Centre assessed exam 1

Question 1

What are Porter’s five forces?

Answer 1

• Threat of new entrants
• Buyer power
• Supplier power
• Threat of substitutes
• Rivalry

Question 2

In Porter’s five forces model, what is threat of entrants all about?

Answer 2

How new competitors will affect businesses

Question 3

In Porter’s five forces model, what is buyer power all about?

Answer 3

Buyers want products at a lower price as possible and how much power they have to demand this.

Question 4

In Porter’s five forces model, what is supplier power all about?

Answer 4

How much power suppliers have to demand the highest price possible.

Question 5

In Porter’s five forces model, what is the threat of substitutes all about?

Answer 5

How likely customers are to buy alternative products

Question 6

In Porter’s five forces model, what is the rivalry within the industry all about?

Answer 6

How much competition there is within the industry

Question 7

What are some strategies to raise barriers to entry?

Answer 7

• Patents or trademarks
• Established businesses may take control of distribution channels
• Threatening new entrants with a price war

Question 8

What are some strategies to influence buyer power?

Answer 8

• A company might buy the supplier out

- Similar businesses could form a buying group in order to buy in bulk and offer better deals

Question 9

What are some strategies to influence supplier power?

Answer 9

• Businesses can try to tie buyers into long-term contracts
• Suppliers can use forward integration to gain power
• Businesses could develop new products and patent them to gain supplier power

Question 10

What are some strategies to reduce the threat of substitutes?

Answer 10

• Businesses can make it expensive or difficult to switch to substitutes
• they could differentiate to create more brand loyalty
• Identify gaps in the market and target the needs of these customers

Question 11

What are the main reasons for Market research?

Answer 11

• It helps businesses spot opportunities
• It helps them decide what to do next
• It helps them see if their plans are working

Question 12

What are the setbacks of doing market research?

Answer 12

• Can be expensive

- Bad research can lead to terrible business decision being made

Question 13

What is qualitative research?

Answer 13

It looks into feelings and motivations of consumers through using open-ended questions?

Question 14

What is quantitative research?

Answer 14

It produces numerical statistics through the use of closed-end questions

Question 15

What is primary research?

Answer 15

It is gathered first hand through the use of questionnaires, interviews, surveys and focus groups.

Question 16

What is secondary research?

Answer 16

Secondary research involves the summary of existing research that was collected by someone else.

Question 17

What is SWOT analysis?

Answer 17

It is a four-factor model that details the strengths, weaknesses, opportunities and threats facing a business.

Question 18

What is the equation for Market Capitalisation?

Answer 18

Number of shares issued x current share price

Question 19

What is a zero-hour contract?

Answer 19

This is when employees are not guaranteed any hours on a weekly basis

Question 20

What is a full-time contract?

Answer 20

When employees must work a minimum of 35 hours weekly and are very beneficial financially and security-wise.

Question 21

What is a part-time contract?

Answer 21

Similar to a full-timer but employees can work less than 35 hours a week

Question 22

What type of decisions do SWOT analysis help with?

Answer 22

Strategic decisions

Question 23

What is the current ratio?

Answer 23

Current assets/ current liabilities

Question 24

What is the ROCE equation?

Answer 24

(Operating profit/ equity + non-current liabilities) x100

Question 25

What is the inventory turnover equation?

Answer 25

Cost of sales/average number of stock held

Question 26

What is the payables days equation?

Answer 26

(Payables/ cost of sales) x365

Question 27

What is the receivables days equation?

Answer 27

(receivables/cost of sales) x 365

Question 28

What is the gearing ratio?

Answer 28

(Non-current liabilities/ equity + non-current liabilities) x100

Question 29

What is the chain of command in a tall structure?

Answer 29

Long chains of command

Question 30

What is the chain of command in a short structure?

Answer 30

Short chain of command

Question 31

What is the span of control in a tall structure?

Answer 31

Narrow

Question 32

What is the span of control in a short structure?

Answer 32

Wide

Question 33

What is delayering?

Answer 33

This is the removal of a layer in the hierarchy of a business to decrease costs

Question 34

What are the advantages of a centralised structure?

Answer 34

- Leaders have lots of experience - Decisions are consistent throughout the business - Senior managers are not biased to certain departments - Decisions are made quickly

Question 35

What are the disadvantages of a centralised structure?

Answer 35

- May not be experienced for such large decisions - Can de-motivate employees as they are excluded from decisions - Takes a long time to implement

Question 36

What are the advantages of a decentralised structure?

Answer 36

- Involvement will motivate employees - Employees can use expert knowledge of their sector - Day-to-day decisions can be much quicker

Question 37

What are the disadvantages of a decentralised structure?

Answer 37

- Junior managers may not have the experience - Inconsistencies between departments could occur - Junior managers may not see the overall situation of the business

Question 38

What is the equation for labour productivity?

Answer 38

Output/ number of employees

Question 39

What are ways to increase efficiency?

Answer 39

- Improve worker motivation - Training workers - New technology

Question 40

What is JIT production?

Answer 40

This means only ordering materials when they are necessary in order to minimise storage costs.

Question 41

What is time-based management?

Answer 41

Companies try to be the first to get their product on the market.

Question 42

What are advantages of time-based management?

Answer 42

- It reduces lead time - Gives the company a competitive advantage - More varied product range - Drives innovation by decreasing R&D time

Question 43

What are the advantages of a capital-intensive production?

Answer 43

- Cheaper in the long term - Machinery is more precise - Available 24/7 - Machines are easier to manage than people

Question 44

What are the disadvantages of a capital-intensive production?

Answer 44

- High set-up costs - Machines are inflexible - Can be long delays if machines break - Workers can become demotivated

Question 45

What are the advantages of a labour-intensive production?

Answer 45

- People are flexible and can be retrained - Cheaper for small-scale production - Cheaper if Low-cost labour is available - Workers can solve problems and input ideas

Question 46

What are the disadvantages of a labour-intensive production?

Answer 46

- It's harder to manage people than machines - People can be unreliable - People need breaks or holidays - People will demand higher wages

Question 47

What is the market share equation?

Answer 47

company sales / total sales x 100