Key Points Flashcards
Land
The natural resources of the world
Labour
The people employed by a business (the workforce) to make the product
Capital
The man-made resources that are needed to make a product
Enterprise
Combining all factors of production, done by the entrepreneur
Business cycle: stage 1
People (consumers) have needs and wants
Business cycle: stage 2
Businesses identify these wants by doing research
Business cycle: stage 3
Businesses produce goods and services to satisfy consumer needs and wants and make a profit
Business cycle: stage 4
Consumers buy the goods and services produced by the business and consume them
Factors of production (CELL) - list
Land, labour, capital, and enterprise
Sectors of industry - list
Primary, secondary and tertiary
Primary sector
They take raw materials from the ground
Secondary sector
They use raw materials and make something with them
Tertiary sector
They provide a service
Sectors of the economy - list
Private, public and third
Private sector businesses - list
Sole traders, partnerships and private limited companies
Public sector businesses - list
National government and local government organisations
Third sector businesses - list
Non-profit making organisations and social enterprises
External factors (PESTEC) - list
Political, economic, social, technological, environmental and competitive
Internal factors - list
Financial, human resources and current technology
Stakeholders - list
Owners, shareholders, employees, banks, customers, suppliers, local community, pressure groups, local government and national government
Market segments - list
Gender, age, occupation, religious or cultural beliefs, income / social class, geographical location and lifestyle
Marketing mix - list
Product, price, place and promotion
Product
The actual item produced by the business and then sold in a market
Price
How much money a business charges the customer to buy the product
Place
The way the business makes the product available to the customer and where the product is sold
Promotion
How customers are told the product exists and are encouraged in different ways to buy it
Product life cycle - list
Introduction, growth, maturity and decline
Introduction
The product is released onto the market, and lots of advertising and promotion is done to encourage sales
Growth
When sales of the product are growing because more customers know it exists as a result of lots of promotion
Maturity
When sales of the product reach their highest, and as a result this is the most profitable stage
Decline
When sales of the product begin to fall because the product is getting older and newer versions are coming onto the market; customers no longer want it
Pricing strategies - list
Low price, high price, promotional pricing, cost-plus pricing and psychological pricing
Low price
The price charged is lower than that of competitors
High price
The price charged is higher than that of competitors
Promotional pricing
The price charged is lower than normal for a short period
Cost-plus pricing
The cost of making the product is calculated and then a percentage is added on for profit
Psychological pricing
The price charged by the business makes the customer think the product is cheaper than it is
Distribution methods - list
Road, train, aircraft, and boat
Advertising methods - list
TV, newspapers and magazines, radio and the media, billboards, internet websites, apps, text messaging, email advertising
Types of market research
Field research and desk research
Field research
Gathering new information by carrying out surveys, interviews and observations; it gathers primary information
Desk research
Looking at existing information, e.g. in newspapers, books and internet websites; it gathers secondary information
Methods of field research
Personal interview, focus group, postal survey, telephone survey, online survey, hall test, observation, electronic point of sale (EPOS) and social networking website
Objectives (list)
Survival, profit, provision of a service, customer satisfaction, enterprise, social responsibility and market share
Purchasing mix
Cost of raw materials, quality of raw materials, lead time / delivery time, quantity of raw materials, location of supplier, reliability and reputation of supplier, and storage space available
Methods of production - list
Job, batch and flow
Job production
When one product is made from start to finish before another one is made, and it is made to the customer’s own requirements
Batch production
When a group of identical products are made at any one time
Flow production
When parts are added to a product as it moves along a production line
Methods of ensuring quality
Using good quality raw materials, training employees to the highest possible level, maintaining equipment, quality control, quality assurance, and quality management
Recruitment process - list
Identify a job vacancy, carry out a job analysis, prepare a job description, prepare a person specification, advertise the job and send out applications
Selection process - list
Collect application forms and CVs, create a shortlist, hold interviews / testing, and inform successful candidate
Types of training
Induction, on-the-job and off-the-job
Financial incentives - list
Salary, time rate, overtime, piece rate, bonus and commission
Salary
Paying a fixed amount of money per year in 12 equal instalments (once every month)
Time rate
Paying per hour worked
Overtime
Working over the minimum number of hours required per week
Piece rate
An amount of money for each item produced in addition to a low time rate or salary
Bonus
Receiving an additional payment on top of a salary or time rate
Commission
A percentage of money paid based on the value of sales a person makes
Flexible working practices - list
Part time, temporary contracts, homeworking, teleworking and job share
Types of industrial action
Strike, work to rule, sit in, go slow, overtime ban, boycott and demonstration
The Equality Act
Aims to prevent against discrimination in terms of different protected characteristics, and brings together a number of different aspects of equality
The National Minimum Wage Act
Sets out the lowest amount of pay a person can receive per hour
The Health And Safety At Work Act (HASWA)
Sets out the responsibilities employees and employers have concerning health and safety in the workplace
The General Data Protection Regulation
Sets out guidelines for the collection and processing of personal information from individuals who live in the EU
Sources of finance - list
Bank loan, loan from family / friends, government grants, bank overdraft, hire purchase and mortgage
Types of costs
Fixed costs, variable costs and total costs
Fixed costs
Costs that always stay the same, no matter how many units of a product are made
Variable costs
Costs that change depending on how many units of a product are made
Total costs
Fixed and variable costs added together
Break-even point
When total costs equals total revenue
Stages of product development
Idea generation, development, prototype and testing, launch to market, and modifications
Types of inventory
Raw materials, works in progress, and finished goods
Non-financial incentives (list)
Offering flexible working practices, giving people extra responsibilities to encourage them and providing promotion opportunities, praising people for a job done well, allowing people to work in teams and / or take part in team-building tasks, providing training opportunities, and providing social events
Solutions to cash flow problems
Find a cheaper supplier, lease machinery or equipment, sell any assets not being used effectively, offer discounts to customers for paying for goods quickly / up front, arrange extra time to pay bills from supplier, increase advertising / sales promotion, and apply for a loan or overdraft from the bank
Differences between non-profits and social enterprises
Their legal structures are different, and social enterprises are less-regulated by the government
Ways to ensure customer satisfaction
Providing the highest possible quality product, making sure employees are trained to the highest level and are knowledgeable about products on sale, having a customer care strategy, having a customer complaints procedure, having an after-sales service
Customer care strategy
Lets customers know about the level of service that will be provided and, if they make a complaint, how it will be dealt with
Customer complaints procedure
A process that the business and customer follows if a customer is unhappy and makes a complaint - it aims to make sure complaints are handled in the best possible way
After-sales service
Gives customers the chance to ask questions about their purchase after it has been bought
Factors affecting business locations
Where the customer is, availability of suitable premises, parking facilities, suitable infrastructure, government grants and incentives, the market segment, employee availability, competition and environmental impact
Labour intensive
Products made using mainly human effort
Capital intensive
Products made using mainly machines and equipment (i.e. using technology)
Uses of spreadsheets (technology) in finance
Record cost information and calculate break-even, prepare cash budgets, prepare income statements, create graphs showing income and expenditure and prepare information that can be exported into other packages
Reasons to do target marketing
To make sure the product is suitable and specific to the needs of the customer group; to make sure that the product is sold in the most suitable place where the customer can access it; so that a price can be set that will reflect the market segment; and to make sure advertising and promotion campaigns are targeted towards the correct customer group
Types of technology which could be used within the operations department
Internet websites can be used to compare prices of raw materials and to place orders, spreadsheets and databases can be used to keep track of inventory levels, equipment such as ovens can be pre-programmed to switch on and off at specific times, tablet computers can be used to take orders from customers, delivery vehicles could contain GPS tracking so that deliveries can be tracked, and CAD - computer aided design - software can be used to design products on screen before they are produced
Quality control
Where products are checked at the beginning and end of the production process for faults
Quality assurance
Where products are checked at each stage of the production process for faults
Quality management
Trying to make sure that every product is made perfectly every time, which requires commitment by the whole business towards quality
Political influences
Influences that come from the actions of the government, e.g. introducing new laws and changing tax levels
Economic influences
Influences that encourage people to spend money or not spend money, e.g. levels of employment, recession and interest rates
Social influences
Influences that are concerned with changing opinions, values and people’s beliefs, e.g. tastes in clothing and the increase in different working practises that businesses are using
Technological influences
Influences that refer to the ways new practises and equipment can affect businesses, e.g. cloud computing and tablet computers
Environmental influences
Influences that refer to things like weather and the need to be environmentally friendly and sustainable
Competitive influences
Influences that cover how businesses who offer similar products or services affect each other
Financial influences
Influences that refer to the availability or lack of finance
Human resources influences
Influences that cover the employees and managers within the business
Current technology influences
Influences that refer to technology being used by the business at the present time
Stages of product development (GAPTAP)
Generate the idea, analyse the idea, produce a prototype, test the product, alter the product, and produce the product
Reasons to have a brand
So that it’s recognisable to customers and can act as a marketing and promotion tool, to encourage customers to become brand loyal, higher prices can sometimes be charged because people often associate branded products with being of a high quality, and new products can be introduced into the market easily as the brand name is already well known
Methods of promotion (list)
Special offers, free samples and celebrity endorsements
