Exam content Flashcards
Sectors of economy
Private, public, third
Private sector of economy definition
The sector of economy made up of businesses which are owned and controlled by private individuals which want to maximise profit and grow the business.
Public sector definition
The sector of economy which is made up of non profit businesses which are owned and controlled by the government and have the goal of providing a high quality service to the public.
Third sector of economy definition
The sector of economy made up of non profit organisations which want to develop the community and help raise funding and awareness for ethical causes.
Private sector goals
Maximise profit
Grow the business
Good corporate social responsibility
High customer satisfaction
Types of private sector businesses
Sole trader,
Partnership,
Private limited company
Public sector goals
Provide high quality service
Good corporate social responsibility
Stay within allocated spending budget
Third sector business goals
Increase awareness of a cause
Increase funding for a cause
Develop the local community
Types of third sector business
Charity
Social enterprise
Voluntary organisations
Sole trader features
Private sector of economy
Unlimited liability
One owner and one controller
No legal work needed for setup
Partnership features
Private sector
Unlimited liability
2-20 owners and controllers
Needs a deed of partnership for setup
Private limited company features
Private sector of economy Owned by shareholders Controlled by directors Limited liability Memorandum and article of association necessary for setup.
Government organisations features
Owned by the government
Controlled by the government
Financed through taxes and budget
Public sector of economy
Social enterprise feature
A business in the third sector of economy
Functions like a private sector business
Owned by private individuals
Controlled by the owners
Has to invest half of profit to ethical causes
Other half of profit has to go into growing the business
Profit doesn’t reward owners.
Charity features
Third sector of economy
Owned and controlled by a trust
Non profit
Goal of raising funds and awareness
Voluntary organisations features
Controlled by board members
Third sector of economy
Purpose of developing the community
Private sector business objective
Maximise profit Maximise sales Maximise market share Good CSR Grow the business
Public sector business goals
Provide high quality service to the public
Good CSR
Stay within budget
Third sector business goals
Maximise awareness and funds through profit/donations
Help develop community
External factors definition
Factors outside of a business which affect the success of the business.
External factors types
Political Economic Social Technological Environmental Competitive PESTEC
Political external factor explain
An example of a political external factor is an introduction of new legislation. New legislation can lead to a business spending extra time training staff to abide to these laws, therefore this can lead to a decrease in productivity.
Economic external factor explain
An example of an economic external factor is a boom . This is an increase in gross domestic product which will make the income of the public more disposable, therefore this can lead to an increase of sales in the business.
Social factor explain
An example of a social factor is a change in tastes and trends. This will lead to products going out of fashion and the business having to do market research to make their products appealing to their target market.
Technological external factors explain
An example of a technological factor is new machinery. New machinery can allow for the product to be produced faster and more cost effectively. Therefore this will lead to an increase of productivity or profit.
Environmental factors explain
An example of an environmental factor is plastic use. If a business uses a lot of plastic that isn’t recyclable in its products this will lead to a decrease of corporate social responsibility because the business is harming the environment.
Competitive external factor explain
An example of a competitive factor is competitor price drops. This can lead to a decrease of market share as the competition will steal customers away from your business and a decrease in market share.
Examples of political factors
Legislation Income tax change Corporation tax change VAT change Brexit
Examples of economic factors
Boom Recession Tariffs Interest rates Exchange rates
Social factors
Tastes and trends
Life expectancy
More awareness about ethics
Technological factors
New medical research
New machinery and equipment
E commerce
Environmental factors
Plastic use
Weather
Pollution / carbon footprint
Competitive factors
Competitor price drops
Competitor new products
Stakeholders examples
Owners Shareholders Employees Banks Customers Suppliers Local community Local government National government
Internal stakeholders definition
An internal stakeholder is anyone who has an interest in the success of the business inside the business.
External stakeholders definition
Anyone who has an interest in the success of the business outside of the business
Internal stakeholders examples
Owners Managers Employees Shareholders Directors
External stakeholders examples
Customers Local community Government Banks Suppliers
Types of market research
Field and desk
Methods of field research
Online survey Postal survey Face to face interview Hall tests Focus groups
Methods of desk research
Newspapers
Books/textbooks
Government statistics
Websites
Field research definition
Where a business goes and collects primary information for a specific purpose by carrying out their own research.
Desk research definition
Where a business uses existing sources to gather secondary information about the market or product.
Advantages of field research
Not available to competition
More relevant
Up to date
Disadvantages of field research
Still can be unreliable
More expensive than desk
More time consuming than desk
Needs trained professionals
Advantages of desk research
Cheaper than field
Quicker than field
Doesn’t need trained professionals
Large quantities can be gathered
Disadvantages of desk
Can be: difficult to interpret Out of date Irrelevant Available to competitors
Market research advantages
Gather feedback on how to improve products
Gather info on the marketing mix of a product
Find out if there is a demand for a product
Market research disadvantages
Expensive and wastes time
Could be inaccurate
Could lead to bad business decisions
Product development stages
Generate the idea Analyse the idea Produce the prototype Test the market Alter the product Produce the product
Generate the idea
Where the business comes up with the idea of the product that will be sold to customers
Analyse the idea
The stage where the business looks to see if the product is possible, checks for existing products, competitors and to see if it is legal.
Produce the prototype
Where the business manufactures a one off product to see what it looks like, test it’s safety and its performance.
Test the market
Where the business carries out market research to ensure the public have a demand for the product and for constructive criticism to make the product better.
Alter the product
Where the product is altered based on feedback from the public to make the product more appealing to the public.
Alter the product
Where the product is altered based on feedback from the market research to make the product more appealing to the public.
Produce the product
This is where the first units of products are manufactured to be sold to the public.
Branding definition
Where a recognisable character is given to a business /product or product ranges to make them stand out form competitors.
Branding definition
Where a recognisable character is given to a business /product or product ranges to make them stand out form competitors.
Advantages of Branding
More memorable Higher quality Stand out from competition Increase sales Can release new products without great risk.
Disadvantages of branding
Expensive to maintain
Bad publicity can tarnish entire product ranges
Failed products can tarnish entire product ranges
Packaging advantages
Protects the product
Can be branded
Gives extra necessary information
Disadvantages of packaging
Can be bad for the environment
Has to show contents of product for food so can off put customers
Leads to bad CSR
Pricing strategies
Premium Low Cost plus Competitive Promotional
Promotional pricing definition
Where the business uses sales promotional strategies like discounts on products to pressure customers into buying the product.
Cost plus pricing definition
Where the business adds a markup cost to the manufacturing cost to get their final product price so they know exactly how much gross profit they are making per sale.
Competitive pricing definition
Where the business equals their competition’s product prices in hopes of stealing their loyal customers away from them, if successful this can increase market share but a better marketing mix is necessary for this to work.
Premium pricing
Where the business charges more money for their product to give it an image of being of higher quality.
Low pricing
Where the business charges as little as possible for their production hopes of maximising sales.
Methods of advertising
TV Social media Radio Billboards Apps Celebrity endorsement Newspapers
Tv advantages
Can show the product to the audience and reaches across countries or worldwide
Social media advantages
Reaches younger generations and worldwide audience
Radio advantages
Target the local community or nationally and allows for jingles and slogans to be played.
Billboards advantages
Can attract a lot of attention in populated areas
Can show logos
Apps advantages
Targets specific types of consumers in the market and broadcast worldwide
Disadvantages of tv
Extremely expensive
Disadvantages of social media
Restricts older generations and ads disrupt and annoy consumers
Billboards disadvantages
Only works in populated areas, can’t use a jingle to make the product memorable.
Apps disadvantages
Disrupting and irritating
Advertising definition
Where a business uses media to promote and inform the public about a product.
Factors to consider when choosing a location
Size of property Population of the local area Cost of the property Distance from target market Distance from supplier Government incentives Distance from competitors
Technology in marketing examples
Website Database Desktop publisher Email Online survey Social media
Websites (TM)
Allows for information about products to be distributed to customers and also allows for e - commerce
Database (TM)
Store customer information
Store market research documents
Desktop publisher TM
Creates posters and billboards for advertising
Email TM
Used to contact customers to inform them about promotional deals
Social media TM
Advertise the product and promote the business
Generate CSR by showing ethical activities
Factors affecting suppliers
Price Quality Distance Lead time Reliability Credit terms and economies of scale
Inventory management types
Computerised and manual
Computerised inventory control
Where the business uses a computer to manage and keep track of the inventory level in the business
Manual inventory control
Where a business uses staff to update and manage the level of inventory in the business.
Advantages of computerised stock control
More secure than manual
Costs less than hiring an employee in the long run
More accurate than manual due to no human error
automatically contacts supplier
Disadvantages of computerised stock control
Glitches or power cuts can cause the system to crash or could lose information on inventory level.
High capital start up cost means it isn’t available to small businesses
Advantages of manual inventory control
Has a low start up cost
Good for businesses that don’t sell large numbers of units
Doesn’t shut down with glitches and power cuts
Disadvantages of manual stock control
Less accurate (more human error) than computerised
Less secure than computerised
Someone needs to contact supplier
Costs more in the long run than computerised
Disadvantages of manual stock control
Less accurate (more human error) than computerised
Less secure than computerised
Someone needs to contact supplier
Costs more in the long run than computerised
Methods of production
Job
Batch
Flow
Job production definition
Where a business receives an order from a customer and an employee/ employees will manufacture the product from start to finish with the customers exact requirements and needs being fulfilled.
Advantages of job production
Customisable
Seen as higher quality
Can charge a higher price
Labour intensive so no large startup cost
Disadvantages of job production
Labour intensive so needs skilled workers
Can’t manufacture the product quickly
Likely to be human error
No economies of scale or bulk buying
Batch production definition
Where a business manufactures their products in groups, the products within each group are identical but the groups have slight differences.
Advantages of batch production
Can be capital or Labour intensive Can produce a variety of different products quickly Raw materials can get scales of economy Batches are identical Faster than job production
Disadvantages of batch production
Slower than flow production
Workers can be idle in between batches
Mistakes ruin entire batches
Not completely customisable like job .
Flow production definition
Where a business manufactures their product on a capital intensive production line, where components are added to the product. Each product is standardised and identical with very little customisable potential.
Advantages of flow
Capital intensive so no human error Good economies of scales Works 24/7 Standardised products Low wages due to low skill levels
Disadvantages of flow
Can’t customise the product
The entire production line can stop if one machine breaks down
Demotivated staff
High startup cost prevents small businesses utilising this method
Ethical operation definition
Where a business ensures that the manufacturing and transport of their product don’t negatively impact on the environment or on the welfare of people and animals and the community
Advantages of ethical operations
Good CSR
Attracts good employees
Marketing strategy
Disadvantages of ethical operations
Makes the product more expensive to manufacture
Lose access to inethical suppliers making it difficult to get raw materials
Methods of quality endurance
Quality control
Quality assurance
Quality training
High quality raw materials
Quality control
Where a business checks the standards of the product at the end of production to save time
Quality assurance
Where the business checks the standard of the product at the end of each stage of production to decrease waste.
Quality training
Where a business teaches their staff to complete their tasks to a higher standard, faster and with less mistakes
High quality raw materials
Where a business uses a high standard of supplier and only the best raw materials to ensure the final product is a higher standard.
Recruitment stages
Identify job vacancy Analyse job vacancy Create a job description Create a person specification Advertise the vacancy Send out applications /ask for CV’s
Selection stages
Take in applications
Create a shortlist
Refine the selection
Appoint the most suitable candidate
Technology in HR
Video conferencing Email Websites Social media Database word
Word HRT
Used to make HR documents such as contract of employment, job description and person specification
Email HRT
Used to send out applications in recruitment
Websites HRT
Used to advertise the job vacancy in the recruitment stage
Databases HRT
Databases can be used to store important employee information and important employee documents such as a contract of employment securely.
Video conferencing HRT
Used in HR to quickly set up meetings between branches allowing for quicker meetings to be held and employees to have the chance to work from home.
Sources of finance
Bank loan Mortgage Own equity Share issue Government grant Bank overdraft Taking on an additional partner
Cash budget features
Opening balance Receipts Total cash available Payments Total payments Closing balance
Income statements features
Sales revenue Less: cost of sales Opening stock Closing stock Gross profit Expenses Total expenses Profit for the year
