finals! Flashcards
what are the advantages/importance of profits?
1- motivate workers
> financial reward eg: bonus, profit sharing, salary raise
> increase workers household income
> increased purchasing power
> increased standard of living & working satisfaction
> reduced labour turnover rate
2- improve workers relationship w/ business
> business can implement Human Resources Management
> attract new workers from diff background
> new workers can provide more creative and innovative ideas
> helps business to improve their distribution management
eg: e-commerce to distribute their products to a larger market segment
> increase market share
> increase bargaining power w/ supplier
> achieve economic of scale
3- advertising
> added values for marketing strategies
> introduce effective advertising to communicate w/ customers of different demographics
> social media for younger customers & newspapers/flyers for older customers
> effective advertising able to influence customers purchasing behaviour
> customers will buy business’s product
> increased of sales and profits
> able to collect customer feedback to improve decision making
> eg: determine effective pricing strategies that creates customer loyalty
4- pay higher dividend to shareholders
> increase shareholder’s wealth and **return of investment **
> increase shareholder’s satisfaction
> attract more investment from shareholders
> increase business’s capital
> introduce **effective added value management **
> improve quality of products
eg: advance design and features on products
> creates USP
> differentiate from competitors
> gain brand recognition
> set premium pricing and maximise profits
what are the factors that can help JIT be successful? (4)
1- heavily relies on excellent relationship w/ suppliers
> trustworthy supplier that offers high quality raw materials
> supplier will deliver goods on time/able to fulfil special orders
> allows business to produce high quality products that meet customers expectations
2- production staff are multi-skilled and are prepared to change jobs at short notices
> workers are skilled and equipped w/ training
> able to expand their skills and knowledge, not just in one certain area
> able to adapt and cope w/ sudden changes in production process if there’s delay from supplier in sending raw materials
3- equipment & machinery are flexible
> are flexible and have many usages
> business can be flexible in their production process if supplier delays in sending raw materials
> utilise business resources efficiently
> finish their task on time
> achieve business goal
> deliver products to customers on time
4- accurate demand forecasts
> by doing detailed market research on customers needs & wants and market trends
> provides clearer picture for stock manager to make orders from supplier
> able to order sufficient goods to meet market demands
> maintain competitiveness in the market
> increase business market share
how to increase business competitiveness? (4)
1- training for workers
> increase worker’s skills, experience & knowledge
> provide high quality service that can meet customers expectation & satisfaction
> create customer loyalty & continual support of business
2- use JIT method
> use of just in time method as effective stock management
> add value to business & increase business competitive advantage
> help business to be more efficient in utilising holding cost, labour cost & utility bills
> achieve at being cost effective
> allows business to add more values to their marketing strategies such as effecting pricing strategies
> influence customers **purchasing behaviour **
> increase business market share & maximise profits
> sufficient cash flow to allocate more funds for **R&D
> expand business to international level
3- TQM
> total quality management as quality management tool
> requires business to practice new business culture such as ** decentralisation management ** -> manager delegates decision-making authority to their workers
> when brainstorming - involvement of workers from diff background
> determine SWOT analysis of quality management
> know how to introduce effective added values management
> improves business productivity & reduce wastage of resources
4- improved technology
> invest in latest technology & equipment
> increased efficiency during manufacturing process
> if business decides to do mass production, can purchase raw materials in bulk
> can bargain for discount w/ supplier
> reduces cost of production
> achieve economic of scale according to Porter 5 Forces Theory
what are the advantages of a company that implements CSR?
1- motivate workers
> ethical company follows labour regulations eg: min wage, max working hours and health & safety regulation
> improve workers satisfaction cuz can get higher income
> increase productivity & efficiency in business
> better r/ship between workers & business
> reduced turnover rate
2- improve business reputation
> attract workers from different backgrounds to work for business
> contribute different ideas during brainstorming session
> new, creative & innovative ideas to add more value to business
> introduce products w/ advanced featured
> create USP, increase customer loyalty
> increase business market share
what are the disadvantages of a company that practices CSR?
1- reduce business’ competitiveness
> increased cost of production cuz apply min wage, max working hours & proper waste management
> force business to increase selling price to cover for the increase of cost of production
> customers will stop purchasing from business, look for cheaper alternatives
> reduce business sales
> reduced profits = difficult to cover for other business expenses
2- conflict between management & shareholders
> apply min wage, max hours, rules & regulations
> business operating expenses increase
> reduced profits of business
> less money to allocate dividend to shareholders
> reduced shareholders wealth & satisfaction
> reduced investment in business
> reduced capital, no funds to implement added value management
what is the advantage of unemployment?
> during economic recession, high rate of unemployment
a lot of workers looking for job, hire labours at cheaper price
reduces cost of production for business
allow business to set lower selling price to export to international market
increase profits, increase market share
sell in mass production, able to achieve economic of scale
higher bargaining power w/ supplier, can get more discount for raw materials
lower cost of production
allocate funds to invest in latest technology
add value to business, create advance features & design
create USP
attract customers & create customer loyalty
what are the 2 disadvantages of unemployment?
1- reduced sales
> due to high unemployment, household income of customers are reduced
> reduces customers purchasing power
> reduced business sales
> business unable to generate sufficient funds to cover for expenses
> eg paying supplier on time, causes conflict between management & supplier
> causes supplier to stop supplying business raw materials
> business production is reduced, not able to produce products in time to meet customers expectation
> reduced customers satisfaction
> customer will find another alternative, and stop supporting business
> reduce business sales
2- pay higher taxes to government
> to support gov policies
> gov need more money to pay unemployment benefits to society
> pay higher taxes, reduces business’ funds
> dividend paid to shareholders is reduced
> reduces shareholder’s wealth & satisfaction
> lower return of investment
> shareholders will invest less, less capital for business to introduce added value management
what is the advantage of high inflation?
1- causes demand pull-inflation
> aggregate demand exceeds aggregate supply
> gives incentive for business to increase production
> can increase the selling price of goods
> maximise profits
> increase productivity & efficiency of business
> pay higher dividend to shareholders
> higher return of investment
> increase wealth & satisfaction of shareholders
> want to invest more, attract more shareholders
> increase business capital to carry new market development
what are the 2 disadvantages of inflation?
1- higher cost of living
> prices of goods increase
> workers will demand increase of salary to cope w/ increased cost of living
> business cost of production will increase
> force business to increase selling price
> loose competitiveness in market, reduced customer loyalty
> unable to export their products overseas, their market becomes smaller
> reduces business profits
2- higher cost of investment
> business unable to raise sufficient funds for investment in new technologies & equipment
> reduces the efficiency & quality of products
> increases wastage of business resources
> low quality products, reduces customers satisfaction
> customer will stop supporting business, reduced profits & customer loyalty
what are the sources of internal finance? (4)
1- retained profits
> using profits from previous years to reinvest in the business
> there’s no interest that needs to be paid
> there’s no change in control
> money could have been used to pay higher dividends to shareholders
> shareholders less satisfied
2- sale of assets
> unused assets can be sold to earn a profit
> turns fixed assets into liquid assets
> loss of potential productivity generated
3- JIT
4- delayed payment to supplier
what are the sources of external finance?
1- bank lending
> for short-term use
> doesn’t dilute ownership
> have sufficient funds to implement added values management, funds to allocate for R&D
> improve product quality
> won’t miss business opportunities, gain competitive advantage in market
2- hire purchase
> business can purchase assets without having to pay the full value immediately
> remainder of balance is paid along with interest rate, then ownership is fully transferred
> control & purchase assets without using all the business funds at once
> flexibility in repayment (yearly/monthly)
> total sum of repayment will be higher than the full payment of an asset
3- equity financing
> raise capital through selling of shares
> doesnt have payment obligation, so it doesn’t add to existing debt load
> have to give ownership of your company to investors (less control)
> share profits w/ investors
4- leasing
5- bond
what is flow production?
- continuous production done in an assembly line, once when part is done, it is moved on to the next
- generally each station uses the same amount of time
what are the advantages of flow production? (4)
1- low inventory
> short lead-time, products are delivered quickly to customers
> increase customers satisfaction
> hold less inventory & reduce inventory cost
> higher profit, more funds for other business projects
> more space for storing finished goods
2- economic of scale
> produce more, cost per unit reduces
> reduce cost of production
> bargain with supplier, gain discount
> set lower selling price
> attract customers to purchase business’s products, create customer loyalty
3- low labour skills required
> production is mostly automated, doesn’t require workers that are highly skilled
> reduces cost of production, highly skilled workers- pay higher wages
4- standardised products
> work station are placed close to each other, when transporting goods from one station to the other, less risk of damage or breakage
> produces higher quality products, mostly automated, less room for production error
> if there’s unsatisfactory products, it’s easy to check at various production check points
what are the reasons a business may fail? (4)
1- financial problems
> business lacks capital to fund business daily operation & production of goods
> unable to get approval for loan from bank
> unable to earn enough profits to cover for immediate expenses like paying supplier on time
> may set selling prices too low to attract customers, not sustainable in the long-run
> unable to cover cost or production, marketing and other expenses
solution:
- set realistic budget for business’s operations - do research and find sources of capital
2- poor management
> too many workers , their job scopes overlap each other, reduces productivity
> no managers in weaker areas of a business like administration, marketing, HR
> reduce workers satisfaction
> no proper organisation, business have no clear objective & direction to move towards
> increase labour turnover rate
3- poor financial management
> spending business’s funds without proper planning
> lead to overspending
> underestimate funds needed for projects or business expenses
> fail to pay back supplier on time, conflict between business & supplier, supplier stop supplying raw materials for business
> resort to taking out loans from bank or creditors, increases business debt
> if unable to pay back, may result in solvency of business
4- level of competition
> too many competitors, market becomes saturated, customer demands will fall
> due to lack of market research and competitive analysis (porter’s 5 forces theory)
> forces business to reduce selling prices to attract customers
> if prices are too low, difficult for business to make profit & cover for business expenses
solution: create USP - introduce added value management - stand out from competitors - creative & innovative ideas
what are the advantages of globalisation in business? (3)
1- access to new markets
> expand your business not just locally, but internationally
> reach to more customers, gain brand recognition
> adapt to meet local demands of other countries
> improve quality of product/service, increase customer satisfaction, meet their expectation
> create customer loyalty
> more customers purchase business’s products, increase profits
2- access to skilled and experienced workers
> business can outsource from other countries talented workers
> during brain-storming session, come up w/ creative & innovative ideas
> workers of different background & experiences, can introduce added value management to product
> increase quality of product
3- access to new sources of investment
> expand business to larger market segment
> attract new investors to invest in business
> gain competitive advantage over competitors
> reduce selling price & attract customers
