Business P1 04 Flashcards
two features of the public sector
1)non-excludable: this means that individuals cannot be prevented from enjoying the benefits of the provision of public goods or services.
2)Non-rivalry: this means that one person gaining from consumption of a good or service does not prevent others from also gaining from the good or service; services are available for everyone to benefit from e.g.the NHS
define YED
measures how sensitive demand is to a change in income.
One advantage and disadvantage of using a bank loan as a source of finance
(+)A business can gain large sums of money, which can then be used for purchasing more expensive assets such as land or machinary
(-)Businesses have to pay interest on the loan, which therefore means they have to pay more than they borrowed
CPU formula
selling price per unit - variable costs per unit
Break even output
fixed costs/CPU (SP-VC)
4 reasons why consumers need to be protected
- Consumers also need to be given protection when buying goods online. The goods may not arrive at all or may not be as described. If there was no protection the consumer would not be able to return the goods or get a refund
-Weights and measures need to be checked to make sure that consumers are not overcharged for anything
-Consumers may be misled into thinking something is a bargain because they have been misled about prices, such as the example of being offered Pepsi for £1, when it was advertised as “previously £1.98”.
-Some consumers are particularly vulnerable, e.g. pensioners.
two different types of pricing strategies that can be used by a supermarket and two reasons why they may be ineffective
-A supermarket might use cost-plus pricing, where it adds its normal profit margin to the cost that it purchases the goods, this should ensure that the business maintains satisfactory profit levels. The price may not be competitive.
-A supermarket might use loss leader pricing, for example on a staple product such as bread, in order to attract customers into the shop. This can be expensive and may not be effective in getting customers to purchase other items.
Two impacts on a business if it does not manage its cash flow effectively
-If this is not controlled, i.e., if the money flowing out of the business exceeds the amount coming in (the net cash flow is negative) for any length of time there can be serious consequences for the business.
1)May not be able to pay rent ->nowhere to produce ->result in failure
2)May not be able to pay wages
3)may not be able to pay suppliers whoich could bring production to a holt
Evaluate ways in which the cash flow situation of a business can be improved (3)
1)A business might try to increase its revenue by raising its prices but, if the demand for its products is elastic, this strategy will not work.
2)The business might try to reduce its costs but this might have an impact on quality. Additionally if the attempt to decrease wages, this can have a significant negative effect on employees motivation
->damage brand rep
3)A business might try to delay payment to its suppliers but this may result in the supplier refusing to supply any more materials.
Define lean production
Lean production aims to remove all elements of waste from the production process and, as a result increase productivity and reduce costs. This involves the use of just-in-time systems, Kaizen, Kanban, cell production and time-based management methods.
Impact of lean production
-Lean production aims to remove all elements of waste from the production process and as a result increase productivity and reduce costs. The most important elements of a lean production system are just-in-time, Kaizen, Kanban, cell production and time-based management methods.
Impact of lean production (kaizen)
-Kaizen will mean that the method of production and the quality of the products will be continuously improved. ->increased quality and productivity ->brand rep
Impact of lean production (kanban)
-Kanban will mean that there will be no time wasted waiting for dishwasher parts, as these will be on the production line ready to be used
->efficiency
Lean production (time-based management)
Time-based management will ensure that goods are produced as quickly as possible so that the customers receive their goods promptly. It also means that new models can be developed quickly, thus making sure that the dishwashers include the most up-to-date technology. This will make the business more competitive.
ledership styles A01 incl what the 5 types of styles are
There are different leadership styles – autocratic, democratic, paternalistic, bureaucratic and laissez-faire. Each of these styles is appropriate in different circumstances. The use of an inappropriate style may cause more harm than good and either result in a workforce that is insufficiently directed or a workforce that is frustrated by too much control.
McGregors theory x and theory y managers
theory x - believe workers have little/no ambition and areonly motivated financially. they believe that employees should be supervised strictly
theory y - involve employees in decision making and believe that they cannot be motivated by money alone
can one leadership style be appropriate for all businesses (12)
(3p’s and 3h’s)
p1- no autocratic
p2- yes democratic
p3-no laissez faire
No - autocratic leadership style would not be suitable for all as it can be demotivating and restricting ->lack of inevation
H-theory x managers would believe that this method is most effective
Yes - democratic ->involves employees in decision making but has the final say
H- would not be suitable for large businesses with taller structures (unrealistic + not everyone can get involved)
No - laissez fair would not be suitable for employees in high risk workplaces that require strict health and safety regulations
H- could be argued that with the correct training and trust in employees it could be possible.
conclusion for leadership style
no but it depends on how effectively employees and employers respond to chang etc
