Business Flashcards
Need it to be easy, cheap and reliable
Entering international markets/internationalisation:
Describe pros and cons of imports and exports, licensing, alliances and direct investment
-Imports and exports: +Low risk and simple (production stays in UK), e-commerce, business keeps the profits themselves.
Though, protectionism, change cust service eg language, limited foreign knowledge
-Licensing: Company can sell their goods in exchange for a fee. +Revenue, existing distribution network, 0 protectionism drawbacks.
Though, small portion of profits, brand image could be damaged,
-Direct investment: Sets up additional operations in another country. +Profits, control and vertical integration (for supplier location).
Though, expensive, different culture abroad.
-Alliances: Agree with another business to pool resources for a specific project. +Synergy, local knowledge.
Though, profit sharing and different objectives.
Give 2+ and cons of trade unions to the business and employee
Employees: +Collective bargaining, more certainty and security for productivity, resist unwanted change e.g. strikes, help with productivity practices
-Pay fee, may not meet needs of individual (not homogenous)
Employer: +Negotiate overall which is more productive, formal communication link
-Industrial action such as strikes or very low productivity. Time consuming decisions.
Give 2 drawbacks of niche markets
-Vulenrable to change (all eggs in one basket)
-Can attract competition if successful. Depends on entry barriers
Define place
How a product gets from manufacturer to consumer/physical location/where in store.
What is a direct distribution channel? Pros and cons.
To consumer. Less intermediaries and less cuts = lower prices.
-Increase in distribution costs
-Low reach and needs more marketing
Selling to retailer pros and cons
Overcomes increase in marketing costs. Online or lots of stores.
-Won’t receive full price consumer pays
-Distribution costs if selling to many retailers.
Multichannel distribution: Give 3 pros and cons
+Open 24/7. Lots of ways to buy to increase sales. Convenient. Buy online try in store. Bricks and clicks
+Different prices for different stores (Customers can pay cheaper prices)
+Increased brand visibility.
-Higher costs to maintain stores and websites for example.
-If one channel has poor customer service, can impact others.
-Risk customers are price sensitive and always pay online
Selling to wholesaler pros and cons
Selling in bulk is good. Reduce distribution costs and less risky. Retailer involved = marketing benefits.
-Intermediaries want to make a cut. Greater prices may lead to less sales.
-Can’t provide customer service wanted/required as you are far away.
What are internal factors for a business?
-Any department and formula eg operations, HR, marketing, finance.
-Overall mission and strategy
-Culture.
-Target markets/nature of good/service.
Describe Ansoffs Matrix for growth
- Market penetration: in some ways the least risky strategy involves selling more of the existing products of the business. more marketing activities eg annual Coca Cola Christmas ad. to generate more sales and possibly a bigger market share. Increase usage eg loyalty schemes. Resources to personal selling.However,this strategy
only work if the demand is there. the business is focusing on the same customers with the same products. - Market development: this strategy takes existing products and targets new customer
segments. BRIC/MINT.These may be in different regions or simply be a different target group, eg
a different segment. A risk here is the business may not have the same knowledge of this new segment as it does of its existing
segment and may not have the resources or networks to meet its needs effectively. - New product development: this strategy develops new products for existing customers.
This could be, for example, an improvement to the service provided or a new physical
product. The risk here is in developing a new product; many new product ideas never
reach the market. Of those that do, many fail. But, respond to customer needs eg walkers crisp polls - Diversification: this is a risky strategy in some ways because it involves new products
and markets. However, it does mean the business is no longer reliant on its existingproducts and markets which helps to spread the risks – if demand falls in one market, it
has another where it is selling. Samsung TVs and phones. Often larger firms.
Kotter and Schlesingers 6 ways to overcome change: Educate/communicate, participate/involve, facilitate, negotiate, manipulate or co option, explicit or implicit coercion
- Education and communication
This approach may be appropriate if people lack information or have inaccurate information
about the proposed change. Education can help people to understand why change is
necessary. However, it may take time to convince people and win the argument. - Participation and involvement
This can help overcome change by getting people involved in the process. This means that
people may have a sense of ownership and so may be more willing to get involved and
make it work. - Facilitation and support
Some people resist change because they are afraid of it. If you can help the process of
change and support people so they have the skills and resources they need to cope with it,
this can help it to be accepted. - Negotiation and agreement
If people are resistant to change it may be possible to negotiate with them or bargain to
win their agreement. This may mean compromise is needed and the form of change is
slightly different (and possibly better) than originally intended. - Manipulation and co-option
This may involve offering rewards to win over key influential people who will then get others
to agree to change. - Explicit and implicit coercion
If other methods are not successful or possible then you may want to force change through.
People may not agree with the change but may do it because they have to. Over time, having
changed their behaviour, they may come to agree with the change itself if it proves
successful.
Give an example of an outdoor brand that has shown CSR
What are sports direct shareholders like?
-Patagonia eg helping activism
-Sports direct focus more on maximizing profit not environment. Customers might have little interest in environmental care or CSR.
What is SWOT a type of?
-Situational analysis tool
Give 2 drawbacks of being first mover
Give eg of second mover with Facebook
Second mover can learn from mistakes MySpace vs Facebook
Employees may leave and use expertise/experience to set up a rival firm
Describe porters 5 forces model
Barriers to enter eg legal, natural or artificial
Buyer power eg homogenous goods or limited buyers/large buyers. Can be businesses or customers.
Supplier power eg diamonds and limited supply. Can issue unfavorable credit.
Threat of substitutes so Amazon have kindle (only compatible with Amazon books)
Threat of rivalry so compete on cost, differentiation, focus and ads
Why are financial ratios or statements good? Why May they be bad?
Help attract investment
Don’t consider qualitative, internal/external, intangible assets eg motivation, distorted by inflation
Give examples of political factors impacting firms
Encouraging enterprise such as tender challenge, great bus website, VCT (encourage risky investments with no capital gains tax). Smaller businesses
Infrastructure such as HS2 for consumers and businesses
Regulation such as the FCA or CMA (monitor collusion, mergers, make sure consumer law is met). OFWAT.
Environmental law eg landfill tax and UK being net zero by 2050
Trade agreements eg UK and NZ. No tariffs on export for UK to help growth in NZ.
Give one positive and one negative of tariffs
+Reduces dumping where foreign countries sell excess below cost to make. This would have depressed food prices and therefore incomes of farmers.
-Might import from other countries instead.
Give 1 advantage/disadvantage of external growth
Funds/i____
Often funded by lots of debt to do takeover
Combined creativity = innovation
Benefits of trading blocs
EOS, freer movement of capital and labour, growth, less economic shocks, fdi and tax revenues, cheaper goods
Drawbacks of trading blocs
Trade diversion (only trading with members who might be cheap but inefficient) and excluding non members which = tension,
comply with different rules and regulations is costly
economic dependency on major partners
Loss of sovereignty on setting tariffs or other laws
Give example of Uber not meeting security needs of Maslow
What else have they done in terms of pricing strategies
No sick pay
Predatory price. Setting prices below costs in the short run to eliminate competition.
Give 2 pros, cons and an evaluation to strategic plans. Give eg of business
Clear sense of direction and SWOR benefits
Follow too tightly. Accuracy of forecasts?
Overall, best for stable markets that won’t change eg funeral services. Demand won’t change much even during economic downturns
Give example of what Amazon did that wasn’t maximising profits but still satisfying shareholders
Amazon, which for several years prioritised growth and re-investing any profit into growing the business – it was even willing to run some services at a loss to gain market share. The logic was that because the industry was new, there was a benefit to gaining a strong market share at the start of the industry. Shareholders were happy to hold Amazon stock – even though it wasn’t making profit.
