Evaluation / Pros And Cons Flashcards
What qualities does an entrepreneur need
- Well rounded
- innovative
- resilient ( able to bounce back )
- risk taker
- committed
Pros of private sector
Focus on profits means a business wants to provide what is demanded to a high quality
Focus on profits means business want to be efficient and not waste resources
Pros of Public sector
Focus on what is beneficial for society rather than profitable
Doesn’t exploit or mislead customers
Pros of sole trader
Making own decisions can be motivating
Setting up is easy
Decisions making is quick and responds rapidly to change in market
Take home all/ most profits
Cons of sole trader
Source of finance limited
UNLIMITED LIABILITY
Rely on your decisions only
May have to work long hours and have limited holidays
Pros and cons of partnership
Share resources
More sources of finance than sole trader
Cover is someone is absent
Share profits
May disagree over decisions
Unlimited liability
Eval of franchise
Less risky
Pre established customer basis / loyalty
Will have support of franchisor
Costs alot of money
Profits hard to make
Eval of joint ventures
Can share skills/ resources/ expertise and experience
Can collaborate without merging - easier
Agreeing on division of profits
Different views on decision making- conflict
Eval of small business
Easy to set up
Flexible - not many workers
Often run by motivated individuals
Oftener creative aswell
Lack power ( market share)
Lack experience
Hard to raise finance
Pros of training
Improve employee performance by developing new skills
Improve morale and productivity
Reputation for training will continue to attract and retain high quality and productive employees
Cons of training
Could use up valuable resources
Time and money
Attendance at training may result in production suffering consequences
Explain motivation theorists
McClelland - 3 A’s
Taylor - piece rate, division of Labour
Maslow - hierarchy
Hertzberg - hygiene and motivator
Vroom - Expect, instrum and valence
Mayo - social needs and teamwork
Fayol 14 principles
(DADUUIRCSOESIE)
Division of work
Authority
Discipline
Unity of command
Unity of direction
Individual interest to general interest
Remuneration
Centralisation
Schalar chain
Order
Equity
Stability
Initiative
Espirit de corps
Mintzbergs Roles of management
Interpersonal - leader, figurehead
Informational - monitor, spokesperson
Decisional - entrepreneur negotiator
( uses informational to make decisions )
Eval of Autocratic leadership
Where rapid decision needed
Important message needs to be given out
For large numbers
Highly complex decisions
When lesson talented self motivated group
Theory X and theory Y
X = money
Y = satisfaction/ commitment
What are 5 Influences on demand
Competitors
Price
Income
Population
Promotional activities
Eval of niche market
Targeted market
Larger firms = interest
High price for targeted products
Small market so returns not high
Eval of mass market
Large scale = lower unit costs and lower prices
Large target market so sales and revenue will be high
Products do not differentiate or change to customer needs
Market segmentation
Geographic - location ( weather / environment )
Demographic - age gender income occupation
Psychographic - personality lifestyle social class
Allows business to meet needs of customers more closely
Marketing mix
Product
Place
Price
Promotion
Product portfolio life cycle
Research and development, introduction, growth , maturity and decline
Boston matrix
High high - Star
High MG and Low MS -Question mark
High MS and Low MS- Cash cow
Low low - Dog
Eval of promotional methods
A, DP , SP, DP, PS
Advertising - Wide coverage, build loyalty and control of message - Expensive
Direct promotion - Cheap / may not be read
Sales promotion - entertain and interest customers - often ST
Personal selling - Two way com, answer enquires - expensive and only reach certain amount of customers
Digital promotion - very targeted, use influencers to attract - need to target effectively, will not reach those not online
How to increase productivity
Training
Longer working hours
Investment in equipment and technology
Motivation strategies
Changing way work is done
Eval of being sustainable
Good for environment and society
Attract customer
Avoiding negative comment in media
Need to reconsider what is produced
Reconsider how products are produced
Reconsider packaging used
Eval of Labour intensive
Production may be flexible
Less expensive than set up of capital intensive
Employees can use skills to Ben creative
May take time to train
May vary in consistency
Volumes produced may be low
Capital intensive evaluation
Can produce high volumes
Output can be standardised/ consistent
May be able to procure continuously
Can be expensive to set up
High fixed costs increasing BE
Very difficult to customise products for individual customers
Types of operation processes
Batch - items move together ( cup cakes)
Flow - large scale ( bottled water)
Mass customisation large scale but had flexibility ( Range Rover )
Job process - one off production
Eval of Inventory
Products ready if needed
Any delays / production not stopped
Cost of storage
Opportunity costs
Security costs
Risk of inventory becoming out of date
Eval of just in time
Increases flexibility
Decreases costs ( no storage)
Minimise waste
Relies on suppliers
No buffer inventory
Vulnerable
Lose bill discounts
Eval debt factoring
Can generate large and immediate inflows of cash
Can reduce amount of profit in each sale
May not be viable for businesses making very small profits
Eval of sale and leaseback
Avoids need for any interest payments
Retains the use of asses for the business and can raise large sums of finance
Only business with saleable assets can engage
Reduce business long term profits
Eval of full costing
Allows to take all costs into account before making pricing decision
Recommended by IFRS
difficult to allocate indirect costs accurately - the allocations of often based in proportions of direct costs
Uses of Break even
Help decide whether idea will be profitable
Help decide level of output and sales to generate profit
Support application for a business loan from a bank
Eval of Break even
Simple allowing most entrepreneurs to use it
Technique that can be completed quickly
Add value in supporting a business for a loan
It assumes all products are sold
Simplification if real world
Costs do not rise steadily as technique suggests
Eval of budgets
Allows managers to endure a business does not overspend - should keep expenditure under control
Can be used to motivate employees - increase satisfaction if stayed within budget
If budgets get assigned to many employees training may be required
Allocating budgets fairly in the interest of the business can be very difficult
