Centre assessed exam 1 Flashcards
What are Porter’s five forces?
- Threat of new entrants
- Buyer power
- Supplier power
- Threat of substitutes
- Rivalry
In Porter’s five forces model, what is threat of entrants all about?
How new competitors will affect businesses
In Porter’s five forces model, what is buyer power all about?
Buyers want products at a lower price as possible and how much power they have to demand this.
In Porter’s five forces model, what is supplier power all about?
How much power suppliers have to demand the highest price possible.
In Porter’s five forces model, what is the threat of substitutes all about?
How likely customers are to buy alternative products
In Porter’s five forces model, what is the rivalry within the industry all about?
How much competition there is within the industry
What are some strategies to raise barriers to entry?
- Patents or trademarks
- Established businesses may take control of distribution channels
- Threatening new entrants with a price war
What are some strategies to influence buyer power?
- A company might buy the supplier out
- Similar businesses could form a buying group in order to buy in bulk and offer better deals
What are some strategies to influence supplier power?
- 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
What are some strategies to reduce the threat of substitutes?
- 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
What are the main reasons for Market research?
- It helps businesses spot opportunities
- It helps them decide what to do next
- It helps them see if their plans are working
What are the setbacks of doing market research?
- Can be expensive
- Bad research can lead to terrible business decision being made
What is qualitative research?
It looks into feelings and motivations of consumers through using open-ended questions?
What is quantitative research?
It produces numerical statistics through the use of closed-end questions
What is primary research?
It is gathered first hand through the use of questionnaires, interviews, surveys and focus groups.
What is secondary research?
Secondary research involves the summary of existing research that was collected by someone else.
What is SWOT analysis?
It is a four-factor model that details the strengths, weaknesses, opportunities and threats facing a business.
What is the equation for Market Capitalisation?
Number of shares issued x current share price
What is a zero-hour contract?
This is when employees are not guaranteed any hours on a weekly basis
What is a full-time contract?
When employees must work a minimum of 35 hours weekly and are very beneficial financially and security-wise.
What is a part-time contract?
Similar to a full-timer but employees can work less than 35 hours a week
What type of decisions do SWOT analysis help with?
Strategic decisions
What is the current ratio?
Current assets/ current liabilities
What is the ROCE equation?
(Operating profit/ equity + non-current liabilities) x100
What is the inventory turnover equation?
Cost of sales/average number of stock held
What is the payables days equation?
(Payables/ cost of sales) x365
What is the receivables days equation?
(receivables/cost of sales) x 365
What is the gearing ratio?
(Non-current liabilities/ equity + non-current liabilities) x100
What is the chain of command in a tall structure?
Long chains of command
What is the chain of command in a short structure?
Short chain of command
What is the span of control in a tall structure?
Narrow
What is the span of control in a short structure?
Wide
What is delayering?
This is the removal of a layer in the hierarchy of a business to decrease costs
What are the advantages of a centralised structure?
- Leaders have lots of experience
- Decisions are consistent throughout the business
- Senior managers are not biased to certain departments
- Decisions are made quickly
What are the disadvantages of a centralised structure?
- May not be experienced for such large decisions
- Can de-motivate employees as they are excluded from decisions
- Takes a long time to implement
What are the advantages of a decentralised structure?
- Involvement will motivate employees
- Employees can use expert knowledge of their sector
- Day-to-day decisions can be much quicker
What are the disadvantages of a decentralised structure?
- Junior managers may not have the experience
- Inconsistencies between departments could occur
- Junior managers may not see the overall situation of the business
What is the equation for labour productivity?
Output/ number of employees
What are ways to increase efficiency?
- Improve worker motivation
- Training workers
- New technology
What is JIT production?
This means only ordering materials when they are necessary in order to minimise storage costs.
What is time-based management?
Companies try to be the first to get their product on the market.
What are advantages of time-based management?
- It reduces lead time
- Gives the company a competitive advantage
- More varied product range
- Drives innovation by decreasing R&D time
What are the advantages of a capital-intensive production?
- Cheaper in the long term
- Machinery is more precise
- Available 24/7
- Machines are easier to manage than people
What are the disadvantages of a capital-intensive production?
- High set-up costs
- Machines are inflexible
- Can be long delays if machines break
- Workers can become demotivated
What are the advantages of a labour-intensive production?
- 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
What are the disadvantages of a labour-intensive production?
- It’s harder to manage people than machines
- People can be unreliable
- People need breaks or holidays
- People will demand higher wages
What is the market share equation?
company sales / total sales x 100
