of risk (diversification), wider ideas and innovation

117
Q

What is product innovation?

A

Increasing revenue by finding new or better products

118
Q

What is process innovation?

A

Reducing unit costs by finding new or better methods of production

119
Q

What are some benefits of operating in international markets?

A

Increased potential for sales as selling to more customers, reduces risk, increased economies of scale

120
Q

What are the advantages of exporting?

A

Increases size of target market, manufacturing stays in home country aiding quality control, less expenditure to set up abroad

121
Q

What are the disadvantages of exporting?

A

May have limited knowledge of international markets, products may need to be customised/specialised, tariffs and quotas in country exporting to

122
Q

What is meant by direct investment?

A

A business with HQ in its home country sets up additional operations in another country

123
Q

What is meant by exporting?

A

Business produces in home country and sells to other countries

124
Q

What are the pros of direct investment?

A

Business retains control over foreign investment, allows vertical integration to secure supplies

125
Q

What are the cons of direct investment?

A

High upfront investment, different org culture (Hofstede)

126
Q

What is meant by alliances?

A

Business agrees with another (usually intl) business to pool resources to undertake a specific project

127
Q

What are the pros of alliances?

A

May have local/cultural knowledge, cost synergies

128
Q

What are the cons of alliances?

A

Profits shared, objectives may differ, trade secrets may be revealed

129
Q

What is meant by licensing?

A

Business makes a legal agreement to authorise another company to produce/sell their goods/services in return for a fee

130
Q

What are the pros of licensing?

A

Gain access to existing distribution network, low risk as licensing fees agreed, avoid quotas and tariffs

131
Q

What are the cons of licensing?

A

Risk of brand being damaged, only receiving small proportion of profits, can only offer licensing to one business

132
Q

What issues could arise from divorce of ownership and control?

A

Risk of misalignment between managers and owners

133
Q

How can a business effectively manage the divorce of ownership and control?

A

Robust corporate governance - chairman and CEO are different people, transparent info (e.g. financial statements) financial incentives used to align management strategy

134
Q

What are the pros of becoming a multi national corporation (MNC)?

A

Increased potential customer base, cheaper suppliers/labour

135
Q

What positives for countries can be created by MNCs?

A

Jobs creates, increased tax revenue, infrastructure improvements, business could become suppliers and increase sales

136
Q

What negatives for countries can be created by MNCs?

A

Workers may have poor wages/conditions, tax avoidance, air/noise pollution, could drive out local businesses

137
Q

What may be some differences in policy between PLCs and LTDs?

A

Short termism of PLCs as shareholders want quick profit

138
Q

How can a business ensure its employees are aligned with its intended culture?

A

Ensuring recruitment attracts people with right values, rewarding those who show culture, training can reinforce culture

139
Q

What factors impact how a business is impacted by exchange rate fluctuations?

A

Whether they primarily import/export, nature of exchange rate changes, whether change is predictable

A Levels (26 decks)

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