Exam Questions Flashcards
(20 cards)
Outline the features of a monopoly market (2)
A dominant business within a market with 25% or more market share. There are high barriers to entry and they are usually the price makers in the market
Outline the features of a monopolistic competition type of market (2)
Many relatively small businesses within a market selling similar product with slight differentiation. There is few barriers to entry and weak brand identity
Reasons for the change in profit
-wage costs increased
-competition increased
-repayment of debts
-increased rent costs
-increased advertisement costs
-cost of maintenance and repair
Identify 2 types of internal EoS and explain how each can lead to a change in unit costs
Define the term job analysis (2)
Job analysis is part of the recruitment process to look in detail at a job vacancy and identifying the tasks and responsibilities involved in the position
Define the term labour productivity (2)
Labour productivity is a measurement of the output per worker over a period of time
Outline the difference between quality control and quality assurance (2)
Quality control is based on inspection of finished products. Quality checking occurs at the end of the production process.
However
Quality assurance is a system of agreed quality standards at each stage of production. Quality checks are carried out by employees throughout the production process. Focus is on prevention of poor quality.
Define the term lean production
Lean production aims to remove waste from the production process and as a result increases productivity and reduces costs
Identify aims of public sector organisations
- provide essential services to the population
- provide jobs
- reduce crime
- increase health care and wellbeing
- improve quality of education / training
- provide good that wouldn’t be provided by the private sector (eg.street lighting)
Identify types of non for profit organisations
- charities
- cooperatives
- social enterprise
- societies
Features of non for profit organisations
- Charities : Aim to raise money for good causes, although not profit focused, they can earn surpluses and do have to cover their running costs. Money is raised through voluntary donations or via retail outlets
- Co-operatives: An organisation owned by its members which includes employees and sometimes customers. Members benefit through dividend payments and all members have equal votes when major decisions are made
- Social Enterprise: Aim to solve problems and improve communities they operate in, they do not exist solely to make profits. Profits are usually
reinvested towards achieving their social ethical goals. - Societies: Where individuals / groups start an organisation for themselves
and others who share a similar interest that operate close to break even
Define the meaning of the term market
A market is where buyers and sellers meet to exchange goods/ services in return for a price. This can be physical or electronic
Identify key opponents of a business plan
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Explain the purpose of a business plan
- Sets out objectives and how to achieve them: Targets set out in the plan can motivate the entrepreneur to work harder in order to achieve them. This can inspire the entrepreneur to work even harder to ensure objectives are achieved.
- Provides evidence for funding e.g. to a bank in a loan application: Without funding the business may not be able to start-up or encounter cash flow problems one set up, resulting in a greater chance of failure.
- It is used to check progress against the plan: This is important as it gives an indication on how successful the business is operating and whether anything needs changing or if things are going wrong. For example future plans for human resource requirements may need adjusting if business performance is worse than expected,
- Ensures that entrepreneurs consider all aspects of their business before starting up:
New entrepreneurs with little experience may not fully know how to run a business, therefore prior planning and the development of a business plan is useful so that all aspects are covered. If the entrepreneur did not complete one they may have not considered key aspects of running their business for example not gathering market research on customer wants, and therefore target customers with an unattractive product reducing sales.
To what extent is a business plan critical to the success of a new business ?
Why a business plan might be critical:
• Drawing up a well-constructed plan forces entrepreneurs to look closely at all aspects of the business and not just the product/service.
• A business plan is essential when asking for a loan from a bank. A bank is unlikely to lend money if it is unsure of a business’ likelihood of success.
• It needs some assurance that there will be no cash flow problems. A business plan will help convince lenders of this and this is crucial when obtaining start-up finance.
• A business plan can also act as a monitoring tool. Actual figures can be compared with predictions and this helps the business to develop strategies to overcome problems or to avoid them all together.
• A business plan gives entrepreneurs a clear idea of direction and operation. Strategy and objectives are key components of a business plan.
• Can help entrepreneurs to set out resources needed and personnel/skills required to make the business a success.
• Can highlight strengths, weaknesses, opportunities and threats.
• Though a business plan cannot guarantee success it can minimise the risk of failure.
• The business plan is the written aspect of planning and it’s the planning that is critical
Why a business plan might not be critical:
• Business plans can be poorly constructed. Some expertise and research is needed to ensure this is not misleading and that all aspects are covered properly.
• Sometimes figures can be too optimistic and not realistic enough - cost could be underestimated and sales overestimated.
• For small business a business plan may not be necessary, for example, a sole trader or where minimal finance is needed to set up.
• Unforeseen circumstance/variables could render the plan ineffective and useless. For example, exogenous shocks, a change in the law or government policy.
• Economic climate will affect the effectiveness of business plan. A downturn in economic activity or demand could render the plan meaningless.
• Costs of research in time and money - resources may be better spent elsewhere in the business.
Outline the difference between a niche and a mass market
A niche market is a smaller part of the large market that focuses on providing specific products. A mass market is a wide market which aims for everyone and its products aren’t targeted
Define quantitative data
Quantitative data is data that is numerical that can be measured. Can be collected through a questionnaire
Explain bias
Bias can cause data to weigh to one side making it invalid and unreliable so it can be misleading and negatively effect the success of the business
To what extent do you agree that Max’s decision to locate his shop on a busy high street was the main factor in running a successful business?
Location factors and other factors indicated in the case study include:
* Access to potential customers on a busy high street
* Free car parking to attract customers
* Small shop might have kept costs down
* Close proximity to competitors could have attracted customers
* Providing different services to competition (USP)
* Lower price in relation to competition
* Massage therapy qualification and experience
* Advertising effort
* Hard work and commitment – 20 hours more a week
Candidates might approach this answer in terms of the 4Ps
* Price – lower on average than competitors
* Place – busy high street (although this is strictly location)
* Promotion – leaflets
* Product - USP
A combination of both location factors and other factors combined could have resulted in
Max’s success. The choice of location alone is unlikely to be the sole contributor without
some other factors having at least some effect. This industry does not necessary rely heavily
on passing trade.
Explain 2 reasons why entrepreneurs are important to the UK economy
- Customers have more choice of products to purchase, and the satisfaction of society as a whole might increase
- Entrepreneurs organise factor inputs such as labour running of businesses which provides jobs and income for people
