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Business Unit 2 > BUSS2 > Flashcards

BUSS2 Flashcards

1
Q

What are the two main approaches to budgeting?

A

Historical

Zero based

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2
Q

What is historical budgeting?

A

Use last years figures as a basis
Realistic as based on actual results
Circumstances may have changed
Does not encourage efficiency

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3
Q

What is zero based budgeting?

A

Budgeting costs and revenues are set to zero
Built from the bottom up
Based on new proposals for sales and loss
Makes budgeting more complicated and time consuming

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4
Q

What are three times of budgets?

A

Income
Expenditure
Profit

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5
Q

What are ways budgets are used in a business?

A 
Establish priorities and set targets
Provide direction and coordination
Assign responsibilities
Delegate without loosing control
Monitor performance
Control revenues and costs
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6
Q

What do budgets do?

A

Set out financial targets
Expressed in money
Provide a yardstick against which success/failure can be measured
Motivate staff to make it clear what they must achieve
Ensure there is no under or over spending

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7
Q

What are the potential benefits of training?

A 
Better productivity 
Higher quality
More flexibility 
Less supervision 
Improved motivation
Better recruitment
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8
Q

What is off the job training?

A

Employee receives training away from the workspace

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9
Q

What are benefits of off the job training?

A

Wider range of skills of qualifications can be obtained
Can be learnt from outside specialists
Employees more confident

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10
Q

What are the drawbacks of off the job training?

A 
More expensive (transport)
Lost working time
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11
Q

What is on the job training?

A

Receives training whilst remaining in the work place

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12
Q

Benefits of on the job training?

A

Most cost effective
Employees are productive
Opportunity to learn whilst doing

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13
Q

Drawbacks of on the job training?

A

Quality depends on the ability of the trainer and time available
Bad habits passes on
Potential disruption to production

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14
Q

Benefits of external recruitment

A

Outside people give new ideas
Larger pool of workers to find best and suitable candidate
Wide range of experience

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15
Q

Drawbacks of external recruitment

A

Longer process
Expensive (advertising, interviews, training)
Selection process may not be effective to someone suitable

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16
Q

Benefits of internal recruitment?

A

Cheaper and quicker
People know how business operates
Provides opportunities for promotion

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17
Q

Drawbacks of internal recruitment

A 
Business already knows strengths and weaknesses of candidate
Limited number of applicants
No new ideas
Demotivate others who weren't chosen 
Creates another vacancy
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18
Q

What is internal recruitment?

A

Jobs given to staff already employed by the business

Promotion and reorganisation

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19
Q

What is external recruitment?

A 
Job centre
Job advertisement
Recruitment agencies
Headhunting
Personal recommendation
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20
Q

What are the factors affecting absenteeism?

A 
Significant business cost
Sickness
Bereavement 
Bullying
Stress
"Playing the system"
Predictable
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21
Q

What are possible solutions for absenteeism?

A

Understand causes
Set targets and monitor trends
Have a clear sickness policy
Positive rewards for attendance

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22
Q

What are the factors affecting labour productivity?

A

Extent and quality of equipment
Skills, ability and motivation of the workforce
Methods of production organisation
External factors (suppliers)

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23
Q

Possible ways to improve labour productivity

A

Measure performance and set targets
Streamline production processes
Invest in capital equipment
Invest in training

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24
Q

What are the factors affecting staff turnover?

A 
Industry practice 
Employee loyalty 
Economic conditions 
Size and ownership of business
Financial rewards
Working conditions
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25
Q

Possible improvements of staff turnover

A

Effective recruitment and training
Provide good and competitive pay
Job enrichment
Reward staff loyalty

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26
Q

What are the key costs to a business of staff turnover?

A

Higher recruitment and training costs
Increased pressure on remaining staff
Disruption to production
Harder to maintain required standards of quality and customer service

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27
Q

What is staff turnover?

A

Percentage of staff who leave during a period

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28
Q

What is labour productivity?

A

Output per employee

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29
Q

What is absenteeism?

A

Percentage of staff who are absent from work

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30
Q

What is delayering?

A

Removing layers of management from the hierarchy of the organisation

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31
Q

Advantages of delayering?

A

Low labour costs

Fast decision making

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32
Q

Disadvantages of delayering?

A

Less opportunity for promotion

Demotivating effect of disruptions, stress?

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33
Q

What are tall hierarchies?

A

Many layers of hierarchy
Narrow spans of control
Allows tighter control and less delegation
Promotion opportunities
Larger communications
More layers means more staff means more costs

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34
Q

What are flat hierarchies?

A 
Few layers of a hierarchy 
Wide span of control
Less direct control, more delegation
Fewer promotion opportunities
Vertical communication improved
Fewer layers meaning fewer staff meaning fewer costs
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35
Q

What is delegation?

A

Assignment to others of the authority for particular functions, tasks and decisions

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36
Q

Advantages of delegation

A

Reduces management stress
Subordinates are motivated
Good on the job training

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37
Q

Disadvantages of delegation

A

Depends on the quality or experience of the subordinate
Harder in a smaller firm
May increase work load and stress of subordinates

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38
Q

What are the challenges faced for management when changing organisational structure?

A

Manager and employee resistance
Disruption and de motivation making potential problems
Costs (redundancies)
Negative impact on customer service or quality

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39
Q

Why change the organisational structure?

A

Growth- formal structure is appropriate
Reduce costs and complexity
Employee motivation is boosted
Customer service or quality improvement

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40
Q

How does the size of the business determine the organisational structure?

A

Small businesses tend to have flat hierarchal structures

Large businesses tend to have complicated structures with more layers of hierarchies

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41
Q

How does the type of business influence the organisational structure?

A

Operate in several locations? Service or manufacturing? Overseas?
How skilled is the workforce?

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42
Q

How does the management and leadership style influence the organisational structure?

A

Autocratic- result in a different structure compared with where leaders delegate responsibility

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43
Q

How does the competitive environment influence the organisational structure?

A

Use of distribution channels, suppliers, competitors actions

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44
Q

Problems in setting budgets

A

Lack experience of knowledge in the main costs
Arrogant boss may impose rather than discuss targets or budgets
Takes time to manage
Needs to be changed as the circumstances do
Results in short term decisions to keep within the budget

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45
Q

Features of a narrow span of control

A

Allows for closer supervision of employees
More layers in the hierarchy may be required
Effective communication

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46
Q

Features of wide span of control

A

Give subordinates chance for more independence

More appropriate if labour costs are significant which reduces the number of managers

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47
Q

What are income budgets?

A

Target set for amount of revenue to be achieved in a set time period
Split by products, services or departments
Translated into individual sales targets for staff

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48
Q

What are expenditure budgets?

A

Split by department, function or product
Responsibility can be passed onto individual managers
Cash outflow
Monitors under and over spending

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49
Q

What are profit budgets?

A

Target set for the surplus between income and expenditure in a given period of time
Highlight potential and feasibility of the business

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50
Q

What are the main causes of cash flow problems?

A 
Low profits
Too much production capacity
Too much stock
Allowing customers too much credit
Seasonal demand
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51
Q

What are the main causes of cash flow problems?

A 
Low profits or losses
Too much production capacity
Too much stock
Allowing customers too much credit
Overtrading-growing too fast
Unexpected changes in the business
Seasonal demand
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52
Q

Short term ways to improve cash flow

A

Cut costs
Reduce current assets
Increase current inabilities
Sell surplus fixed assets

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53
Q

Long term ways to improve cash flow

A

Improve efficiency and productivity
Increase equity finance
Increase long term liabilities
Reduce spending on fixed assets

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54
Q

What is debt factoring?

A

A firm buys the amounts outstanding from customers

Factoring firm chances the debts

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55
Q

Benefit of factoring

A

Short term cash inflow

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56
Q

Cost of factoring

A

Usually 10 to 15% of value of debts bought, not all money is gained back

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57
Q

What are the sales of assets?

A

Converting fixed assets
Can be significant depends on the assets held
Can only be done once
Do the assets contribute towards profitable activities?

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58
Q

What are variances?

A

Difference between actual and budget figures

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59
Q

What is a favourable variance?

A

Actual figures are better than budgeted

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60
Q

What are adverse variances?

A

Actual figures are worse than budgeted

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61
Q

Why should businesses aim to improve profit?

A

Earn better return for investors
Stop businesses from suffering losses
Improve internal sources of finances
Provide s better return on investment made in new products of capacity

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62
Q

What is motivation?

A

The will to work

Comes from enjoyment of work itself and/or from desire to achieve certain goals

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63
Q

Methods to motivate employees

A

Financial

Non-financial

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64
Q

Advantages of a well-motivated workforce

A 
Better productivity 
Better quality and customer service
Lower levels or absenteeism
Lower levels of staff turnover
Lower training and recruitment costs
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65
Q

What are the key motivational theorists?

A 
Taylor
Mayo
Maslow
Herzberg
McGregor
Drucker
Peters
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66
Q

What are the main financial incentives at work?

A

Wages- paid per hour worked and received money at the end of the week/month
Salaries-annual salary which is paid at the end of each month
Bonus system- usually only paid when certain targets have been achieved
Commission- pay based accordingly to value or volume of sales
Profit sharing- employees receive a proportion of company’s profits
Fringe benefits- company car, private health care, free meals

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67
Q

What are key non-financial incentives for employees?

A

Empowerment- delegate power to employees so they can make their own decisions
Praise
Promotion
Job enrichment - giving more challenging and interesting tasks

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68
Q

What is job enrichment?

A

Giving workers more interesting and challenging tasks

Seen as more motivating as it gives workers chance to further themselves

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69
Q

What is job enlargement?

A

Giving workers more tasks to do of a similar nature

Increasing the number of responsibilities that an employee has in order to increase motivation

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70
Q

What is the difference between time based pay and merit based pay?

A

Merit based- quality of work

Time based- number of hours worked

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71
Q

Two advantages of time based pay

A

Exact amount of work you do even overtime

Easy to work out pay

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72
Q

Two disadvantage of time based pay

A

If the staff work lots it could cost the business lots of money
Company controls the amount of hours worked
Less incentive to work hard

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73
Q

Advantages of piece rate

A

Motivated staff to make more money

Lots of finished products for the company

74
Q

Disadvantages of piece rate

A

Work could be rushed, affecting quality

Could cause stress to employees

75
Q

What is job rotation?

A

Varying the tasks that an employee does to reduce boredom and increase the resign or skills the worker has (multi tasking)

76
Q

What is the purpose of an organisational structure?

A

Design of organisation
Chain of command (reporting system from top to bottom of the hierarchy)
How different functions fit together (marketing, personnel)
Levels of hierarchy
Span of control
Channel of communication with

77
Q

Role of responsibility in the organisational structure?

A

Different tasks individuals are responsible for

Carrying the burden of blame even if it were your subordinate that made the mistake

78
Q

Roles of authority in the organisational structure?

A

Having the power to make a decision or carry out a task

Manager has to consider carefully who they delegate tasks to

79
Q

Role of accountability in the organisational structure?

A

The extent to which an individual is held responsible for their decisions/actions

80
Q

Two types of directors?

A

Executive- appointed to the board and head up important decisions
Nonexecutive- part time directors from outside the business

81
Q

Describe the recruitment process?

A

Job becomes available-job description-personal spec.-place advert-applicants apply(cv, cover letter, application form)-the business shortlists-interview-testing-appointment-induction training

82
Q

What is a personal specification?

A

Describes the type of person the business is looking for

83
Q

What is included in a personal spec.?

A 
Experience 
Qualifications 
Job title
Key skills
Personal attitudes
84
Q

Advantages and disadvantages of interviews

A

Advantages- can help identify whether the recruit is the right sort of person
Disadvantages- recruiters can be over influenced by a candidates appearance and social skills

85
Q

Advantages and disadvantages of assessment centres

A

Advantages-Opportunity to examine skills of team working end leadership
Disadvantages- may allow someone who is quiet to slip through the net

86
Q

Advantages and disadvantages of references

A

Advantages- important to check degree at success at previous job
Disadvantages-the writer may not be open about the candidates weaknesses

87
Q

Advantages and disadvantages of tests

A

Advantages- can access attitudes

Disadvantages- can only show what the individual knows already, not what they learn in the future

88
Q

Ways businesses should aim to improve profits

A

Earn better return for investors
Stop the business suffering from losses
Improve internal sources of finance
Provide a better return on investment

89
Q

Ways to increase profits

A

Sales - increase quantity sold or raise prices
Variable costs reduced
Fixed cost reduced
Reduce overheads

90
Q

Why does trying to sale more volume increase profit? Will the strategy work?

A

Higher volumes mean higher revenues and potentially higher market share
The strategy may work depending on the price elasticity of demand and competitors actions

91
Q

Why try to increase selling prices for a higher profit? Will it work?

A

Higher prices meaning higher sales (if the quantity sold doesn’t fall)
Customers may think the product is a higher quality as that’s normally associated with a higher price
No need for extra capacity
The strategy may work depending on the price elasticity and if the customers remain loyal

92
Q

Why would increasing production output lead to a higher profit? Will it work?

A

Provides more quantity of the sold product
Spreads fixed costs over more units
The strategy would work depending if the extra output can be sold and if it has spare capacity
However, fixed costs may actually rise

93
Q

Why would reducing fixed costs and overheads lead to and increase in profits? Will it work?

A

Drop in fixed costs leads to higher profits
Reduces the breakeven output
It will work depending on if the fixed costs cut do not affect quality, customer service or output

94
Q

Ways to measure production efficiency

A

Productivity

Unit costs

95
Q

How does productivity help measure production efficiency

A

Measures the relationship between the inputs into the production process and the outputs

96
Q

How do unit costs help measure production efficiency

A

Divide total costs by the amount of units produced, a fall in ratio would indicate that efficiency was improving

97
Q

What is capacity?

A

The maximum output that a business can produce in a given period with the available resources

98
Q

What is capacity utilisation?

A

The percentage of the total capacity that is actually used or achieved in a given period

99
Q

Why don’t firms operate at full capacity?

A

Low demand - loss of market share, seasonal
New technology introduced
Inefficiency - poor maintenance, quality

100
Q

Ways to improve productivity

A 
More training
Improved motivation
Better capital equipment
Better quality raw materials
Improved organisation of production e.g. less wastage
101
Q

How to add capacity in the short term

A

Increase hours by extra shifts, encourage overtime, temporary staff
Reduce time spent maintaining production equipment

102
Q

Problems of working at full capacity

A 
Negative effect on quality 
-Production is rushed
-Less time for quality management
Employees suffer
- Added stress
Loss of sales
- Less able to meet sudden or unexpected increases in demand
103
Q

What is operations management?

A

Managing the process involved in producing goods or providing services

104
Q

What is the ideal level of capacity?

A

90%

105
Q

How do you work towards full capacity?

A

Increase demand- marketing, extra promotion, cutting prices, new products or new markets
Cut capacity- cut down shifts, sell machinery, make staff redundant

106
Q

What is a long term effect of utilisation?

A

Economic recession

107
Q

How can you deal with non standard orders?

A

Risky if order is temporary
Initial sub-contract production to another factory
See if extra demand is permanent
Extra costs to produce involving overtime

108
Q

What is quality?

A

Meeting the needs and expectations of customers

109
Q

What is quality control and how is it done?

A

The inspection of products as a part of a SAMPLING process to ensure the right quality standards have been achieved

  • Traditional way
  • Concerned with checking and reviewing production
  • Mainly about detecting problems rather than preventing them
110
Q

What are some common problems with quality control?

A

More wastage
Costly
Often at the end so too late
Not compatible with modern production systems

111
Q

What is quality assurance and how is it done?

A

Organising every process to get the product ‘right the first time’ and prevent mistakes ever happening by checking the product throughout the process

  • well controlled as quality is built in
  • reliable
  • less wastage
  • reassurance from customers
112
Q

What is the ISO9000?

A 
International standard for quality
Companies document their business procedures
Benefits:
- Less waste
- Cost savings
- Fewer mistakes
- Increased efficiency
- Improved competitiveness
- Increased profits
113
Q

What is TQM?

A 
Total quality management where there is commitment from the whole organisation and draws in closely with 'Kaizen' (Japanese quality- continuous improvement)
Deeply rooted
Shows in after sales service
Lacks clear, concrete programme
Expensive - training
114
Q

Comparisons between quality control and quality assurance

A 
QA- focuses on processes
QC- focuses on outputs
QA- achieved by improving production processes
QC-achieved by sampling
QA- targeted at the whole organisation
QC-targeted at production activities 
QA-quality is built into the product
QC-defect products are inspected out
115
Q

What is customer service?

A

The way businesses look after their customers

116
Q

Benefits of satisfied customers

A

Repeat purchase
Recommend businesses to friends
Respond to promotional campaigns
Loyalty

117
Q

Why customer service is important in a business

A

Part of the package of benefits that a customer buys
Provides a way to differentiate a product
Help keep customers and win new ones
Make customers feel valued
Important source of customer feedback
Helps attract good quality employyes

118
Q

Ways a business can deliver good customer service

A

Listen to complaints and compliments as they highlight areas for improvement
Build trust by keeping promises, deliver when they say they will
Take complaints seriously and have a friendly system of dealing with complaints
Get it right the first time which saves money and time if customers are handled well
Make the most of staff by investing in training and valuing them, empower them to deal quickly with complaints
Go the extra mile

119
Q

Factors that affect customer expectations

A

Price - expect more for a premium price product
Previous experience - what happened the last time?
Reputation - what do other customers say?
Competitors - how do they compare?
Promotion - what has been promised by advertisement?

120
Q

What is a supplier?

A

A supplier is a business or an individual that provides goods and services to another business

121
Q

Why are suppliers important?

A

Business to meet the needs and wants of the customers
Suppliers determine many of the costs of the business
Closely linked to product quality
Important source of finance (trade credit)

122
Q

Characteristics of an effective supplier

A 
Price
Quality and reliability
Flexibility
Communication
Financially secure
Capacity - able to handle increased volumes of supply
123
Q

How to find a good supplier

A

Word of mouth
Trade associations
Exhibitions
Direct marketing and advertising

124
Q

How a good supplier can improve business competitiveness

A

Lower purchase costs- better prices from a supplier lower the costs of a business
Better quality- crucial for a business to satisfy customers
Improved customer service- fewer later deliveries
Increased productivity- fewer production delays, less wastage
More flexible capacity- ability of a business to work with suppliers to meet a sudden increase in demand

125
Q

What are the main businesses technology?

A 
Robots
Stock control programs
Automation
Design software systems
Communications
126
Q

Advantages and disadvantages of robots

A 
Advantages;
- Speed, accuracy and efficiency
- Reliable quality, less waste
- Handle boring, repetitive or hazardous tasks
- Reduce unit costs
Disadvantages;
- Up-front investment
- De-motivating for displaced staff
127
Q

What is CAD?

A

Computer aided design

Designing ideas on computer rather by hand, can see designs in 3D

128
Q

What is CAM?

A 
Computer aided manufacturing
Integrated, high accurate production
Pros;
allows designs to be saved and altered
easy to send designs to other countries
risks of errors reduced
cons;
need initial investment to buy equipment
training required
129
Q

What is marketing?

A

The process of identifying, anticipating and satisfying customer needs profitably

130
Q

What is the purpose of marketing?

A

To use market research and other methods to understand customers (identify)
Analyse data and use marketing skills to judge marketing opportunities (anticipating)
Do everything possible to provide develop products that meet customer needs and provide great customer service (satisfying)

131
Q

What is a niche market?

A

Business targets a smaller segment of a larger market, where customers have specific needs and wants

132
Q

Advantages of niche markets

A 
Less competitions
Clear focus - target particular customers
Builds up specialist skill and knowledge
Can often charge a higher price
Profit margins are higher
Loyal customers
133
Q

Disadvantages of niche markets

A

Likely to attract competition

Vulnerable to market changes

134
Q

What is mass marketing?

A

Where a business sells into the largest part of the market, where there are similar products offered by competitors

135
Q

What are the key features of a mass market?

A

Customers form majority in the market
Customer needs and wants are less specific
Associated with higher production output
Successfully usually associated with low cost operations

136
Q

What is the importance of product in the marketing mix?

A

Products are at the heart of marketing, the product needs to exist in order for the other elements to happen

137
Q

What are the key stages of the product life cycle?

A

Development- often complex, may not be successful
Introduction- usually a low level of sales and low capacity utilisation
Growth- expanding market but arrival of competitors, cash flow may become positive
Maturity- slower sales growth as rivals enter the market, intense competition, high level of capacity utilisation
Decline- product loses popularity, falling sales, more competitiors leave the market

138
Q

Which part of the boston matrix has high growth and high market share?

A

Stars

139
Q

Which part of the boston matrix has high growth and low market share?

A

Problem Child

140
Q

Which part of the boston matrix has low growth and high market share?

A

Cash Cow

141
Q

Which part of the boston matrix has low growth and low market share?

A

Dogs

142
Q

What is a USP?

A

A characteristic of a product which makes it highly differentiated from other products

143
Q

What are physical benefits of a product?

A

Looks good, tastes good if edible

144
Q

What are psychological benefits of a product?

A

Whether the brand image is what the consumers want

145
Q

What are influences on new products?

A

Technology
Competitors actions
Entrepreneurial skills of managers and owners

146
Q

What is market share?

A

The proportion or percentage of the market owned by each competitor or product

147
Q

What is promotion?

A

The ways in which a business communicated with existing and potential customers to encourage demand

148
Q

What is the promotional mix and what are the elements of it?

A 
Stages in the product life cycle
- Advertising and PR in launch stage
Nature of the product
Competition
Market budget
Market strategy
Target market
149
Q

What is advertising?

A

Paid for promotion

150
Q

Advantages of advertising

A

Wide coverage
Control of message
Repetition - stuck in peoples heads
Used to build brand loyalty

151
Q

Disadvantages of advertising

A 
Often expensive
Impersonal
One way communication
Lacks flexibility
Limited ability to close a sale
152
Q

What are the uses of promotion?

A

Increase sales, attract new customers

153
Q

What is branding?

A

Best form of promotion
Distinctive and lasting identity
Considerable time and marketing effort

154
Q

Advantages of branding

A 
Reduces amount spent on promotion
Loyalty
Repeat purchase
Easier to persuade retailers
Charge premium prices
155
Q

What is sales promotion?

A

Tactical, point of sale material or other incentives designed to stimulate purchases

  • Coupons
  • Money off
  • Loyalty points
  • Free samples
156
Q

Advantages of sales promotion

A

Effective at achieving quick boosts of sales

Encourage customers to trail a product or switch brands

157
Q

Disadvantages of sales promotion

A

Sales effect may only be short term
Customers may come to expect or anticipate further promotion
May damage brand image

158
Q

What is personal selling?

A

Promotion on a person to person basis
Two way communication
Meeting with potential customers to close a sale
Telephone, meetings, knocking on doors

159
Q

Adv of personal selling

A

High customer attention

Message is customised

160
Q

Disadv of personal selling

A

High cost

161
Q

What is public relation?

A

Activities that create good will towards an individual, business, cause or product
Aims to publise the business
Build image and reputation

162
Q

What is price?

A

The money charged for a product or service

163
Q

What are the factors that affect what price is charged?

A 
Cost of production
Competitors
Customers perception
The firm's objectives
Target market
Stages in the product life cycle
Likely reaction from customers
State of the economy
164
Q

Why is price an important element of the marketing mix?

A

Price cannot be set in isolation from other elements of the mix
The choice of price directly affects the revenue and profit earned by a product and firm
The way in which a product is perceived by potential customers is directly affected by price

165
Q

What is price skimming?

A

Setting high price to maximise profit
Product is sold to different market segments at different times
Best used in introduction or early growth state of product life cycle
Electronic items is an example

166
Q

What is penetration pricing?

A

Introduce a new product at a lower price than competitors
Aim is to gain market share quickly
Build customer loyalty
Opposed to price skimming
Price is raised once target market share is reached

167
Q

What is prestige pricing?

A

High price to enhance or reinforce a products high quality, luxury image
High price is maintained throughout the life of the product
Chanel

168
Q

What is a price war?

A

Competitive price reductions by firms in a competitive industry

169
Q

What is place and why does it matter?

A

Place refers to the way in which a product or service is distributed from the producer to the final consumer

170
Q

What is a distribution channel?

A

Moves a product from production to consumption

171
Q

What is each party in a distribution channel called?

A

Intermediary

172
Q

What are the main types of intermediaries in distribution channels?

A

Retailer
Wholesaler
Distributor
Agent

173
Q

Why use intermediaries instead of selling directly to customers?

A

Customers may live too far away
Better use of resources elsewhere
Lack of retailing experience
Segmentation - different segments of the markets can be best reached by different distribution channels

174
Q

What does selling direct do?

A

Retains more profit margin
QVC
Direct mailing
Telemarketing

175
Q

What factors influence the choice of distribution?

A

The market- nature and extent of competition
The business- size, nature
Nature of the product- fragile, customised, complex?

176
Q

What is competitiveness?

A

The ability of a business to deliver better value to customers than competitors

177
Q

What are the key benefits of USPs?

A

A way to differentiate
Doesn’t have to compete on price
Higher profitability

178
Q

What is Porter’s five forces model into measuring market attractiveness?

A 
Power of customers
Power of suppliers
Threat of market entry
Threat from substitutes 
Intensity of Rivarly
179
Q

What are barriers to entry of a market?

A

Product differentiation

Access to raw materials and distribution channels

180
Q

What is oligopoly?

A

Competition between a small number of suppliers

181
Q

What can a business do to protect against market forces?

A

Customer reliance - focus market on profitable customers
Supplier reliance - build relationships
Barriers to entry to the market - build a strong brand

Business Unit 2 (3 decks)

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