Chapter 9 Cost-effective operations and competitiveness Flashcards
Chapter 09
How can costs be lowered?
Edexcel 2BS01 Business Studies GCSE Unit 3.2
Costs can also be reduced in a number of ways.
- Improved purchasing methods
- Relocation
- Better product design
- Cutting overhead costs
Chapter 09
How can developing new products allow a company to increase its competitiveness?
Edexcel 2BS01 Business Studies GCSE Unit 3.2
Reasons why new product development increases competitiveness:
• Gain more customers
• Increased profitability
• Better to launch new products before rivals
• Enhances the brand
Reasons why new product development may not increase competitiveness:
• Expensive to develop
• Risk of failure
• Other features may be more important (e.g. promotion)
• Lack of competition = no need
• Innovation can be easily copied
Chapter 09
How can productivity be increased?
Edexcel 2BS01 Business Studies GCSE Unit 3.2
Labour productivity can be raised in a number of ways.
- Training
- Using better equipment
- Using efficient working practices
- Re-organising production lines and work spaces
- Giving people more control over their working lives (maybe by working from home)
Chapter 09
How do lower costs feed through to lower competitive prices?
Edexcel 2BS01 Business Studies GCSE Unit 3.2
Cutting costs can mean that lower prices can be offered.
Prices need to remain competitive in order to survive.
If prices are too high then customers will not buy the goods or services.
Chapter 09
How can improving productivity improve the competitiveness of a business?
Edexcel 2BS01 Business Studies GCSE Unit 3.2
Possible points - Improved productivity: • Lower units costs • Allows a lower price to be charges • Increases profit • Increased efficiency
Chapter 09
How can improving the quality of a product improve the competitiveness of a business?
Edexcel 2BS01 Business Studies GCSE Unit 3.2
Possible points - Product quality: • Adds value • Allows a premium price to be charges • Higher profits • Makes demand price insensitives • Increases customer loyalty • Allows a business to out-compete rivals
Chapter 09
What are the benefits of improving productivity?
Edexcel 2BS01 Business Studies GCSE Unit 3.2
Possible points: • Higher profits • Lower unit costs • Increased competitiveness • Lower break-even point
Chapter 09
What are the benefits to a business resulting from high quality design of its products?
Edexcel 2BS01 Business Studies GCSE Unit 3.2
Possible points - Product quality: • Adds value • Allows a premium price to be charges • Higher profits • Makes demand price insensitives • Increases customer loyalty • Allows a business to out-compete rivals
Chapter 09
What is meant by productivity?
Edexcel 2BS01 Business Studies GCSE Unit 3.2
This is the total output per worker.
It is calculated by the following formula:
Total Output ÷ Number of workers = Productivity
Chapter 09
What is meant by the term ‘competitiveness’?
Edexcel 2BS01 Business Studies GCSE Unit 3.2
Competiveness is where a firm has higher productivity than its rivals. This allows the firm to have lower prices and win customers from their competition.
Chapter 09
Why are higher productivity and lower costs important in managing overall costs?
Edexcel 2BS01 Business Studies GCSE Unit 3.2
Increasing productivity and lowering costs wherever possible is important.
There are certain costs that a business cannot control, such as gas and electricity and so businesses need to control what they can in order to ensure profit levels are maintained.
